t c memo united_states tax_court john a hartmann petitioner v commissioner of internal revenue respondent docket no 24214-17l filed date john a hartmann pro_se ina s weiner for respondent memorandum opinion ruwe judge pursuant to sec_6320 and sec_6330 petitioner seeks review of the internal_revenue_service irs office of appeal sec_1unless otherwise indicated all rule references are to the tax_court rules_of_practice and procedure and all section references are to the internal_revenue_code in effect at all relevant times determinations to sustain the filing of a notice_of_federal_tax_lien nftl and a proposed levy to collect petitioner’s unpaid and federal_income_tax liabilities the issue before the court is whether to grant respondent’s motion for summary_judgment motion pursuant to rule respondent contends that no genuine dispute exists as to any material fact and that his determinations to collect petitioner’s unpaid liabilities should be sustained after reviewing these allegations along with the attached declaration and exhibits we conclude that this case is appropriate for summary adjudication background petitioner is a lawyer who resided in new jersey when he filed his petition petitioner filed federal_income_tax returns late for and and he failed to pay the liabilities reported on the returns on date the commissioner issued petitioner a letter final notice_of_intent_to_levy and notice of your right to a hearing for his unpaid and income_tax liabilities on date the commissioner issued petitioner a letter notice_of_federal_tax_lien and your right to a hearing under sec_6320 for the and liabilities petitioner timely filed requests for a collection 2respondent’s motion also requests that we impose a penalty on petitioner under sec_6673 we will deny respondent’s request due process cdp hearing with respect to the request related to the proposed levy petitioner asked for an installment_agreement or an offer-in- compromise or for his accounts to be placed in currently not collectible cnc status with respect to the request related to the nftl petitioner asked for an installment_agreement or for his accounts to be placed in cnc status and he requested that the lien be withdrawn petitioner did not challenge his underlying liabilities on date a settlement officer so from the irs office of appeals sent petitioner a letter acknowledging receipt of his requests for a cdp hearing and scheduling a telephone conference call to conduct the cdp hearing for date in the letter the so asked petitioner to submit within days a form 433-a collection information statement for wage earners and self-employed individuals and to submit within days a signed federal_income_tax return the so enclosed a form 433-a with the letter but petitioner contends that the income and expense analysis portion of the form 433-a was not enclosed on date petitioner requested that the cdp hearing be rescheduled and the so granted his request on date the so received a form a and held a telephone conference call with petitioner in the case activity record sec_3 the so stated that petitioner failed to complete the income and expense analysis portion of the form 433-a but petitioner claims that the so did not mention this during the conference call during the conference call petitioner reiterated his request for an installment_agreement after the conference call the so sent petitioner’s form 433-a to an irs revenue_officer ro for verification on or about date the ro sent petitioner a form_9297 summary of taxpayer contact asking that by date petitioner submit among other things the income and expense portion of the form 433-a proof of estimated_tax payments for investment statements for the previous six months and his most recent car payment statement petitioner responded to the information requests but did not submit all of the requested documents petitioner provided written explanations about some of the documents he submitted with respect to the income and expense section of the form 433-a he claims he never received the page with respect to the request for proof of estimated payments petitioner conceded that he failed to make estimated payments for but that a payment for would be forthcoming with 3the so maintained separate case activity records for the nftl and the proposed levy 4while petitioner’s cdp hearing was ongoing petitioner had delinquent tax continued respect to the investment statements petitioner provided a statement for the past four months for one of his accounts and provided no statements for his other two accounts listed on the form 433-a with respect to the last car payment statement petitioner claimed that he does not retain car payment statements and provided one page of a lease agreement showing that a dollar_figure payment is due monthly but the portion of the lease agreement does not name the lessee petitioner provided no proof that he actually made the payments on date the so issued petitioner notices of determination sustaining the nftl and the proposed levy because petitioner was not in compliance with the required estimated_tax payments for the current taxable_year and for his failure to submit the information requested in the form_9297 petitioner timely filed a petition with this court contending that there was no showing that estimated_tax payments were due for and that he submitted all of the materials requested in the form_9297 continued debt for the tax debt is not at issue in this case 5the so issued separate notices of determination for the nftl and the proposed levy discussion a summary_judgment summary_judgment is designed to expedite litigation and to avoid unnecessary and expensive trials 61_tc_861 under rule b the court may grant summary_judgment when there is no genuine dispute as to any material fact and a decision may be rendered as a matter of law 98_tc_518 aff’d 17_f3d_965 7th cir the burden is on the moving party to demonstrate that no genuine issue as to any material fact remains and that he is entitled to judgment as a matter of law 116_tc_73 in deciding whether to grant summary_judgment we view the evidence in the light most favorable to the nonmoving party 100_tc_32 however the nonmoving party is required to go beyond the pleadings and by his own affidavits or by the ‘depositions answers to interrogatories and admissions on file ’ designate ‘specific facts showing that there is a genuine issue for trial ’ 477_us_317 see also 119_tc_157 115_tc_554 on the basis of the record we conclude that there is no genuine dispute of material fact and that a decision may be rendered as a matter of law b standard of review where the validity of a taxpayer’s underlying liability is properly at issue the court reviews any determination regarding the underlying liability de novo 114_tc_176 where the taxpayer’s underlying liability is not properly at issue we review the office of appeals’ determination for abuse_of_discretion only 131_tc_197 goza v commissioner t c pincite a determination is an abuse_of_discretion if it is arbitrary capricious or without sound basis in fact or law 125_tc_301 aff’d 469_f3d_27 1st cir a taxpayer may raise a cdp challenge to the existence or amount of his underlying tax_liability only if he did not receive any statutory_notice_of_deficiency for such tax_liability or did not otherwise have an opportunity to dispute such tax_liability sec_6330 this court may consider such a challenge however only if the taxpayer properly raised it before the settlement officer 129_tc_107 and again in his petition to this court see rule b an issue is not properly raised at the office of appeals if the taxpayer fails to request consideration of the issue or fails to present any evidence after being given a reasonable opportunity to do so sec_301_6320-1 q a-f3 proced admin regs see 140_tc_173 citing giamelli v commissioner t c pincite it is unclear whether petitioner was entitled to challenge his liabilities for and at the cdp hearing however petitioner did not challenge his underlying liabilities at the cdp hearing or in his petition he is therefore not entitled to contest those liabilities in this court and we will therefore review the so’s determination only for abuse_of_discretion c analysis in deciding whether the so abused his discretion in sustaining the nftl and the proposed levy we review the record to determine whether he properly verified that the requirements of applicable law and administrative procedure have been met considered any relevant issues petitioner raised and considered whether any proposed collection action balances the need for the efficient 6generally a taxpayer must actually receive a notice_of_deficiency for the preclusion under sec_6330 to apply see 114_tc_604 and the record is silent as to whether petitioner received notices of deficiency for and collection_of_taxes with the legitimate concern of petitioner that any collection action be no more intrusive than necessary see sec_6330 our review of the record establishes that the so considered all of these factors when making his determination petitioner contends that the so abused his discretion because he was incorrect that petitioner failed to make estimated_tax payments for typically current compliance with the revenue laws including compliance with estimated_tax payment obligations is a prerequisite to being eligible for a collection alternative see 126_tc_237 rev’d on other grounds 514_f3d_1119 10th cir hennessey manor nursing home inc v commissioner tcmemo_2017_97 at in the form_9297 petitioner acknowledged that he had not made estimated_tax payments for in his petition petitioner claimed that the so failed to show that estimated payments were due for however in his response to respondent’s motion petitioner acknowledged that estimated_tax payments were due but claims that he made a payment of dollar_figure in a portion of which should be applied to the tax_year the commissioner’s certified transcripts for do not show any payments for and petitioner has presented no evidence that he made any therefore it was not an abuse_of_discretion for the so to reject a collection alternative on the ground of petitioner’s current noncompliance with his estimated_tax payment obligations although petitioner’s failure to make estimated payments is sufficient to sustain the so’s determinations we will address some of petitioner’s remaining arguments petitioner contends the so erroneously determined that he failed to provide the information requested when the office of appeals gives a taxpayer a specific timeframe to submit requested items it is not an abuse_of_discretion to move ahead if the taxpayer fails to submit the requested items 135_tc_344 glossop v commissioner tcmemo_2013_208 at further an so is not required to negotiate indefinitely or wait any specific time before issuing a determination kuretski v commissioner tcmemo_2012_262 at aff’d 755_f3d_929 d c cir the ro asked petitioner to provide among other things the completed income and expense analysis portion of the form 433-a investment account statements for the previous six months and his most recent car payment statement petitioner contends that he was never provided an income and expense analysis sheet to submit even assuming this is true petitioner failed to submit all of the requested investment statements and the car lease payment statement in his response to the form_9297 petitioner provided no explanation for not submitting all of the investment account statements he claims that he did not have his last car payment statement and did not provide any proof of his car payments petitioner failed to provide the requested information and the so did not abuse his discretion in rejecting a collection alternative on this ground finding no abuse_of_discretion in any respect we will sustain the proposed collection actions in reaching our decision we have considered all arguments made by the parties and to the extent not mentioned or addressed they are irrelevant or without merit to reflect the foregoing an appropriate order and decision will be entered 7petitioner has a history of failing to provide requested information during collection_due_process hearings see 667_fedappx_374 3d cir aff’g tcmemo_2015_129 638_f3d_248 3d cir


internal_revenue_service number release date ------------------ ------------------------------ ------------------------------------------------------------ -- ------------------------------------------------------------ ----------------- -------------------------------- ------------------------------- in re ----------------------------------- hybrid amendment department of the treasury washington dc third party communication none date of communication not applicable_person to contact --------------------- telephone number ---------------------- refer reply to cc tege eb qp1 plr-128229-18 date date legend taxpayer ----------------------------------------------------------------------------------------------------- plan ------------------------------------------------------------ date ----------------------- dear --------------- this letter responds to a request for a ruling dated date submitted by your authorized representative related to the proper treatment of the plan under sec_413 and sec_433 of the internal_revenue_code_of_1986 as amended code upon amendment of the plan to make a statutory hybrid formula available to adopting employers hybrid amendment the following facts and representations are submitted under penalties of perjury in support of your request the taxpayer is an association ------------------------------------------------------------------------ that meets the requirements of sec_501 of the code the taxpayer sponsors plr-128229-18 the plan the plan is an employee_pension_benefit_plan within the meaning of sec_3 of the employee_retirement_income_security_act_of_1974 as amended erisa a defined_benefit_plan within the meaning of sec_414 of the code and a multiple-employer plan within the meaning of sec_413 of the code the plan provides retirement income to eligible retirees of taxpayer or taxpayer’s members or any of their eligible subsidiaries or controlled affiliates who have adopted the plan the plan was originally established by the taxpayer on date a date prior to date and has since been amended from time to time by the taxpayer for a number of reasons including as determined to be necessary to comply with changes in applicable law the pension_protection_act of ppa modified the funding rules generally for defined benefit plans sec_104 of ppa provides a delayed effective date for these modifications for any plan in existence on date that was an eligible_cooperative plan for its plan_year that includes date with respect to any plan_year beginning before the earlier of the first plan_year for which the plan ceases to be an eligible_cooperative plan or date pursuant to sec_104 of ppa a plan that for a plan_year is maintained by more than one employer percent of which are rural cooperatives as defined in sec_401 of the code without regard to sec_401 is an eligible_cooperative plan for the plan_year during the plan_year that includes date the plan_year and each subsequent plan_year the plan has been maintained by more than one employer further including new employers that first adopted the plan after date percent of the employers that maintain the plan during the plan_year and each subsequent plan_year have been rural cooperatives thus the plan is an eligible_cooperative plan for all relevant plan years the cooperative and small_employer charity pension flexibility act of csec act further modified the funding rules for certain defined benefit plans generally plans to which sec_104 of ppa applied in the absence of an election by the plan_administrator of such a plan not to have these further modifications apply to the plan each a csec plan for a csec plan that has not made such an election the csec act generally reinstates the pre-ppa funding rules and eliminates ppa’s delayed effective date the plan_administrator has not made an election to not have these further modifications of the funding rules apply with respect to the plan and therefore the plan has been treated as a csec plan for each plan_year beginning on or after january ------- in addition to including an application from the taxpayer on form_5300 application_for determination for employee_benefit_plan for a determination_letter with respect to the form of the plan the application_for favorable determination that ultimately culminated in the taxpayer's receipt of its current favorable determination_letter also plr-128229-18 included individual applications for determination letters on behalf of several employers that adopted the plan with respect to their employees prior to the date of the application but after date the application_for favorable determination filed for each of these employers listed the date that the employer adopted the plan employer adoption date as the date that the employer first established and maintained the plan each such employer received a separate letter of favorable determination that is applicable to the plan established by that employer as of the applicable_employer adoption date the hybrid amendment benefits currently accrue under the plan under different basic_benefit accrual formulas as elected by adopting employers each of the currently available formulas is a traditional defined benefit formula taxpayer intends to amend the plan hybrid amendment to permit adopting employers to elect a cash balance formula a cash balance formula is referred to under applicable law as a statutory hybrid formula and is a type of benefit_accrual formula to which different rules apply for certain purposes under the code than the rules that apply to a traditional benefit_accrual formula in relevant part the hybrid amendment will include that an adopting employer would be permitted to select in its adoption_agreement prospective benefit_accrual under the plan for its employees under a cash balance formula interest credits would be provided in accordance with the market rate of return rules set forth in sec_1_411_b_5_-1 of the income_tax regulations employer contributions to the plan related to accruals under the cash balance formula from adopting employers that have selected benefit_accrual under the cash balance formula would be held in a separate subset of plan assets in the plan's trust generally available to pay benefits that do not accrue under the cash balance formula only if other plan assets are insufficient to pay those other plan benefits the taxpayer expects that new employers that are not currently adopting employers with respect to the plan may adopt the plan and first establish and maintain the plan with respect to their employees both through the date the plan is amended by the hybrid amendment as well as after the plan is amended at all times the taxpayer intends to ensure that after adoption by any such new adopting employers at least percent of the employers that maintain the plan will be rural cooperatives rulings requested taxpayer requests rulings that plr-128229-18 the plan does not fail to be a csec plan for purposes of sec_413 solely as a result of the amendment to the plan to add the cash balance formula described as part of the hybrid amendment to the extent applicable the deduction limitations described in sec_413 apply to amounts contributed to or under the plan by an employer that has adopted provisions of the plan providing for benefit_accrual only by reference to the statutory hybrid formula added by the hybrid amendment for purposes of sec_433 the date as of which the plan was first established or maintained including any portion of the plan first established and maintained by an employer that has adopted provisions of the plan providing for benefit_accrual only by reference to the statutory hybrid formula is date law sec_104 of ppa provides generally that the amendments made by title i of ppa to the minimum_funding standards and rules relating to benefit limitations for defined benefit plans set forth in the code and corresponding provisions of erisa shall not apply to a plan in existence on date that was an eligible_cooperative plan for its plan_year that includes date with respect to any plan_year beginning before the earlier of the first plan_year for which the plan ceases to be an eligible_cooperative plan or date section b of the preservation of access to care for medicare beneficiaries and pension relief act of pra amended sec_104 of ppa to replace the term eligible_cooperative plan with eligible_cooperative plan or an eligible charity plan each place where the former term appeared sec_104 of ppa provides that a plan is treated as an eligible_cooperative plan for a plan_year if the plan is maintained by more than employer and at least percent of the employers are rural cooperatives as defined in sec_401 of the code determined without regard to sec_401 sec_411 provides special rules for applicable defined benefit plans and plans that have an effect similar to an applicable_defined_benefit_plan sec_411 provides that the term applicable_defined_benefit_plan means a defined_benefit_plan under which the accrued_benefit or any portion thereof i sec_1 the plan is an eligible_cooperative plan and therefore treatment of the plan under sec_104 of ppa was not affected by the amendment made by section b of pra plr-128229-18 calculated as the balance of a hypothetical account maintained for the participant or as an accumulated percentage of the participant's final_average_compensation sec_411 provides a special rule regarding compliance of a plan with the age discrimination rules described in sec_411 with respect to participants in a plan immediately before and after an amendment to the plan to convert the plan to an applicable_defined_benefit_plan sec_413 provides special rules in the case of a plan maintained by more than one employer sec_413 provides generally that in the case of a csec plan including a plan to which sec_413 also applies many of the special rules described in sec_413 apply without modification sec_413 provides that notwithstanding any other provision of sec_413 the requirements of sec_412 are determined for a csec plan as if all participants in the plan were employed by a single employer sec_413 provides that notwithstanding any other provision of sec_413 each applicable limitation provided by sec_404 is determined with respect to a csec plan as if all participants in the plan were employed by a single employer that section also provides that the amounts contributed to or under a csec plan by each employer that maintains the plan for the portion of the taxable_year included within a plan_year is considered not to exceed the applicable limitation if the anticipated employer contributions for such plan_year of all employers determined in a reasonable manner not inconsistent with regulations prescribed by the secretary do not exceed that limitation that section provides further that if those anticipated contributions exceed that limitation the portion of each such employer's contributions that is not deductible under sec_404 is determined in accordance with regulations prescribed by the secretary sec_414 of the code provides that the term csec plan includes a defined_benefit_plan other than a multiemployer_plan to which sec_104 of ppa applies without regard to the original date sunset of the sec_104 special rules as enacted in ppa the amendments to sec_104 made by section b of pra or sec_104 ceasing to apply to the plan by virtue of the plan being treated as a csec plan sec_414 provides that if a plan falls within the definition of a csec plan the plan is a csec plan unless the plan_sponsor elects not later than the close of the first plan_year of the plan beginning after date for the plan not to be plr-128229-18 treated as a csec plan this election shall take effect for that plan_year and once made may be revoked only with consent of the secretary under sec_414 of the code sec_104 of ppa as amended by section b of pra ceases to apply to such a plan that has not made an election not to be treated as a csec plan as of the first date as of which such plan is treated as a csec plan sec_433 defines plan_sponsor for purposes of a csec plan to mean the association committee joint board_of trustees or other similar group of representatives of the parties who establish or maintain the plan sec_1_411_a_13_-1 provides that the term statutory_hybrid_plan means a defined_benefit_plan that includes a statutory hybrid formula sec_1_413-2 provides that the term sec_413 plan means a plan that is described in sec_413 and each trust that is a part of the plan and that a plan and each trust that is a part of the plan is deemed to be a sec_413 plan if is described in sec_1_413-2 sec_1_413-2 specifies that a plan and each trust that is a part of the plan is a sec_413 plan if the plan is a single_plan within the meaning of sec_413 and sec_1_413-1 and the plan is maintained by more than one employer for this purpose the number of employers maintaining the plan is determined by treating any employers described in sec_414 or sec_414 whichever is applicable as if all of those employers are a single employer and the rules relating to the time an employer maintains a plan are set forth in sec_1_411_a_-5 sec_1_413-1 provides that a plan that provides benefits for employees of more than one employer is considered a single_plan for purposes of sec_1_413-2 if the plan is considered a single_plan for purposes of applying sec_414 pursuant to sec_1_414_l_-1 sec_1_414_l_-1 provides that a plan is a single_plan if and only if on an ongoing basis all of the plan assets are available to pay benefits to employees who are covered by the plan and their beneficiaries for this purpose all the assets of a plan will not fail to be available to provide all the benefits of a plan merely because the plan is funded in part or in whole with allocated insurance instruments under sec_1_414_l_-1 a plan does not fail to be a single_plan merely because of the following plr-128229-18 the plan has several distinct benefit structures that apply either to the same or different participants the plan has several plan documents several employers whether or not affiliated contribute to the plan the assets of the plan are invested in several trusts or annuity_contracts or separate_accounting is maintained for purposes of cost allocation but not for purposes of providing benefits under the plan sec_1_414_l_-1 provides further that more than one plan will exist if a portion of the plan assets is not available to pay some of the benefits under the regulation this will be the case even if each plan has the same benefit structure or plan document or if all or part of the assets is invested in one trust with separate_accounting with respect to each plan sec_1_411_b_5_-1 example illustrates circumstances under which plan assets are generally separately accounted under a plan such that certain plan assets are generally held to pay benefits under a statutory hybrid benefit formula and other plan assets are generally held to pay other plan benefits in a manner not inconsistent with the sec_414 single_plan requirements under the example although benefits accrued under a statutory hybrid formula are generally paid from a separately accounted portion of the plan's assets if the assets in the separately accounted portion earmarked to pay statutory hybrid formula benefits are insufficient to pay benefits accrued under that formula the plan provides that other plan assets from which benefits accrued under a different benefit formula are generally paid are available to pay the statutory hybrid formula benefits in accordance with the requirement that all assets of the plan be available to pay all plan benefits sec_1_411_b_5_-1 example includes similar language analysis i effect of hybrid amendment on plan’s status as a csec plan sec_414 of the code provides that the term csec plan includes a defined_benefit_plan other than a multiemployer_plan to which sec_104 of ppa applies if each of the following are disregarded the original date sunset of the sec_104 special rules as enacted in ppa the amendments to sec_104 made by section b of pra and the fact that sec_104 ceases to apply to a plan as of the first date the plan is treated as a csec plan sec_414 provides that a plan that falls within the definition of a csec plan is a csec plan unless the plan_sponsor makes an election that the plan not be treated as a csec plan in other words if sec_104 of ppa would apply to a plan during a plan_year ignoring the original date sunset the pra amendment and the csec act amendment then the plr-128229-18 plan is a csec plan for that plan_year in the absence of the plan sponsor’s election for the plan not to be treated as a csec plan for sec_104 of ppa as modified to apply during an applicable_plan year a defined_benefit_plan must have been inexistence on date and an eligible_cooperative plan during the plan_year that includes date and each subsequent plan_year through and including the applicable_plan year accordingly a defined_benefit_plan that is an eligible_cooperative plan on and during the plan_year that includes date and during each subsequent plan_year through the applicable_plan year will in the absence of a timely election to the contrary by the plan_sponsor be treated as a csec plan for each such plan_year an eligible_cooperative plan includes a plan that is maintained by more than one employer and at least percent of the employers are rural cooperatives percent test treatment as a csec plan would end as of the first day of the first plan_year during which such a plan ceases to be an eligible_cooperative plan there is no requirement under either sec_414 of the code or sec_104 of ppa that the employers that maintain a csec plan in any applicable_plan year must be the same employers that maintained the plan in any other applicable_plan year sec_413 provides special rules in the case of a plan such as an eligible_cooperative plan that is maintained by more than one employer sec_413 provides special rules for csec plans that apply in lieu of the rules that would otherwise apply under sec_413 under sec_413 many of the special rules described in sec_413 apply without modification however sec_413 and sec_413 provide special funding and deduction rules with respect to a csec plan that in certain cases may not have applied to the plan under sec_413 the rules of sec_413 apply to a csec plan to the extent those rules are not superseded by the rules of sec_413 accordingly to be a csec plan with respect to any given plan_year the plan must have been in existence on date be a single_plan maintained by more than one employer during the plan_year that includes date and each subsequent plan_year through and including the plan_year in question and satisfy the percent test for the plan_year that includes date and each subsequent plan_year through and including the plan_year in question a existence of the plan on date based on the facts provided the plan was in existence on date was maintained by more than one employer during the plan_year the plan_year that includes date and at least percent of the employers that maintained the plan during the plan_year were rural cooperatives that is the plan satisfies the percent test for the plan_year accordingly sec_104 of ppa applies to plr-128229-18 the plan for the plan_year the fact that the original effective date or date the plan was originally adopted was completed on form_5300 with respect to an adopting employer using a date after date that the adopting employer first began to maintain the plan and not the plan's original effective date does not result in the plan or any portion of the plan not being in existence on date the form_5300 is an administrative form that may be used by the plan_sponsor or adopting employer of a multiple-employer plan for purposes of applying for an individual favorable determination_letter the instructions to form_5300 explicitly contemplate in certain situations more than one form_5300 being filed with respect to a single qualified_plan amendment of the plan to add the hybrid amendment does not affect the conclusion that the plan was in existence on date under sec_411 inclusion of a statutory hybrid formula under a plan does not result in the plan being treated as two separate plans specifically sec_1_411_a_13_-1 provides that the term statutory_hybrid_plan means a defined_benefit_plan ie a single_plan that includes a statutory hybrid formula in other words a statutory_hybrid_plan is a single defined_benefit_plan that includes a specific benefit formula or formulas one or more of which is a statutory hybrid formula this is consistent with the statutory language in sec_411 which provides that the term applicable_defined_benefit_plan means a defined_benefit_plan under which the accrued_benefit or any portion thereof is calculated as the balance of a hypothetical account maintained for the participant or as an accumulated percentage of the participant's final_average_compensation it is also consistent with the statutory language in sec_411 which provides a special rule regarding compliance of a plan with applicable age discrimination rules in the case that the plan is converted to an applicable_defined_benefit_plan in that case the statutory language contemplates that the resulting single_plan will include two or more separate benefit formulas at least one of which will be a newly added statutory hybrid formula in context these provisions indicate that a plan--the same plan--is in existence for purposes of sec_401 and sec_411 both before and after an amendment to the plan to add a statutory hybrid formula accordingly the plan including the portion of the plan added by the hybrid amendment does not fail to be the same plan that was in existence on date merely because the plan was amended by the hybrid amendment adopted and effective as of a later date to include a statutory hybrid formula b status as a single_plan maintained by more than one employer to continue to be a csec plan after amendment to include the statutory hybrid formula the plan must be maintained by more than one employer and a single_plan as described in sec_1_414_l_-1 adopting the hybrid amendment by itself does not affect whether the plan is maintained by more than one employer based on the facts provided the plan at all relevant times has had more than one adopting plr-128229-18 employer accordingly as amended by the hybrid amendment the plan continues to satisfy the requirement that it must be maintained by more than one employer to satisfy the requirement that the plan must be a single_plan under sec_1_414_l_-1 all of the plan's assets must be available on an ongoing basis to pay benefits to employees who are covered by the plan and their beneficiaries under sec_1 l - b v a plan does not fail to be a single_plan merely because separate_accounting is maintained for purposes of cost allocation but not for purposes of providing benefits under the plan however under sec_1_414_l_-1 more than one plan will exist if a portion of the plan assets is not available to pay some of the plan benefits even if each then determined to be separate plan has the same benefit structure or plan document or if all or part of the assets are invested in one trust with separate_accounting with respect to each then determined to be separate plan the preamble to the sec_414 regulations instructs that it is intended that the concept of a single_plan contained in these regulations will be applied for other purposes where it is necessary to determine whether an arrangement involves one or more than one plan including as examples references to sec_404 sec_411 and sec_412 under the plan allocation of plan costs funding to the employers that maintain the plan is determined separately for each employer pursuant to formulas developed for this purpose this does not affect the requirements for the plan to be considered a single_plan under sec_1_414_l_-1 which permits that a type of separate_accounting is maintained by contributing employers for purposes of determining cost allocation in addition it also does not affect those requirements if under the plan as amended by the hybrid amendment employer contributions to the plan related to accruals under the statutory hybrid formula from adopting employers are held in a separate subset of plan assets in the plan's trust where they are available to pay benefits that do not accrue under the statutory hybrid formula only if the corresponding other plan assets are insufficient to pay those other plan benefits such general separate_accounting and use of plan assets consistent with that described sec_1_411_b_5_-1 example sec_1 and do not result in any portion of the plan assets not being available on an ongoing basis to pay benefits to employees who are covered by the plan and their beneficiaries as set forth in example sec_1 and even if certain assets are available to pay certain benefits only in the case of an emergency which emergency could occur at any time those plan assets remain available on an ongoing basis to pay any benefits under the plan consistent with applicable_requirements to be considered a single_plan under sec_1_414_l_-1 accordingly the plan does not cease to be considered a single_plan merely because the plan is amended by the hybrid amendment fed reg date plr-128229-18 c satisfaction of the percent test based on the facts provided at least percent of the employers that maintained the plan during the plan_year were rural cooperatives that is the plan satisfies the percent test for the plan_year further based on the facts provided additional employers became adopting employers with respect to the plan during plan years subsequent to the plan_year after adoption of the plan by each such additional adopting employer at least percent of the employers that maintained the plan were rural cooperatives accordingly adoption of the plan by one or more new additional employers that are rural cooperatives or that do not cause the plan to fail to be maintained by employers at least percent of which are rural cooperatives does not by itself cause the plan to fail to satisfy the percent test in addition amendment of the plan by the hybrid amendment by itself does not affect whether the plan satisfies the percent test because the amendment by itself neither adds nor removes any adopting employer therefore the plan including any portion of the plan newly established and maintained by an adopting employer after date is an eligible_cooperative plan for the plan_year and each subsequent plan_year based on the foregoing the plan was in existence on date satisfies the applicable sec_413 requirements as a single_plan maintained by more than one employer during the plan_year that includes date and each subsequent plan_year through and including the plan_year in which the hybrid amendment is adopted and satisfies the percent test for the plan_year that includes date and each subsequent plan_year through and including the plan_year in which the hybrid amendment is adopted accordingly even after amendment of the plan by the hybrid amendment sec_104 of ppa continues to apply to the plan during the plan_year and each subsequent relevant plan_year as if that section did not originally include a sunset provision had not been subsequently amended and did not cease to apply based on subsequent legislation in addition no election has been made with respect to the plan that it not be treated as a csec plan therefore amendment of the plan by the hybrid amendment will not cause the plan to cease to be a csec plan ii sec_413 deduction limitations for an employer who only adopts the statutory hybrid formula added by the hybrid amendment sec_413 provides that in the case of a csec plan notwithstanding any other provision of sec_413 each applicable limitation provided by sec_404 shall be determined as if all participants in the plan were employed by a single employer that section also provides that the amounts contributed to or under the plan by each employer who maintains the plan for the portion of the taxable_year included within a plan_year shall be considered not to exceed such applicable limitation if the anticipated employer contributions for such plan_year of all employers determined in a reasonable manner not inconsistent with regulations prescribed by the secretary do not exceed such limitation that section provides further that if such anticipated contributions plr-128229-18 exceed such limitation the portion of each such employer's contributions that is not deductible under sec_404 shall be determined in accordance with regulations prescribed by the secretary based on the analysis above the plan as amended by the hybrid amendment is a csec plan in addition neither the plan nor any portion of the plan ceases to be a csec plan merely because an employer adopts and provides for benefit_accrual only under the statutory hybrid formula that was added to the plan by the hybrid amendment therefore the sec_404 deduction to the extent applicable for an employer that adopts provisions of the plan providing for benefit_accrual only by reference to the statutory hybrid formula added by the hybrid amendment must be determined in accordance with sec_413 iii plan_sponsor for purposes of sec_433 based on the foregoing the plan's status as a csec plan is not affected by the hybrid amendment or the adoption of the plan including the statutory hybrid formula by a new employer on or after any particular date therefore for purposes of sec_433 the taxpayer is the plan_sponsor of the plan as defined in sec_433 from the time that the plan was first established or maintained on date based on the foregoing this conclusion is not affected by the fact that the original effective date or date the plan was originally adopted was shown on form_5300 with respect to an adopting employer as the date that the adopting employer first began to maintain the plan and not the plan's original effective or adoption date by the plan_sponsor on date the conclusion is also not affected by the fact that an adopting employer received an individual determination_letter from the irs indicating that the plan with respect to that employer had been first adopted as of the date the employer first began to maintain the plan and not the plan's original effective or adoption date by the plan_sponsor on date therefore the taxpayer is the plan_sponsor of the plan for purposes of sec_433 notwithstanding that other employers began to maintain the plan after date including any employers that adopted provisions of the plan providing for benefit_accrual only by reference to the statutory hybrid formula conclusion as described more fully above the plan does not fail to be a csec plan for purposes of sec_413 during any plan_year commencing on or after january --------as a result of an amendment to the plan the hybrid amendment adopted and effective after such date to include an available statutory hybrid formula because the plan was in existence on date and the hybrid amendment by itself neither causes the plan to cease to be an eligible_cooperative plan nor causes the plan to fail to satisfy applicable_requirements under sec_413 during the plan_year or any other relevant plan_year although certain plan assets attributable to certain benefit accruals under the statutory hybrid formula may be separately accounted for such that those separate plan plr-128229-18 assets would only be available to pay benefits attributable to other benefit accruals under the plan only in what would be expected to be rare situations those plan assets remain available on an ongoing basis to pay any benefits under the plan consistent with applicable_requirements further neither the plan nor the portion of the plan first established and maintained by an employer under which the accrued_benefit is determined solely by reference to the statutory hybrid formula fails to be a csec plan for purposes of sec_413 during the plan_year in which that portion of the plan is so established and maintained merely because the plan's statutory hybrid formula was not in existence on date or merely because that employer first adopted and maintained the plan as of a later date finally the taxpayer is the plan_sponsor of the plan for purposes of sec_433 as defined in sec_433 notwithstanding that other employers began to maintain the plan after date including any employers that adopted provisions of the plan providing for benefit_accrual only by reference to the statutory hybrid formula based on the facts and representations provided by taxpayer the plan does not fail to be a csec plan for purposes of sec_413 solely as a result of the amendment to the plan to add the cash balance formula described as part of the hybrid amendment to the extent applicable the deduction limitations described in sec_413 apply to amounts contributed to or under the plan by an employer that has adopted provisions of the plan providing for benefit_accrual only by reference to the statutory hybrid formula added by the hybrid amendment for purposes of sec_433 the taxpayer is the plan_sponsor of the plan as defined in sec_433 from the time that the plan was first established or maintained on date notwithstanding that other employers began to maintain the plan after date including any employers that adopted provisions of the plan providing for benefit_accrual only by reference to the statutory hybrid formula these rulings are based on the assumption that the plan is qualified under sec_401 the rulings contained in this letter are based upon information and representations submitted by the taxpayer through its authorized representative and accompanied by a penalty of perjury statement executed by an appropriate party as specified in revproc_2019_1 2018_1_irb_1 b this office has not verified any of the material submitted in support of the request_for_ruling and such material is subject_to verification on examination the associate office will revoke or modify a letter_ruling and apply the revocation retroactively if there has been a misstatement or omission of controlling facts the facts at the time of the transaction are materially different from the plr-128229-18 controlling facts on which the ruling was based or in the case of a transaction involving a continuing action or series of actions the controlling facts change during the course of the transaction see revproc_2019_1 sec_11 except as expressly provided above no opinion is expressed or implied concerning the federal_income_tax consequences of any other aspects of any transaction or item_of_income described in this letter_ruling 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 in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representatives sincerely linda s f marshall senior counsel qualified_plans branch office of associate chief_counsel employee_benefits exempt_organizations and employment_taxes cc


internal_revenue_service number release date index number ----------------------- --------------- --------------------------------------- --------------------------------------- in re --------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ------------------------ id no ---------------- telephone number -------------------- refer reply to cc intl b06 plr-120415-14 date date ty ------ legend taxpayer company z country y year year year year date date dear ------------- ---------------- ----------------------------- ---------- ------- ------- ------- ------- ------------------------- -------------------------- this responds to a letter dated date and submitted by your representatives the letter requests that the internal_revenue_service service grant taxpayer consent to use the methods described in sec_1_482-7 and notice_2005_99 2005_52_cb_1214 for measuring timing and identifying employee stock_options restricted shares and restricted share units for purposes of determining the amount taxpayer must include in its cost_sharing_arrangement csa as intangible_development_costs idcs for year and subsequent tax years the rulings contained in this letter are based upon information and representations submitted by taxpayer and its representatives and accompanied by a penalties of perjury statement executed by an appropriate party this office has not verified any of the material submitted in support of the request for rulings verification of the factual plr-120415-14 information representations and other data may be required as part of the audit process facts taxpayer a domestic_corporation was incorporated in year on date in year taxpayer and its wholly-owned subsidiary company z entered into an agreement they intended would constitute a csa within the meaning of sec_1_482-7 since the onset of the csa taxpayer has granted stock-based compensation sbc with respect to shares of taxpayer’s common_stock to its employees and employees of affiliates the csa provides that idcs include sbc granted on or after date to the extent required to comply with sec_1_482-7 as taken into account pursuant to the method provided in sec_1_482-7 default method on date in year taxpayer had an initial_public_offering and became publicly traded on an established u s securities market taxpayer currently has only one class of stock issued and outstanding the majority of taxpayer’s sbc grants vest in quarterly installments over a service period of four years with a one-year minimum service requirement some of taxpayer’s sbc grants vest over a period of two years and certain grants do not include the one-year minimum service requirement taxpayer filed this request for commissioner consent to prospectively change its method for measuring and timing sbc that taxpayer must include as idcs from the default method to the method described in sec_1_482-7 which was extended to certain restricted shares and restricted share units by notice_2005_99 elective method taxpayer also requested consent to prospectively change its method for identifying sbc with the intangible development activity ida from grant_date identification as provided in sec_1_482-7 to period-by-period identification as provided in notice_2005_99 taxpayer has made the following representations as stated in its submissions plr-120415-14 the sbc with respect to which taxpayer requests to use the method of measurement and timing and period-by-period identification provided in sec_1_482-7 and notice_2005_99 are based on publicly traded stock within the meaning of sec_1_482-7 with respect to its csa taxpayer is in compliance and will remain in compliance with all record-keeping requirements of the internal_revenue_code_of_1986 as amended and the regulations thereunder including sec_1_482-7 upon request taxpayer will timely provide to the commissioner records kept pursuant to such requirements taxpayer’s sbc is not subject_to market conditions or significant post-vesting restrictions within the meaning of statement of financial_accounting standards no share-based payment financial_accounting standards board rev fa sec_123r the service and performance vesting restrictions do not have a substantial effect on the fair value of the sbc under u s generally_accepted_accounting_principles gaap and do not result in unreasonably long vesting periods within the meaning of fa sec_123r with respect to any sbc the fair value of which is not reflected as a charge against income in audited financial statements taxpayer will identify such sbc for purposes of sec_1_482-7 as if the fair value of such compensation were reflected as a charge against income in audited financial statements taxpayer will treat sbc granted but not vested during the term of the csa as vesting immediately before expiration or termination of the csa for purposes of sec_1_482-7 as provided for in notice_2005_99 for all sbc granted before the first day of the first taxable_year following receipt of the commissioner’s consent legacy sbc taxpayer and all controlled participants to the csa will use the method of measurement and timing provided in sec_1_482-7 and grant_date identification provided in sec_1_482-7 until all legacy sbc has been exercised or lapsed for all stock_options issued with respect to publicly traded stock within the meaning of sec_1_482-7 granted in or after year taxpayer and all controlled participants to the csa will use the elective method of measurement and timing and the period-by-period identification method provided in notice_2005_99 for all restricted shares and restricted share units issued with respect to publicly traded stock within the meaning of sec_1_482-7 granted plr-120415-14 in or after year that are a nonvested equity shares or nonvested equity share units within the meaning of fa sec_123r and b are not subject_to market conditions or significant post-vesting restrictions within the meaning of fa sec_123r taxpayer and all controlled participants to the csa will use the elective method of measurement and timing and period-by-period identification taxpayer will apply the period-by-period identification method provided in notice_2005_99 consistently under the principles of sec_1_482-7 taxpayer will amend its csa to elect the elective method of measurement and timing and specify the use of period-by-period identification within days of receiving the commissioner’s consent to change methods as requested law measurement and timing of sbc related to intangible development sec_1_482-7 provides the default method for measurement and timing of sbc idcs as follows except as otherwise provided in this paragraph d iii the cost attributable to stock-based compensation is equal to the amount allowable to the controlled participant as a deduction for federal_income_tax purposes with respect to that stock-based compensation_for example under sec_83 and is taken into account as an idc under this section for the taxable_year for which the deduction is allowable sec_1_482-7 provides the alternative elective method for measurement and timing of sbc idcs with respect to options on publicly traded stock as follows with respect to stock-based compensation in the form of options on publicly traded stock the controlled participants in a csa may elect to take into account all idcs attributable to those stock_options in the same amount and as of the same time as the fair value of the stock_options reflected as a charge against income in audited financial statements or disclosed in footnotes to such financial statements provided that such statements are prepared in accordance with united_states generally_accepted_accounting_principles by or on behalf of the company issuing the publicly traded stock sec_1_482-7 provides for the time and manner of making the election in relevant part as follows plr-120415-14 the election described in this paragraph d iii b is made by an explicit reference to the election in the written contract required by paragraph k of this section or in a written amendment to the csa entered into with the consent of the commissioner pursuant to paragraph d iii c of this section sec_1_482-7 provides in relevant part i f controlled participants already have granted stock_options that have been or will be taken into account under the general_rule of paragraph d iii a of this section then except in cases specified in the last sentence of paragraph d iii b of this section the controlled participants may make the election described in paragraph d iii b of this section only with the consent of the commissioner and the consent will apply only to stock_options granted in taxable years subsequent to the taxable_year in which consent is obtained notice_2005_991 extended the elective method to nonvested equity shares or nonvested equity share units within the meaning of statement of financial_accounting standards no share- based payment financial_accounting standards board rev sfa sec_123r provided that those shares or share units i constitute or are issued with respect to publicly traded stock within the meaning of sec_1_482-7 and ii are not subject_to market conditions or significant post-vesting restrictions within the meaning of sfa sec_123r we refer to such shares and share units as restricted shares and share units an election to apply the elective method to restricted shares or share units is generally made in the time and manner set forth in sec_1_482-7 however the consent of the commissioner is not required to elect the elective method for restricted shares and share units if the election is made by a written amendment to the csa not later than the latest due_date with regard to extensions of a federal_income_tax return of any controlled participant for the first taxable_year beginning after date identifying sbc related to intangible development sec_1_482-7 provides the rule for identification of sbc with the ida grant_date identification in relevant part as follows notice_2005_99 refers to the sbc rules contained in sec_1_482-7 the materially similar predecessor of the rules in sec_1_482-7 that are applicable in the present case plr-120415-14 the determination of whether stock-based compensation is directly identified with or reasonably allocable to the ida is made as of the date that the stock-based compensation is granted accordingly all stock- based compensation that is granted during the term of the csa and at date of grant is directly identified with or reasonably allocable to the ida is included as an idc under paragraph d of this section notice_2005_99 provides that a taxpayer may choose to determine whether sbc measured by the elective method is related to the ida by analyzing the activities of the employee recipients of the sbc by reference to financial reporting periods identifying the related compensation on a period-by-period basis period-by-period identification rather than using grant_date identification notice_2005_99 further provides taxpayers’ implementation of this identification method based on financial reporting periods must meet four requirements first the identification methodology must be applied consistently under the principles of sec_1 d iii c second any stock-based compensation the fair value of which is not reflected as a charge against income in audited financial statements for example as in the case of certain stock_options the fair value of which was disclosed in footnotes prior to the effective date of sfa sec_123r must be identified for purposes of sec_1_482-7 as if the fair value of such compensation were reflected as a charge against income in audited financial statements third as under the grant-date identification rule controlled participants using this identification methodology must exclude stock-based compensation granted prior to the term of the qcsa fourth and finally stock-based compensation granted but not vested during the term of the qcsa must be treated as vesting immediately before expiration or termination of the qcsa for purposes of sec_1_482-7 under this final requirement if costs attributable to stock-based compensation granted during the term of the qcsa are allocable under u s gaap to reporting periods subsequent to the term of the qcsa the determination of whether these costs must be taken into account as intangible_development_costs must be based on the employee's activities as of the financial reporting_period during which the date of the expiration or termination of the qcsa occurs generally pursuant to sec_1_482-7 and b a change_of identification method may be made only by a written amendment to the csa entered into with the consent of the commissioner however notice_2005_99 further provides that the consent of the commissioner is not required to change from grant_date identification to period-by-period identification if such written amendment is made no later than the latest due_date with regard to extensions of a federal_income_tax return of any controlled participant for the first taxable_year beginning after date plr-120415-14 in applying period-by-period identification notice_2005_99 provides a ctivities within the intangible development area are not necessarily coextensive with those activities classified as research_and_development for financial reporting purposes consequently nothing in this notice should be interpreted as eliminating the requirement to take into account all stock-based compensation costs related to the intangible development area controlled participants must identify the stock-based compensation that is related to the intangible development area notwithstanding that the activities conducted to develop intangibles covered by the qcsa may differ from the activities classified as research_and_development for u s gaap purposes analysis based on the representations taxpayer has made the service grants taxpayer prospective consent to change to the elective method for measurement and timing of employee stock_options restricted shares or restricted share units pursuant to sec_1_482-7 and notice_2005_99 for purposes of determining the amount taxpayer must include as idcs the service also grants taxpayer prospective consent to change to period-by-period identification of sbc with the ida pursuant to notice_2005_99 this consent is effective for days from the date of this letter therefore if taxpayer chooses to adopt the elective method and period-by-period identification it must make the written election in its csa within days from the date of this letter the sole purpose of this private_letter_ruling is to grant consent for taxpayer to use the elective method and period-by-period identification for purposes of including sbc as an idc that taxpayer must share for purposes of its csa except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter including the csa or concerning the validity of any provisions within the csa 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-120415-14 in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representatives sincerely _____________________________________ marissa k rensen assistant to the branch chief branch office of associate chief_counsel international cc


internal_revenue_service number release date index number ------------------------ ---------------------------- ----------------------------------------- -------------------------------------------------- -------------------- --------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ------------------------ id no ------------------ ---------------------------------------------------- telephone number ---------------------- refer reply to cc psi b06 plr-144687-12 date date re request for private_letter_ruling under sec_48 and legend taxpayer holdco member1 member2 ----------------------------------------- ------------------------ -------------------------------------------------------- ------------------------ --------------------- ------------------------- --------------------- ------------------------- -------------- -------------- ------------------------------------ ------------------ ---------------------------- ------------------------------------------------ ------------------------------------------------------------------------------------------ state1 state2 project county1 county2 product segment ----------------------------------------------------------------------------------------------------------- a b c number1 number2 number3 number4 year1 year2 date1 ------------------------------ --------------------------------------------------- ------------------------------------------------------- ----- ---- ----- ------------ ------- ------- --------------------------- plr-144687-12 date2 ------------------------ dear --------------- this letter responds to a letter dated date and supplemental correspondence submitted by taxpayer requesting a private_letter_ruling that certain circumstances will not prevent the project from being placed_in_service in year1 for purposes of sec_48 sec_167 and sec_168 of the internal_revenue_code facts taxpayer represents that the facts relating to its request are as follows taxpayer a state1 limited_liability_company is a developer of renewable energy projects taxpayer uses the accrual_method of accounting taxpayer is developing a number1 megawatt solar photovoltaic pv power generation facility in state2 that is referred to as the project taxpayer has two members member1 and member2 both of which are disregarded entities for federal tax purposes the first regarded entity in the ownership chain of both member1 and member2 is holdco taxpayer is building the project in county1 and county2 of state2 the main components of the project include i product each of which is a number2 megawatt alternating current pv block consisting of solar panel modules mounted on a single- axis tracking system a number2 megawatt alternating current inverter station and a medium voltage step-up pad mount transformer and ii the electrical gathering and transmission facilities including electrical substations the project will have number3 products totaling number4 solar panel modules and number3 inverters by date2 physical construction will have been completed on all components of the project all of the components will have been commissioned and accepted a final commissioning certificate will have been issued for the project as a whole the taxpayer will have all the permits and licenses needed to operate the project will be synchronized to the power grid legal_title and control_over the project will have been conveyed to the taxpayer and the project will be transmitting energy on a regular and routine basis the electricity generated by the project will be connect to the grid and transmit power through a owned and operated by b the grid is controlled by c the electricity generated will be sold to b under a power purchase agreement under the power purchase agreement the point of interconnection to the grid and delivery of the plr-144687-12 electricity is a under the power purchase agreement the project must achieve full capacity deliverability status which is measured not only by the quantity and quality of the electricity produced by the project but also by the completion of various deliverability and reliability network upgrades the network upgrades to the network by b all of the network upgrades are expected to be completed by date2 however the upgrade to segment is the subject of litigation by local residents and such litigation may delay the installation of the upgrade beyond date1 c the controller of the grid has determined that the project will achieve full capacity deliverability status even if the upgrade to segment is not installed however production of electricity by the project may be curtailed by b during the installation of the upgrade to segment under instructions from c to protect transmission system reliability ruling requested taxpayer requests the following ruling the project will not be precluded from being in placed service in year1 for purposes of sec_48 sec_167 and sec_168 if more frequent than anticipated curtailment of the project occurs due to unanticipated delays in completing segment law and analysis sec_48 of the code provides for an energy_credit equal to percent of the cost_basis of qualifying energy_property placed_in_service before date sec_48 of the code provides that energy_property includes equipment which uses solar_energy to generate electricity to heat or cool or provide hot water for use in a structure or to provide solar process heat excepting property used to generate energy for the purposes of heating a swimming pool sec_1_48-9 of the income_tax regulations provides that in order to qualify as energy_property under sec_48 of the code property must be depreciable_property with an estimated_useful_life when placed_in_service of at least three years and constructed after certain dates sec_1_48-9 of the regulations provides as follows d solar_energy property- in general energy_property includes solar_energy_property the term solar_energy_property includes equipment and materials and parts related to the functioning of such equipment that use solar_energy directly to i generate electricity ii heat or cool a building or structure or iii provide hot water for use within a building or structure generally those functions are accomplished through the use of equipment such as collectors to absorb sunlight and create hot liquids or air storage tanks to store hot liquids rockbeds to store hot air plr-144687-12 thermostats to activate pumps or fans which circulate the hot liquids or air and heat exchangers to utilize hot liquids or air to create hot air or water property that uses as an energy source fuel or energy derived indirectly from solar_energy such as ocean thermal energy fossil fuel or wood is not considered solar_energy_property sec_1_48-9 of the regulations provides in part that solar_energy_property includes equipment that uses solar_energy to generate electricity and includes storage devices power conditioning equipment transfer equipment and parts related to the functioning of those items such property however does not include any equipment that transmits or uses the electricity generated sec_167 provides a depreciation deduction for the exhaustion wear_and_tear and obsolescence of property used in a trade_or_business or held_for_the_production_of_income the depreciation deduction provided by sec_167 for tangible_property placed_in_service after generally is determined under sec_168 this section prescribes two methods for determining depreciation allowances one method is the general depreciation system in sec_168 and the other method is the alternative_depreciation_system in sec_168 under either depreciation system the depreciation deduction is computed by using a prescribed depreciation method recovery_period and convention for purposes of the general depreciation system the depreciation method recovery_period and convention are determined by the property’s classification under sec_168 sec_168 provides that 5-year_property includes any property modifying the language of sec_48 which is equipment which uses solar or wind_energy to generate electricity sec_1_167_a_-11 of the income_tax regulations provides in part that property is first placed_in_service when first placed in a condition or state of readiness and availability for a specifically designed function it further provides that the provisions of sec_1_46-3 and d generally apply for purposes of determining the date on which property is placed_in_service in general property is placed_in_service in the taxable_year the property is placed in a condition or state of readiness and availability for a specifically designed function see sec_1_46-3 and sec_1_167_a_-11 placed_in_service is construed as having the same meaning for purposes of the investment_tax_credit under sec_46 and depreciation under sec_167 sec_1_46-3 provides examples of when property is in a condition of readiness and availability one of those examples is equipment that is acquired for a specifically assigned function and is operational but undergoing tests to eliminate any defects see also revrul_79_40 1979_1_cb_13 where machinery and equipment were placed_in_service in the year critical tests with appropriate materials and operational tests were completed another example in sec_1_46-3 involved operational farm equipment acquired and placed_in_service plr-144687-12 in a taxable_year even though it was not practical to use such equipment for its specifically designed function in the taxpayer’s business of farming until the following year several tax_court cases have addressed placed_in_service questions in the context of electric power plants in olgethorpe power corp v commissioner tcmemo_1990_505 and 89_tc_710 facilities can be deemed placed_in_service upon sustained power generation near rated capacity however if the facility operates on a regular basis but does not produce the projected output it may still be considered placed_in_service 46_f3d_382 5th cir nonacq 1995_2_cb_2 in the action on decision for sealy power the service stated that at a minimum the property would have to have been in a state of readiness sufficient to produce electricity on a sustained and reliable basis in commercial quantities aod finally in revrul_84_85 1984_1_cb_10 a solid_waste facility that was experiencing operational problems such that it was unable to operate at its rated capacity was nonetheless considered to have been placed_in_service since it was being operated on a regular basis and saleable steam was being produced however if a facility is merely operating on a test basis it is not placed_in_service until it is available for service on a regular basis consumers power v commissioner t c pincite the above-referenced cases and revenue rulings provide that the following are common factors to be considered in determining placed_in_service dates for power plants approval of required licenses and permits passage of control of the facility to taxpayer completion of critical tests commencement of daily or regular operations and synchronization into a power grid for generating electricity to produce income see generally revrul_76_256 1976_2_cb_46 and revrul_76_428 1976_2_cb_47 these factors are not exclusive - they are used as guideposts to determine whether looking at the totality of the facts and circumstances a facility has been placed_in_service the focus in determining a placed_in_service_date is on ascertaining from the relevant facts and circumstances the date the unit begins supplying product in such a manner that it is routinely available and is consistent with the unit’s design it is necessary to examine relevant factors occurring both before and after the claimed placed_in_service_date so that the date can be verified however a facility does not have to achieve full design output to be placed_in_service as long as it is in the process of ramping up its production levels subject_to exceptions that are beyond the taxpayer’s control the service has generally required actual operational use as a plr-144687-12 prerequisite for an asset to be deemed placed_in_service see eg 675_f2d_113 6th cir to be qualified_energy_property for purposes of the sec_48 energy_credit the facility must be placed_in_service before date similarly the period for tax depreciation of 5-year_property begins when the depreciable solar equipment is placed_in_service for purposes of the sec_48 energy_credit a facility is placed_in_service when it would be placed_in_service for depreciation purposes thus the project is placed_in_service when it is placed in a condition or state of readiness and availability for a specifically assigned function that is to produce and deliver electricity generated from solar_energy based on the facts provided and applying those facts to the factors delineated in revrul_76_256 the taxpayer represents that as of date all necessary permits and licenses with respect to the project will have been obtained the project will have been synchronized to the power grid for its function of generating electricity for production_of_income the critical tests for the various components of the project will have been completed the project will have been placed in the control of the taxpayer and taxpayer expects to have produced and sold more than a de_minimis amount of electricity generated by the project taxpayer further represents that it is expected that all network upgrades will be completed before date1 further if the upgrade to segment is not completed by date1 the project will nevertheless have full capacity deliverability status under the power purchase agreements and the rules governing the grid thus the project will be considered placed_in_service prior to date1 if the upgrade to segment is not completed by date1 power produced by the project may be curtailed during certain periods while that upgrade is being installed however the project is ready and available for use and capable of producing commercial quantities of electric power temporary curtailment for reasons beyond the control of taxpayer does not affect the status of the project as being placed_in_service see 24_fsupp_993 w d pa conclusions accordingly based solely on the representations submitted by taxpayer and the applicable law discussion above we conclude that the project will not be precluded from being in placed service in year1 for purposes of sec_48 sec_167 and sec_168 if the plr-144687-12 upgrade to segment is not completed by date1 and that results in curtailment of the power produced by the project for certain periods while the upgrade is being installed the above ruling is expressly conditioned upon taxpayer otherwise meeting the placed_in_service factors of revrul_76_256 for the project before date and upon the operation of the project in accordance with taxpayer’s representations except as specifically set forth above we express no opinion concerning the federal tax consequences of the facts described above under any other provisions of the code specifically no opinion is expressed or implied as to the entity classification of taxpayer holdco member1 or member2 or on when the project is actually placed_in_service by taxpayer this letter_ruling is directed only to taxpayer sec_6110 provides that it may not be used or cited as precedent in accordance with the power_of_attorney we are sending a copy of this letter to taxpayer’s authorized representative we are also sending a copy of the letter_ruling to the appropriate operating division director sincerely peter c friedman senior technician reviewer branch office of associate chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes cc


department of the treasury internal_revenue_service washington d c number release date cc el gl br3 gl-500574-00 uilc date memorandum for district_counsel ohio district cincinnati from subject lawrence schattner chief branch general litigation bankruptcy court orders requiring turnover of tax refunds this memorandum supplements our earlier memorandum dated date regarding the authority of the bankruptcy court to issue ex_parte orders directing the service to turn over the future tax refunds of chapter debtors to the chapter trustee this memorandum supersedes our earlier memorandum to the extent that they are inconsistent issues whether sovereign immunity is a viable defense to the enforcement of income deduction orders that are entered pursuant to section c of the bankruptcy code against the service with respect to debtors’ future income_tax refunds whether chapter debtors’ future income_tax refunds fall within the meaning of income in section c whether the assignment of claims act applies to bar the enforcement of income deduction orders directing the payment of future income_tax refunds to the chapter trustee conclusions gl-500574-00 facts the internal_revenue_service has been receiving ex_parte orders from the bankruptcy court for the southern district of ohio which require the service to pay directly to the chapter trustee any future income_tax refunds that may be owed to certain debtors it is estimated that between and of these orders have been issued in the vast majority of these cases the service is not a creditor in the bankruptcy case while the special procedures branch of the ohio district_office has been sending tax refunds to the chapter trustees in cases where the service is a creditor following the same practice in cases where the service is not a creditor presents administrative difficulties that call into question the service’s ability to comply with such orders the service’s computer system cannot process income deduction orders automatically in order to process such orders a freeze code must be placed on each account for which an income deduction order has been entered to prevent the automatic issuance of refund checks to the debtor in cases where the service is not a creditor entering the freeze code on the debtor’s account may result in the improper calculation of the statute_of_limitations period for collection under sec_6502 additionally the processing of the income deduction orders must be done manually which makes it time consuming and labor intensive the service does not have the staffing resources to manually process hundreds of income deduction orders issued in cases where the service is not a creditor further such orders place the burden of monitoring chapter cases on the service even when it is not a creditor in order to ensure that the refund is sent to the debtor if the case is dismissed the local bankruptcy rules acknowledge the service’s voluntary practice of sending tax refunds to the chapter trustee in cases where the service is a creditor local rule provides that unless otherwise ordered or provided by the debtor’s confirmed plan a debtor’s tax_refund received by the trustee shall not be turned over to the debtor until the allowed amount of the service’s claim is paid_by the trustee there is nothing in the local rule to suggest that the service is required to pay income_tax refunds directly to the trustee gl-500574-00 law analysis section c of the bankruptcy code u s c provides that after confirmation of a chapter plan the court may order any entity from whom the debtor receives income to pay all or any part of such income to the trustee the definition of the term entity includes a governmental_unit and the definition of the term governmental_unit includes the united_states see u s c sec_101 and sec_101 sovereign immunity as a defense section of the bankruptcy act preceded section c under section the bankruptcy court was empowered to issue such orders as may be requisite to effectuate the provisions of the plan including orders directed to any employer of the debtor rule b facilitated this authorization by providing that the order of confirmation or a separate payment order was to specify the amount and manner in which payments were to be made by the debtor or to be obtained from the employer of the debtor thus instead of having the debtor collect his entire wages and make the payment to the trustee the bankruptcy act provisions authorized the court to direct the debtor’s employer where requisite to deduct from the debtor’s earnings the amount which the debtor is supposed to pay under the plan collier on bankruptcy dollar_figure 14th ed in 377_f2d_104 10th cir cert_denied 389_us_845 the court held that an order entered pursuant to section which required the united_states to pay part of the wages of one of its employees to the trustee was barred by sovereign immunity applying the rule that general language in the bankruptcy act cannot be construed as a waiver of sovereign immunity the court rejected the trustee’s argument that the reference to any employer in section included the united_states id pincite the court also noted that its ruling did not deprive federal employees of the benefits of chapter because federal employees could be ordered to endorse and turn over their pay checks to the trustee id pincite under the bankruptcy reform act of the class of persons eligible to file a petition under chapter was expanded and no longer limited to wage earners see in re buren 725_f2d_1080 6th cir cert_denied 469_us_818 discussion of legislative_history section b the successor statute to section of the bankruptcy act and what is now section c was also enacted as part of the bankruptcy reform act of the legislative_history to section b indicates that congress used the term entity in the statute because it intended income deduction orders to apply to governmental units see sen_rep no pincite reprinted in u s c c a n subsection b authorizes the court to order an entity as defined by sec_101 to pay any income of the debtor to the trustee any gl-500574-00 governmental_unit is an entity subject_to such an order see also 4_br_102 bankr m d tenn the language used in b of the bankruptcy code and the definitions of entity and governmental_unit contained in sec_101 clearly overrule the immunity analysis in krakover 7_br_791 bankr e d tenn noting that the senate committee report flatly states that any governmental_unit is subject_to an order under b court states that o nly by obtuseness can the administration avoid the avoid the conclusion that b was meant to overrule united_states v krakover in holding that there was an explicit waiver of sovereign immunity the courts in howell and hughes also relied upon the language contained in sec_106 prior to its amendment under the bankruptcy reform act of the bra see in re howell b r pincite and in re hughes b r pincite sec_106 previously provided that sovereign immunity was waived in any situation in which the applicable bankruptcy statute contained the trigger words of creditor entity or governmental_unit a was amended to set forth a list of statutory provisions for which sovereign immunity is abrogated as to a governmental_unit section is not included in this list further the provision in sec_106 that waived sovereign immunity when a statute contained certain trigger words such as entity was not retained in the amended version of the statute sec_2 whether the term income includes future income_tax refunds under the bankruptcy code any individual with regular income is eligible for chapter relief u s c sec_109 sec_101 defines individual with regular income as an individual whose income is sufficiently stable and regular to enable such individual to make payments under a chapter plan section b defines the term disposable income as income received by the debtor which is not reasonably necessary to be expended for the maintenance or support of the debtor the term income is not defined in the bankruptcy code in 86_f3d_478 6th cir the sixth circuit held that future income_tax refunds can be considered projected disposable income under gl-500574-00 section b in freeman the debtors received an income_tax refund in an amount greater than expected and tried to amend their chapter plan to exempt a portion of the refund id pincite relying upon the particular facts in the case the court determined that the refund qualified as projected disposable income because the debtor specifically provided that tax refunds should go to the plan and made no argument that the funds were needed for the maintenance and support of the debtor or her dependents id pincite above the predecessor statute to section c applied to employers of the debtor thus the statute applied to wages received by debtors when the bankruptcy reform act expanded the eligibility of debtors to file chapter so that relief was not limited to wage earners it extended eligibility to any individual with regular income under sec_101 an individual with regular income is defined as an individual whose income is sufficiently stable and regular to enable such individual to make payments under a plan under chapter of this title as noted in in re 21_f3d_355 9th cir the ninth circuit held that the requirement that a chapter plan provide for payment of all of the debtor’s projected disposable income to the trustee does not entitle the trustee to require that the debtor agree to pay all actual disposable income to the trustee relying upon anderson the court in 177_br_671 bankr d ariz held that the trustee cannot require a blanket turnover of all tax refunds without a showing that such refunds are in fact projected in a certain amount thus debtors may object to plan provisions which require them to commit all or a portion of their future tax refunds to the plan on the grounds that future tax refunds are not projected disposable income gl-500574-00 while courts have recognized a variety of nontraditional sources of money as income under sec_101 the income must be regular and stable enough to fund a plan see 226_br_601 bankr m d tenn and cases cited therein similarly the income against which courts have upheld income deduction orders under section c is the regular and stable income that is used to fund chapter plan payments see eg 704_f2d_1513 11th cir debtors listed social_security_benefits as regular income in all of their chapter plans in re 138_br_484 w d pa debtors entitled to monthly afdc grants which were used to fund chapter plans 94_br_74 bankr w d pa debtor received monthly income from a teacher’s retirement_system 64_br_195 w d mich debtor received unemployment benefits in lieu of wages 13_br_640 e d wash debtors’ schedules listed as income monthly social_security_benefits in all of these cases the income deduction order was entered against a stream of regular payments that were used to fund the chapter plan payments the applicability of the assignment of claims act in 141_br_270 m d ga the united_states argued that the assignment of claims act the act bars a bankruptcy court from ordering the service to send the debtor’s tax_refund to the trustee the court rejected this argument on the grounds that section c impliedly modified the act to allow the assignment of tax refunds to the trustee via income deduction orders id although the issue was not raised in cochran there is also a question as to whether the assignment of claims act even applies in a bankruptcy proceeding gl-500574-00 in a couple of cases courts have determined that the assignment of claims act does not apply where tax refunds were transferred to the trustee by operation of bankruptcy law or in accordance with a plan of arrangement in 382_us_375 the supreme court held that a loss-carryback refund that was inchoate on the date of the petition was property that passed to the trustee under section 70a of the bankruptcy act in determining whether the refund constitutes property that could be transferred within the meaning of section 70a the court noted that the predecessor statute to the assignment of claims act u s c does not prevent transfers by operation of law accordingly the court reasoned that the assignment of claims act does not interfere with the vesting in the trustee of property coming within section 70a because all transfers of property to the bankruptcy_estate under section 70a are explicitly by operation of law id pincite n similarly in 98_fsupp_51 d minn the court held that a debtor’s assignment of any and all tax refunds which may be due or owing to the debtor from the united_states government was not within the purview of the assignment of claims act and that the assignment was therefore valid and effective to vest in a receiver any right of the debtor to the tax refunds because the tax refunds claimed by the debtor were transferred to the receiver pursuant to plan of arrangement under chapter xi of the bankruptcy act that was approved and confirmed by the bankruptcy court the court determined that the transfer constituted an act of the law and was not within the prohibition of the assignment of claims act id pincite under section a of the bankruptcy code all property that the debtor acquires after the commencement of the case is property of the estate under section property of the estate vests in the debtor upon confirmation except as otherwise provided in the plan or the order confirming the plan gl-500574-00 conclusions case development hazards and other considerations gl-500574-00 gl-500574-00 if you have any questions please call


internal_revenue_service department of the treasury index number washington dc person to contact number release date telephone number refer reply to cc dom p si 1-plr-111813-99 date date legend x date this responds to a letter dated date submitted on behalf of x requesting relief under sec_1362 of the internal_revenue_code facts x was incorporated on date the shareholders of x desired that x elect s_corporation treatment for x effective on date but the election to be treated as an s_corporation was not timely filed accordingly x requests a ruling that it will be treated as an s_corporation effective date law and analysis sec_1362 provides that a small_business_corporation may elect to be an s_corporation sec_1362 provides the rule on when an s election will be effective sec_1362 provides in relevant part that if an s election is made within the first two and one-half months of a corporation's taxable_year then the corporation will be treated as an s_corporation for the year in which the election is made under sec_1362 however if an s election is made after the first two and one-half months of a corporation's taxable_year then that corporation will not be treated as an s_corporation until the taxable_year after the year in which the s election is filed plr-111813-99 sec_1362 provides that if no sec_1362 election is made for any taxable_year and the secretary determines that there was reasonable_cause for the failure to timely make such election then the secretary may treat such an election as timely made for such taxable_year and sec_1362 shall not apply x did not file an election to be treated as an s_corporation under sec_1362 x has however established reasonable_cause for not making a timely s election and is entitled to relief under sec_1362 conclusion based solely on the facts submitted and the representations made and provided that x otherwise qualifies as an s_corporation we conclude that x will be treated as an s_corporation effective date within days from the date of this letter x should submit a properly completed form_2553 with a copy of this letter attached to the relevant service_center except as specifically set forth above no opinion is expressed or implied as to the federal_income_tax consequences of the transaction described above under any other provision of the code specifically no opinion is expressed concerning whether x is in fact an s_corporation for federal tax purposes this ruling is directed only to the taxpayer s requesting it sec_6110 of the code provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to the taxpayer signed david r haglund sincerely david r haglund senior technician reviewer branch office of the assistant chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes


internal_revenue_service department of the treasury number release date index number washington dc person to contact telephone number refer reply to cc psi 3-plr-106849-01 date date legend company owner indirect owners country date dear this letter responds to your submission dated date and subsequent correspondence requesting a ruling under sec_301_9100-3 of the procedure and administration regulations that company be permitted to file a form_8832 to elect its classification pursuant to sec_301_7701-3 effective for date facts the following facts have been represented company was formed on date under the laws of country since formation company has been wholly owned by owner owner in turn makes distributions to indirect owners company is not classified as a corporation under sec_301_7701-2 or and so may elect its classification for federal tax purposes owner has limited_liability as defined under sec_301_7701-3 and so company would be classified as a corporation under the default rules of sec_301_7701-3 company has represented that it was the intent of it and owner that company would be disregarded as a separate_entity as of date however form_8832 entity classification election to elect such a classification was not filed timely plr-106849-01 law and analysis sec_301_7701-3 provides that a business_entity that is not classified as a corporation under sec_301_7701-2 or an eligible_entity can elect its classification for federal tax purposes elections are necessary only when an eligible_entity does not want to be classified under the default classification or when an eligible_entity chooses to change its classification sec_301_7701-3 provides that unless the entity elects otherwise a foreign eligible_entity is classified as an association if all members have limited_liability sec_301_7701-3 provides that an eligible_entity may elect to be classified other than as provided under sec_301_7701-3 by filing form_8832 entity classification election with the appropriate service_center under sec_301_7701-3 this election will be effective on the date specified by the entity on form_8832 the date specified on form_8832 cannot be more than days prior to the date on which the election is filed 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 of all subtitles of the code except subtitles e g h and i sec_301_9100-1 through provide the standards the commissioner will use to determine whether to grant an extension of time to make an election sec_301_9100-2 provides automatic extensions of time for making certain elections sec_301_9100-3 provides extensions of time for making elections that do not meet the requirements of sec_301_9100-2 sec_301_9100-3 provides that requests for relief will be granted when the taxpayer provides evidence to establish that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government conclusion based on the facts submitted and representations made in the present case we conclude that the requirements of sec_301_9100-1 and sec_301_9100-3 have been satisfied as a result company has days from the date of this ruling to file a form_8832 to elect an initial classification as of date a copy of this letter should be attached with the election a copy is included for that purpose except as specifically set forth above we express or imply no opinion concerning the federal tax consequences of the facts described above under any other provision of the internal_revenue_code this ruling is directed only to the taxpayer requesting it sec_6110 plr-106849-01 provides that it may not be used or cited as precedent the rulings contained in this letter are based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in support of the request for rulings it is subject_to verification on examination in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to company’s authorized representative sincerely yours paul f kugler associate chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes cc