t c memo united_states tax_court christopher s harrell sr and ingrid t harrell petitioners v commissioner of internal revenue respondent docket no filed date christopher s harrell sr and ingrid t harrell pro sese peter n scharff for respondent memorandum opinion thornton judge respondent determined deficiencies in petitioners’ income_tax of dollar_figure for and dollar_figure for respondent also determined 1unless otherwise indicated all section references are to the internal_revenue_code code in effect for the relevant years and all rule references are to the tax_court rules_of_practice and procedure all monetary amounts are continued that petitioners are liable for accuracy-related_penalties under sec_6662 of dollar_figure for and dollar_figure for after the parties’ concessions the remaining issues for decision are whether any portion of the annuity received by petitioner ingrid t harrell from the new york city employees’ retirement_system is excludable from petitioners’ gross_income for and and whether petitioners are entitled to deduct any expenses paid_or_incurred for the funeral or in the administration of the estate of howard wilkerson background the parties submitted this case fully stipulated pursuant to rule the stipulated facts are found accordingly when the petition was filed petitioners resided in new york during taxable years and mrs harrell received gross distributions of dollar_figure from the new york city employees’ retirement_system nycers mrs harrell received the distributions from nycers as the beneficiary of howard wilkerson her father who died on date on the date of her father’s death mrs harrell wa sec_24 years old continued rounded to the nearest dollar mr wilkerson was a tier member of nycers the summary_plan_description spd for tier members of nycers states that nycers is a defined_benefit_plan that consists of both employer and employee contributions the spd states that t ier members are required to contribute a portion of their salary each pay_period through payroll deductions these deductions are ‘basic’ employee contributions the basic employee contributions are not subject_to federal income_taxation in the year contributed but those contributions will be subject_to federal taxation upon distribution the spd further states that members may make additional employee contributions beyond the required basic employee contributions up to of the basic employee contribution rate these additional employee contributions are subject_to income_tax in the year the contributions are made mrs harrell received a letter from nycers dated date titled information concerning death_benefit this document indicates a total benefit payable of dollar_figure comprising a member’s share of dollar_figure and an employer’s share of dollar_figure the letter does not designate what amount if any of the member’s share of dollar_figure is an additional employee contribution as opposed to the required basic employee contribution according to a letter from nycers dated date mrs harrell elected to receive the benefit as an annual annuity of dollar_figure payable for life in equal monthly installments effective date during and mrs harrell paid various expenses related to her father’s death and the administration of his estate these expenses included among other things funeral_expenses attorney’s fees and certified_public_accountant c p a fees petitioners provided an unsigned copy of a form et-90 new york state estate_tax_return for mr wilkerson’s estate listing mrs harrell as the executor and reporting an annuity of dollar_figure at line and new york estate_tax of dollar_figure on the form et-90 mrs harrell claimed a deduction of dollar_figure for among other things funeral_expenses estate administration_expenses and debts of decedent and marked the box for no with regard to whether a federal estate_tax_return was required a memorandum from the c p a who allegedly prepared the form et-90 states that the amount of new york estate_tax owed is dollar_figure an incomplete copy of a notice of assessment resolution notice from the new york state department of taxation and finance dated date with regard to mr wilkerson’s estate indicates a total amount of estate_tax due of dollar_figure the notice states that the form et-90 reported an annuity at line of dollar_figure but that t o determine the proper amount of the annuity you should consult the life expectancy table using the beneficiary’s age and the information from the table it will result in the life expectancy that amount multiplied by the annual payment is the figure that should be reported as the annuity amount we are unable to change tax until an amended_return is filed the record does not include a copy of an amended form et-90 petitioners reported the full annuity distributions of dollar_figure from nycers on their form sec_1040 u s individual_income_tax_return for and petitioners now assert that dollar_figure of each of the dollar_figure distributions is excludable from gross_income on their original form_1040 petitioners did not deduct the expenses_incurred in and related to the death of and administration of the estate of mr wilkerson but they now claim entitlement to them as an estate_tax deduction on schedule a itemized_deductions as a net_operating_loss carryforward to their taxable_year 2the dollar_figure difference in this amount and the amount we find as the annuity amount is due to rounding additionally the annuity amount as reported on the form et-90 provided by petitioners and the annuity amount as recounted in the notice from the new york state department of taxation in finance do not correspond this discrepancy does not affect the outcome of this case discussion in general the commissioner’s determination set forth in a notice_of_deficiency is presumed correct 290_us_111 in pertinent part rule a provides the general_rule that t he burden_of_proof shall be upon the petitioner the submission of this case under rule does not change or otherwise lessen petitioners’ burden_of_proof see rule b 121_tc_273 under sec_7491 if the taxpayer introduces credible_evidence with respect to any factual issue relevant to ascertaining the proper income_tax_liability and if certain conditions are met the burden_of_proof shifts to the commissioner see also rule a petitioners do not contend that the burden_of_proof should shift pursuant to sec_7491 and we conclude that the burden_of_proof has not shifted to respondent annuity payments sec_61 defines gross_income broadly as all income from whatever source derived it is well established that gross_income is to be broadly construed while exclusions from income are to be narrowly construed 515_us_323 35_f3d_93 2d cir taxpayers seeking an exclusion_from_gross_income must demonstrate that they are eligible for the exclusion and bring themselves within the clear scope of the exclusion 111_tc_339 ndollar_figure sec_61 and provides that annuities and pensions are among the forms of income within the purview of sec_61 sec_72 sets forth the specific rules applicable to taxation of among other things annuities and distributions from qualified_employer retirement plans see also sec_403 sec_72 reiterates the general_rule of inclusion in gross_income unless otherwise provided sec_72 however provides that portions of annuity payments may be excludable from income the excludable_portion of a payment generally is that portion which bears the same ratio to the payment as the investment_in_the_contract bears to the expected_return under the contract determined at the time the annuity payments begin exclusion_ratio sec_72 the term investment_in_the_contract is defined by reference to the aggregate amount of premiums or other consideration paid for the contract sec_72 a taxpayer’s investment_in_the_contract includes his or her nondeductible_contributions see 108_tc_54 hall v commissioner tcmemo_1998_336 tax ct memo lexi sec_334 at for this purpose an employee’s investment_in_the_contract also includes amounts contributed by the employer but only to the extent that such amounts were includable in the gross_income of the employee sec_72 consequently employee or employer contributions that were not includable in the employee’s gross_income for the contribution_year are not included in the employee’s investment_in_the_contract additionally for decedents dying before date former sec_101 provided that g ross income does not include amounts received by the beneficiaries or the estate of an employee if such amounts are paid_by or on behalf of an employer and are paid_by reason of the death of the employee see small_business job protection act of sbjpa pub_l_no sec_1402 sec_110 stat pincite the exclusion amount is limited to dollar_figure and is treated as additional investment_in_the_contract sec_101 and d repealed by sbjpa sec_1402 sec_1_72-8 income_tax regs sec_72 provides that if the expected_return under the contract for an annuity depends on the life expectancy of one or more individuals the expected_return is computed with reference to actuarial_tables prescribed by the secretary table v of sec_1_72-9 income_tax regs is generally used in determining the expected_return when the investment_in_the_contract includes a post-date investment and the annuity is based upon a single life expectancy see sec_1_72-6 income_tax regs if the contract provides that one annuitant is to receive a fixed monthly income_for_life the expected_return is determined by multiplying the total of the annuity payments_to_be_received annually by the multiple shown in the applicable table sec_1_72-5 income_tax regs sec_72 provides that the annuity_starting_date is the first day of the first period for which an amount is received as an annuity under the contract in determining the amounts of the annuity payments excludable from petitioners’ gross_income the analysis must begin with a determination of the investment_in_the_contract the letter from nycers regarding the information concerning death_benefit states that mrs harrell is entitled to a benefit payable of dollar_figure comprising a member’s share of dollar_figure and an employer’s share of dollar_figure petitioners have not produced evidence showing that the member’s share of dollar_figure was mr wilkerson’s investment_in_the_contract the evidence strongly suggests that the member’s share of dollar_figure was mr wilkerson’s required basic employee contribution to nycers that was not previously includable in his gross_income contrary to petitioners’ assertion that the entire amount of the member’s share of dollar_figure was made with after-tax_dollars the spd provides that any additional employee contribution is in addition to the basic employee contribution nothing in the record establishes what portion if any of the member’s share is an additional employee contribution as opposed to the required basic employee contribution additionally nothing in the record evidences that any of the employer’s share of dollar_figure was previously includable in mr wilkerson’s gross_income therefore we conclude that none of the nycers death_benefit of dollar_figure is investment_in_the_contract however because mr wilkerson died before date petitioners are entitled under former sec_101 to exclude from gross_income death_benefits of dollar_figure accordingly we conclude that petitioners’ investment_in_the_contract for the nycers death_benefit is dollar_figure the expected_return on the nycers contract is determined by multiplying the total of the annuity payments_to_be_received annually of dollar_figure by the multiple shown in the applicable table of sec_1_72-9 income_tax regs the dollar_figure nycers death_benefit was payable as a result of mr wilkerson’s death on date thus the dollar_figure death_benefit is a post-1986 investment in the nycers annuity and table v of sec_1_72-9 income_tax regs applies mrs harrell wa sec_24 years old on date the date the annuity became effective table v of sec_1_72-9 income_tax regs provides that for a single_life_annuity that begins when the annuitant i sec_24 years old the multiple i sec_58 as a result the expected_return of the nycers annuity is the total annual annuity_payment of dollar_figure multiplied by the multiple shown in table v of or dollar_figure dollar_figure dollar_figure the exclusion_ratio is computed by dividing the investment_in_the_contract of dollar_figure by the expected_return of dollar_figure or dollar_figure dollar_figure see sec_72 as a result of applying the exclusion_ratio to the nycers annual annuity_payment of dollar_figure the excludable amount is dollar_figure dollar_figure dollar_figure see id accordingly we hold that petitioners are entitled to exclude from gross_income dollar_figure of the dollar_figure nycers annuity_payment for each of the taxable years and expenses related to mr wilkerson’s death and estate administration deductions are a matter of legislative grace and the taxpayer bears the burden of proving entitlement to them 319_us_590 89_tc_816 it is axiomatic that income is taxed to the person who earns it and deductions are thus generally not transferable between taxpayers vichich v commissioner 146_tc_186 holding that a surviving_spouse was not entitled to inherit or otherwise retain a tax_benefit that was originally conferred on the deceased spouse citing 410_us_441 337_us_733 292_us_435 and 281_us_111 a taxpayer seeking a deduction must be able to point to an applicable statute and show that he comes within its terms new colonial ice co v helvering u s pincite in support of their claimed entitlement to a deduction for for funeral and estate administration_expenses for mr wilkerson petitioners point to various internal_revenue_service irs publications petitioners’ reliance on these publications is misplaced the publications that petitioners rely upon discuss deductions allowable under sec_691 and c relating to income in respect of decedents and net operating losses allowable under sec_172 sec_691 is not pertinent because funeral and estate administration_expenses are not specified therein as a 3petitioners’ seriatim answering brief in support of the deduction for funeral and estate administration_expenses references the following irs publications instructions for form_706 united_states estate and generation-skipping_transfer_tax return rev date publication survivors executors and administrators publication pension and annuity income publication individual_retirement_arrangements iras and publication net operating losses nols for individuals estates and trusts type of expense for which a deduction may be claimed sec_691 is limited to deductions or credits authorized by sec_162 trade_or_business_expenses interest taxes expenses for production_of_income or depletion sec_262 provides that except as otherwise expressly provided in the code no deduction shall be allowed for personal living or family_expenses funeral_expenses are clearly personal or family_expenses see beck v commissioner tcmemo_2001_270 tax ct memo lexis at holding that income_tax deduction claimed for wife’s funeral_expenses was a nondeductible personal_expense carr v commissioner tcmemo_1979_400 tax ct memo lexi sec_120 at holding that taxpayer failed to show that funeral_expenses for brother-in-law was a business_expense as distinguished from a personal_expense see also 35_tc_737 finding that funeral_expenses were not properly claimed on estate’s fiduciary income_tax return but were allowable only as a deduction to the estate under sec_2053 therefore petitioners are not entitled to a deduction under sec_691 as the funeral and estate administration_expenses are nondeductible personal or family_expenses see sec_262 sec_691 allows a recipient of income_in_respect_of_a_decedent an income_tax deduction equal to the federal estate_tax attributable to that item petitioners have not produced evidence that a federal estate_tax_return was filed or that federal estate_tax was paid for mr wilkerson’s estate therefore petitioners are not entitled to a deduction under sec_691 in any event sec_461 requires a taxpayer to deduct expenses for the year required under his or her method_of_accounting a cash_basis taxpayer generally must deduct his or her expenses for the year that payment of those expenses takes place 104_tc_518 reynolds v commissioner tcmemo_2000_20 aff’d 296_f3d_607 7th cir sec_1_461-1 income_tax regs for this additional reason petitioners are not entitled to deductions for their taxable_year for expenses paid in and finally petitioners are not entitled to deduct any net_operating_loss carryforward with respect to the disputed funeral and estate administration_expenses because as previously discussed these expenses are nondeductible personal or family_expenses they are not allowable expenses in computing any net_operating_loss see sec_172 defining net_operating_loss as the excess of deductions allowed in chapter of the code over gross_income and perhaps more fundamentally sec_172 preclude s from the computation of the net_operating_loss of an individual taxpayer any deduction which is not attributable to a trade_or_business 17_tc_318 27_tc_99 unless it be a sec_165 casualty_loss rodriguez-torres v commissioner tcmemo_1970_76 tax ct memo lexi sec_281 at n in sum petitioners are not entitled to a deduction for for funeral or estate administration_expenses the court has considered all of petitioners’ arguments contentions and statements to the extent not discussed herein the court concludes that they are moot meritless or irrelevant to reflect the foregoing decision will be entered under rule 4the deductions that petitioners claimed might have been allowable on a federal estate_tax_return under sec_2053 which provides that the value of the taxable_estate shall be determined by reducing the value of the gross_estate for among other things funeral and estate administration_expenses the evidence does not show however that any federal estate_tax_return was filed for mr wilkerson’s estate


internal_revenue_service number release date index numbers ----------------------------------------------------- ---------------------- ------------------------- -------------------------- ------------------- --------------------------------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ---------------------- id no ----------------- telephone number --------------------- refer reply to cc psi b03 plr-146163-11 date may x --------------------------------------------------------------------------------------------------- ----------------------- legend country ---------------------- date ------------------- year ------- dear ------------- this letter responds to your letter dated date and subsequent correspondence submitted on behalf of x by x’s authorized representatives requesting a ruling under sec_301_9100-3 of the procedure and administration regulations that x be granted an extension of time to file an election under sec_301_7701-3 facts x organized under the laws of country as a limited_liability_company on date x desires to be treated as other than its default classification however x inadvertently failed to timely file form_8832 entity classification election 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 plr-146163-11 elect its classification for federal tax purposes as provided in sec_301_7701-3 an eligible_entity with at least two members can elect to be classified as an association and thus a corporation under sec_301_7701-2 or a partnership and an eligible_entity with a single owner can elect to be classified as either as association or to be disregarded as an entity separate from its owner sec_301_7701-3 provides that unless it elects otherwise a foreign eligible_entity is a a partnership if it has two or more members and at least one member does not have limited_liability b an association if all members have limited_liability or c disregarded as an entity separate from its owner if it has a single owner that does not have limited_liability sec_301_7701-3 provides that for purposes of sec_301_7701-3 a member of a foreign eligible_entity has limited_liability if the member has no personal liability for the debts of or claims against the entity by reason of being a member sec_301_7701-3 provides in part that an eligible_entity may elect to be classified other than as provided under sec_301_7701-3 or to change its classification by filing form_8832 with the service_center designated on form_8832 sec_301_7701-3 provides that an election made under sec_301 c i will be effective on the date specified by the entity on form_8832 or on the date filed if no date is specified on the election form the effective date specified on form_8832 can not be more than days prior to the date on which the election is filed and can not be more than months after the date on which the election is filed if an election specifies an effective date more than days prior to the date on which the election is filed it will be effective days prior to the date it was filed sec_301_7701-3 provides that for purposes of sec_301_7701-3 a foreign eligible_entity is relevant when its classification affects the liability of any person for federal tax or information purposes the date that the classification of a foreign eligible_entity is relevant is the date an event occurs that creates an obligation to file a federal tax_return information_return or statement for which the classification of the entity must be determined sec_301_7701-3 provides that for purposes of sec_301_7701-3 except as provided in sec_301_7701-3 the classification for federal tax purposes of a foreign eligible_entity that files form_8832 entity classification election shall be deemed to be relevant only on the date the entity classification election is effective sec_301_9100-1 provides that the commissioner has discretion to grant a reasonable extension of time under the rules set forth in sec_301_9100-2 and sec_301_9100-3 to make a regulatory election or a statutory election but no more than six months plr-146163-11 except in the case of a taxpayer who is abroad under all subtitles of the code except subtitles e g h and i sec_301_9100-1 defines a regulatory election to include an election whose due_date is prescribed by a regulation published in the federal_register 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 subject_to sec_301_9100-3 will be granted when the taxpayer provides the evidence including affidavits described in sec_301_9100-3 to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and the grant of relief will not prejudice the interests of the government conclusion based solely on the facts submitted and representations made we conclude that the requirements of sec_301_9100-3 have been satisfied as a result x is granted an extension of time of days from the date of this letter to make an entity classification election by filing form_8832 effective date with the appropriate service_center a copy of this letter should be attached to the election a copy of this letter is attached for this purpose this ruling is contingent upon the filing within days of this letter any and all required federal_income_tax and information returns from year to the present consistent with the requested relief except as expressly provided herein we express or imply no opinion concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter this ruling is directed only to the taxpayer requesting it sec_6110 provides that it may not be used or cited as precedent in accordance with a power_of_attorney on file with this office we are sending a copy of this letter to your authorized representatives plr-146163-11 the ruling contained in this letter is 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 ruling_request it is subject_to verification on examination sincerely associate chief_counsel passthroughs special industries by ______________________________________ richard t probst senior technician reviewer branch office of the associate chief_counsel passthroughs special industries enclosures a copy of this letter a copy for sec_6110 purposes cc


t c summary opinion united_states tax_court mayer weinberger and sarah weinberger petitioners v commissioner of internal revenue respondent docket no 23544-10s filed date ronald jay cohen for petitioners rose e gole and michael j de matos for respondent summary opinion armen special_trial_judge this case was heard pursuant to the provisions of sec_7463 of the internal_revenue_code in effect when the petition was filed pursuant to sec_7463 the decision to be entered is not reviewable by any other court and this opinion shall not be treated as precedent for any other case respondent determined deficiencies in additions to tax on and accuracy- related penalties with respect to petitioners’ federal income taxes as follows year deficiency addition_to_tax sec_6651 accuracy-related_penalty sec_6662 dollar_figure big_number big_number big_number big_number dollar_figure dollar_figure dollar_figure dollar_figure -- dollar_figure dollar_figure dollar_figure dollar_figure dollar_figure after concessions by respondent the issues now before the court are as follows whether petitioners received earned_income in the amounts reported for each year in issue for purposes of the additional_child_tax_credit whether petitioners are entitled to the dependent_care_credit for each year in issue unless otherwise indicated all subsequent section references are to the internal_revenue_code in effect for the years in issue and all rule references are to the tax_court rules_of_practice and procedure respondent concedes that petitioners are entitled to six child dependency_exemption deductions and the child_tax_credit for each year in issue whether petitioners are liable for the addition_to_tax under sec_6651 for failure to timely file their federal_income_tax returns for and and whether petitioners are liable for the accuracy-related_penalty under sec_6662 for negligence or disregard of rules or regulations with respect to each year in issue background some of the facts have been stipulated and they are so found we incorporate by reference the parties’ stipulation of facts and accompanying exhibits petitioners resided in antwerp belgium when the petition was filed mayer weinberger and sarah weinberger were married in and have lived together in antwerp belgium at all times relevant thereafter sometime after their marriage mr weinberger began attending a jewish school in antwerp called the friends of satmar kollel antwerp ltd satmar satmar is an institution where married jewish men engage in the full-time advanced study of the torah the talmud and the laws of jewish life although some remain for longer periods students at satmar typically study for two or three years satmar students generally receive a stipend from the school to defray living_expenses mr weinberger received such a stipend while he was a full-time_student at satmar after four years of study at satmar mr weinberger was hired by the principal of the school to conduct lectures for the students regarding a variety of religious subjects involving the jewish tradition during the years in issue mr weinberger continued to teach and he received payments from satmar for each lecture he gave at the school in addition mr weinberger spent his free time engaged in rabbinical studies and became a rabbi shortly before trial meanwhile mrs weinberger worked in antwerp as a teacher at an all-female school called bais rachel also during the years in issue petitioners had six dependent_children who were united_states citizens and who lived with petitioners in belgium petitioners paid a child care center at bais rachel to care for their young children while petitioners were teaching and lecturing at their respective schools petitioners filed joint u s federal_income_tax returns tax returns for and on june august august and date and date respectively on each of those tax returns petitioner sec_3 petitioners also filed belgian income_tax returns for the years in issue reported dollar_figure of wages and claimed inter alia the additional_child_tax_credit and the dependent_care_credit respondent subsequently issued notices of deficiency in which he determined that the amounts reported as wage income on petitioners’ tax returns for the years in issue should be reclassified as other income because petitioners allegedly failed to substantiate that the income constituted earned_income within the meaning of sec_32 see discussion infra furthermore respondent disallowed inter alia the additional child tax_credits and dependent care credits claimed by petitioners discussion4 a burden_of_proof in general the commissioner’s determinations set forth in a notice_of_deficiency are presumed to be correct and the taxpayer bears the burden of proving that those determinations are erroneous rule a 290_us_111 moreover credits are a matter of legislative grace and the taxpayer bears the burden of proving that he or she is entitled to any credit claimed rule a 308_us_488 292_us_435 89_tc_816 the united_states and the kingdom of belgium signed a tax_treaty in convention for the avoidance of double_taxation and the prevention of fiscal evasion with respect to taxes on income u s -belg date u s t which was in force from date through date at which time the current treaty convention for the avoidance of double_taxation and the prevention of fiscal evasion with respect to taxes on income u s -belg date tax_treaties cch para big_number came into force because the united_states taxes its citizens on their worldwide income a saving clause is included in both tax_treaties which reserves the right of the united_states to tax its citizens on the basis of the internal_revenue_code notwithstanding the treaty provisions see 74_tc_406 while both treaties provide certain exceptions to the saving clause none are relevant here furthermore the two treaties have no bearing on any of the issues for decision as presented by the parties in this case and the existence of the treaties is noted here simply for purposes of completeness under sec_7491 the burden_of_proof with respect to any factual issue may shift from the taxpayer to the commissioner if the taxpayer produces credible_evidence bearing on that issue that is relevant to ascertaining the taxpayer’s liability however sec_7491 applies only if inter alia the taxpayer has complied with the substantiation and recordkeeping requirements of the internal_revenue_code see sec_7491 and b as discussed below petitioners failed to fully substantiate their income and expenses and did not maintain appropriate records accordingly the burden_of_proof remains on petitioners see rule a welch v helvering u s pincite b additional_child_tax_credit sec_24 allows eligible taxpayers a credit for each qualifying_child sec_24 provides that a portion of the credit may be refundable which portion is commonly referred to as the additional_child_tax_credit to be eligible for the additional_child_tax_credit in any given year a taxpayer must have received earned_income within the meaning of sec_32 see sec_24 see also heilman v commissioner tcmemo_2011_210 petitioners contend that the amounts mr weinberger received from satmar respondent concedes that all six of petitioners’ children claimed on their returns are qualifying children for purposes of the child_tax_credit and the additional_child_tax_credit represent wages paid for his services as a lecturer and thus constitute earned_income respondent argues however that the amounts received by mr weinberger represent educational grants and do not constitute earned_income under sec_32 respondent also argues that petitioners failed to substantiate the amounts reported as wages on their tax returns we hold that the amounts received by petitioners as substantiated by the record and discussed infra constitute earned_income within the meaning of sec_32 earned_income the term earned_income includes wages salaries tips and other employee compensation but only if the amounts of those items are includible in gross_income sec_32 at some point shortly after petitioners were married in mr weinberger became a full-time_student at satmar and received funds from the school to help defray living_expenses upon completing four years of study however he was hired by satmar as a lecturer and he continued to be employed by satmar as a lecturer during the years in issue although the notices of deficiency reclassified all of petitioners’ income the record demonstrates that mrs weinberger received earned_income from bais rachel in exchange for her services as a teacher it appears that respondent no longer contends otherwise accordingly we focus on the amounts received by mr weinberger during the years in issue on the whole the record demonstrates that mr weinberger was hired to lecture and that he was compensated for each lecture given admittedly mr weinberger spent time studying to become a rabbi during the years in issue but his rabbinical studies were conducted during his personal time although mr weinberger occasionally studied to prepare for his lectures the payments he received for each lecture were not educational grants but payments for his services at trial mr weinberger introduced monthly payment reports provided by satmar payment reports and a spreadsheet maintained by satmar spreadsheet that detail each lecture he performed for the school during the years in issue each payment report describes inter alia the nature of the lesson he taught and the number of days he lectured on a particular subject during the month the payment reports also clearly list the corresponding amount_paid to mr weinberger for each lecture in sum and on the basis of the entire record we are satisfied that mr weinberger was paid to provide services to satmar as a lecturer during the years in issue and that the payments he received from satmar in those years represented earned_income within the meaning of sec_32 therefore petitioners are entitled to claim the additional_child_tax_credit to the extent they have substantiated the amounts of earned_income they received during each year in issue see eg sec_6001 sec_1_6001-1 income_tax regs substantiated earned_income respondent argues in the alternative that petitioners failed to fully substantiate the amounts reported as earned_income on their tax returns in that regard and to the extent specified below we agree with respondent the payment reports from satmar list the amount mr weinberger received for each lecture beginning with late date and ending in the first quarter of the spreadsheet from satmar reconciles with those payment reports during the aforementioned period in addition the spreadsheet includes payments mr weinberger received during the final three quarters of and the first quarter of the payment reports and spreadsheet however do not show any payments for the period january through date or any payments during the final three quarters of missing periods although mr weinberger contends that he received payments from satmar for his lectures during the missing periods there is no documentary_evidence in the record to support such a claim in this regard the court is not required to accept the self-serving testimony of petitioner as gospel 87_tc_74 without further documentary_evidence we are unwilling to conclude that mr weinberger received any amount of income beyond what is shown on the payment reports and spreadsheet with respect to the earned_income received by mrs weinberger as a teacher at bais rachel petitioners likewise failed to substantiate the full amounts reported on their tax returns for the years in issue petitioners have proven however that mrs weinberger received earned_income during those years in amounts that coincide with the amounts reported on her pay stub for and petitioners’ belgian income_tax returns therefore we conclude that petitioners received the following aggregate amounts of earned_income tax_year mayer weinberger sarah weinberger total dollar_figure big_number big_number big_number big_number dollar_figure big_number big_number big_number big_number dollar_figure big_number big_number big_number big_number overall petitioners failed to maintain complete records of their income and provided insufficient evidence to substantiate the full amounts claimed on their tax all income and expense amounts have been converted from euro to u s dollars using the conversion rates in the parties’ stipulation of facts and have been rounded to the nearest dollar returns accordingly we are unwilling to conclude that petitioners received any earned_income beyond the amounts enumerated above c dependent_care_credit general requirements sec_21 allows a credit for a percentage of employment-related_expenses paid employment-related_expenses include expenses paid for the care of a qualifying_individual that enable the taxpayer to be gainfully_employed sec_21 the term qualifying_individual includes a dependent as defined in sec_152 of the taxpayer who has yet to reach years of age sec_21 in the notices of deficiency respondent disallowed the dependent_care_credit claimed by petitioners each year because they allegedly failed to establish that their children were qualifying individuals pursuant to sec_21 respondent has since conceded that petitioners are entitled to dependency_exemption deductions with respect to each child claimed as a qualifying_individual for purposes of the the amount of employment-related_expenses that may be claimed for purposes of the dependent_care_credit in any given tax_year is limited to the earned_income of the lower earning spouse for that year sec_21 because we hold that both petitioners received earned_income during each year in issue further substantive discussion of earned_income in the dependent_care_credit context is unnecessary dependent_care_credit furthermore the record indicates that those dependent_children were under the age of during the years in issue and it appears respondent does not contend otherwise therefore we conclude that petitioners’ dependent_children are qualifying individuals within the meaning of sec_21 furthermore petitioners have demonstrated that they were both employed during the years in issue and their employment made it necessary for them to pay child care expenses for their qualifying children thus on the basis of the entire record we hold that petitioners are entitled to the dependent_care_credit with respect to the substantiated amounts of expenses they paid for the care of their qualifying children see eg sec_6001 sec_1_6001-1 income_tax regs substantiated employment-related_expenses petitioners provided sufficient documentary_evidence to substantiate a portion of the employment-related_expenses they paid during each year on the basis of that documentation we are satisfied that petitioners paid the following amounts of employment-related_expenses in regard to their qualifying children for each respective year in issue amount of expenses dollar_figure big_number big_number big_number big_number year as a general_rule if in the absence of required records a taxpayer provides sufficient evidence that the taxpayer has paid an expense but the taxpayer is unable to adequately substantiate the amount the court may estimate the amount of such expense 39_f2d_540 2d cir in order for the court to estimate the amount of an expense however we must have some basis upon which an estimate may be made 85_tc_731 without such a basis any allowance would amount to unguided largesse 245_f2d_559 5th cir although mr weinberger claimed he and his wife paid employment-related_expenses beyond the amounts they were able to adequately substantiate they provided no documentary_evidence of further payments and no basis upon which a greater allowance may be justified accordingly we are unwilling to conclude that petitioners paid employment-related_expenses beyond the substantiated amounts listed above d additions to tax sec_6651 imposes an addition_to_tax for failure_to_file a return by its due_date the addition equal sec_5 of the amount_required_to_be_shown_as_tax on the return for each month or fraction thereof that the return is late not to exceed in the aggregate sec_7491 generally provides that the commissioner bears the burden of production with respect to the liability of an individual for any penalty or addition_to_tax the commissioner may meet his burden of production by coming forward with sufficient evidence indicating that it is appropriate to impose the relevant penalty or addition_to_tax 116_tc_438 respondent has proven and has therefore discharged his burden of production under sec_7491 that petitioners’ and tax returns were not received and filed by their respective due dates a failure_to_file a tax_return on the date prescribed leads to a mandatory penalty unless the taxpayer shows that such failure was due to reasonable_cause and not due to willful neglect 114_f3d_366 2d cir aff’g tcmemo_1995_547 a showing of reasonable_cause requires a taxpayer to show that he or she exercised ordinary business care and prudence petitioners timely filed their tax_return but was nevertheless unable to file the return within the prescribed time 469_us_241 sec_301_6651-1 proced admin regs petitioners have failed to offer persuasive evidence to establish that the late filing of their and returns was due to reasonable_cause as for example the fact that they worked long hours and cared for many children is insufficient to relieve them from liability under sec_6651 see howe v commissioner tcmemo_2000_291 accordingly we hold that petitioners are liable for the addition_to_tax under sec_6651 for and to the extent applicable as a result of the parties’ computations under rule e accuracy-related_penalties sec_6662 and b imposes a penalty equal to of the amount of any underpayment attributable to negligence or disregard of rules or regulations the term negligence includes any failure to make a reasonable attempt to comply with tax laws and disregard includes any careless reckless or intentional disregard of rules or regulations sec_6662 negligence also includes any failure to keep adequate books_and_records or to substantiate items properly sec_1 b income_tax regs sec_6664 provides an exception to the imposition of the accuracy- related penalty if the taxpayer establishes that there was reasonable_cause for and the taxpayer acted in good_faith with respect to the underpayment sec_1 a income_tax regs the decision as to whether a taxpayer acted with reasonable_cause and in good_faith is made on a case-by-case basis taking into account the pertinent facts and circumstances sec_1_6664-4 income_tax regs as a general_rule the duty_of filing accurate tax returns cannot be avoided by placing responsibility on an agent see 88_tc_654 63_tc_149 however a taxpayer may avoid the accuracy-related_penalty by showing that his or her reliance on the advice of a professional such as a commercial tax_return_preparer was reasonable and in good_faith sec_1_6664-4 income_tax regs specifically the taxpayer must establish that the preparer was a competent professional the taxpayer provided accurate and necessary information to the preparer and the taxpayer actually relied in good_faith on the preparer’s judgment see 115_tc_43 aff’d 299_f3d_221 3d cir 70_tc_158 blind reliance on a tax_return_preparer however is not a defense rather the taxpayer is generally required to review the tax_return before signing and filing it bronson v commissioner tcmemo_2002_260 osborne v commissioner tcmemo_2002_11 bilzerian v commissioner tcmemo_2001_187 the record establishes that petitioners failed to maintain adequate_records and properly substantiate their income and expenses see sec_7491 sec_1 b income_tax regs thus we turn to whether petitioners acted with reasonable_cause and in good_faith mr weinberger had little to say at trial with respect to petitioners’ failure to maintain records and substantiate their income and child care expenses and mrs weinberger did not testify mr weinberger simply explained that his wife was responsible for the couple’s united_states and belgian tax reporting in that respect he testified albeit vaguely that his wife consulted a commercial tax_return_preparer based in israel called u s benefits group u s benefits which allegedly prepared the couple’s tax returns for the years in issue each of petitioners’ tax returns for those years however includes the typewritten statement self-prepared and was not signed by a tax_return_preparer moreover there is no documentary_evidence in the record to suggest that petitioners relied on a tax_return_preparer named u s benefits or any_tax return preparer for that matter even if we assume arguendo that petitioners hired a commercial tax_return_preparer there is no evidence that the preparer was a competent professional that complete and correct information was given to the preparer or that petitioners reviewed their returns for accuracy mr weinberger demonstrated at trial that he had little knowledge regarding whether complete and accurate documents were provided to u s benefits and was unfamiliar with the tax returns themselves furthermore petitioners never called their alleged tax_return_preparer as a witness see 6_tc_1158 aff’d 162_f2d_513 10th cir mr weinberger testified that he and his wife no longer seek the services of u s benefits and have become skeptical of the company’s business practicesdollar_figure if they did in fact hire u s benefits to prepare their tax returns we question whether petitioners did so in good_faith moreover regardless of whether they hired u s benefits or not we are skeptical whether petitioners performed even a cursory although not entirely clear from the record it appears that u s benefits promised its clients refundable tax_credits from the u s government and charged a commission on any refund its clients received review of their tax returns to confirm the accuracy of the information reported therein in sum petitioners have not met their burden of persuasion with respect to reasonable_cause and good_faith see higbee v commissioner t c pincite- accordingly petitioners are liable for the accuracy-related_penalty under sec_6662 for each year in issue to the extent the penalties are applicable as a result of the parties’ computations under rule conclusion we have considered all of the arguments advanced by the parties and to the extent not addressed herein we conclude that those arguments are irrelevant moot or meritless to give effect to the foregoing decision will be entered under rule


internal_revenue_service number release date index number -------------------------------- -------------------------------- ---------------------------- in re --------------------------------------------------- --------------------- --------------------------------------- ---------------------------- department of the treasury washington dc person to contact --------------- id no ------------- telephone number --------------------- refer reply to cc psi b08 - plr-112449-04 date date taxpayer ------------------------------------------------------------------- county legend --------------------------------------------------- dear ----------- ------------------------ x ----------------------------- this responds to a letter_ruling request submitted by taxpayer asking whether taxpayer qualifies for the excise_tax exemptions allowed to state and local governments under g a i and a of the internal_revenue_code taxpayer is a ' c corporation that provides ambulance service in the county taxpayer and county have an agreement made on date x that designates taxpayer to manage emergency and non-emergency medical transportation services for county and to provide medical services to all persons regardless of their ability to pay under the agreement taxpayer treats and transports county’s firefighters law enforcement personnel and certain prisoners without compensation taxpayer charges persons using medical transportation other than those exempt in accordance with a county-approved fee rate structure plr-112449-04 county ambulances and related equipment are provided to taxpayer and titled in taxpayer’s name employees of taxpayer are not county employees upon termination of the contract taxpayer s assets including ambulances related equipment and supplies and account receivables become county property sec_4041 provides that no tax is imposed by ' with respect to the sale of diesel_fuel and special motor fuels for the exclusive use of any state political_subdivision of a state or the district of columbia comparable exemptions from the manufacturers excise_taxes the tax on communications and the highway use_tax are provided in sec_4221 sec_4253 and sec_4483 respectively revrul_77_387 1977_2_cb_364 holds that where taxable articles are sold or communications_services and facilities are furnished to a nonprofit volunteer rescue squad for its exclusive use such articles and services come within the exemptions under sec_4041 sec_4221 and sec_4253 further the exemption provided from the highway use_tax by sec_4483 applies to the operation of vehicles by such organizations in performing their rescue functions revrul_77_387 addresses volunteer rescue squads that provide non-emergency ambulance service as well as emergency rescue and ambulance service the volunteer rescue squads in many cases although not necessarily in every case receive assistance from governmental units and this assistance may consist of direct grants of funds or equipment or the use of public property equipment and supplies either provided free or at a nominal charge their operations may also be financed through a variety of fund-raising projects and drives revrul_77_388 1977_2_cb_365 holds that taxable articles sold or communications facilities and services furnished to a volunteer ambulance association for its exclusive use come within the exemptions under sec_4041 sec_4221 and sec_4253 revrul_77_388 addresses a volunteer ambulance association that provides emergency services in an area where no other ambulance service is available the association does not charge for its services or the use of its equipment the association s only source_of_income is an annual fund raising drive and contributions the operations of taxpayer under the above-described agreement with county are similar to the operations of the rescue squad in revrul_77_387 and the ambulance association in revrul_77_388 accordingly in the case of taxable articles sold to taxpayer for its exclusive use communications_services and facilities furnished to taxpayer or the use of any highway vehicle by taxpayer taxpayer qualifies for the excise_tax exemptions allowed to state and local governments under g a i and a plr-112449-04 this letter_ruling is directed only to the taxpayer who requested it sec_6110 provides that it shall not be used or cited as precedent sincerely associate chief_counsel passthroughs and special industries by frank boland chief branch enclosures copy of this letter copy for ' purposes


department of the treasury i n t e r n a l r e v e n u e s e r v i c e w a s h i n g t o n d c date o f f i c e o f t h e c h i e f c o u n s e l number info release date conex-115453-12 uil the honorable rodney frelinghuysen schuyler place second floor morristown nj dear representative frelinghuysen this letter responds to your correspondence dated date you requested a clarification of the status of public charter schools as agencies or instrumentalities of a state for purposes of the definition of the term governmental_plan under sec_414 of the internal_revenue_code the code sec_414 of the code generally defines a governmental_plan as a plan that the government of the united_states the government of any state or its political subdivisions or any of their agencies or instrumentalities establishes or maintains for employees of the entity on date the treasury_department and the irs published an advance notice of proposed rulemaking anprm relating to the definition of a governmental_plan under sec_414 of the code copy enclosed an anprm which is typically issued early in the rulemaking process describes an anticipated regulatory approach and seeks input from the public about the guidance under consideration the anprm includes as an attachment draft proposed_regulations that in part define key terms in the definition of governmental_plan including the terms united_states states and political_subdivision of a state describe the multiple factors under consideration for determining whether an entity is an agency_or_instrumentality of the united_states or an agency_or_instrumentality of a state or a political_subdivision of a state provide rules for determining whether a governmental entity has established and maintained a plan for purposes of sec_414 of the code you wrote that the anprm provides that charter school employees would not be eligible to participate in a governmental_plan within the meaning of sec_414 of the code the anprm does not specifically exclude charter schools as governmental conex-115453-12 entities a facts_and_circumstances_test determines whether an entity is a governmental entity this test depends on all facts relating to the particular entity in question the preamble to the guidance under consideration specifically provides that no one factor will determine whether an entity is a governmental entity in addition the factors in the guidance under consideration are generally a compilation of factors from various revenue rulings and court cases dating back to in cooperation with the department of labor and pension_benefit_guaranty_corporation the treasury_department and the irs will review comments we received in response to the anprm as well as input from the general_public at the public hearings and town hall meetings the irs and the treasury_department as well as the department of education plan to meet with representatives from the charter school community to hear their concerns on the anprm this meeting has been scheduled for date after evaluating the comments the cooperative process for drafting a notice of proposed rulemaking nprm will begin after issuing the nprm the treasury_department and the irs will once again give the public an opportunity to submit comments recognizing that we have never issued regulations on the definition of governmental plans within the meaning of sec_414 of the code we anticipate that once issued the regulations will have transition_rules the anprm specifically requests comments on transitional relief we also anticipate that any regulations would not be effective any earlier than the plan_year beginning after the date of publication of the treasury_decision adopting the rules as final regulations i hope this information is helpful if you have any questions please call me at ------------- ------------- or -------------------------------------------- sincerely victoria a judson division counsel associate chief_counsel tax exempt government entities enclosure


internal_revenue_service number release date index number ---------------------- ----------------------------- ---------------------------------- ------------------------------------ ---------------------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact --------------------- id no ------------- telephone number --------------------- refer reply to cc fip b03 plr-149311-09 date date legend legend taxpayer ---------------------------------- dear -------------- this responds to a letter and subsequent correspondence on behalf of taxpayer requesting a ruling regarding the treatment of taxpayer’s investments in certain partnerships the property partnerships for purposes of the gross_income tests in sec_856 and sec_856 of the internal_revenue_code facts taxpayer is a domestic_corporation that has elected to be treated as a real_estate_investment_trust reit under part ii of subchapter_m of the code taxpayer owns a portfolio of commercial properties on its own behalf as well as through joint ventures with unrelated third parties each of which are formed as either limited_partnerships or limited_liability companies for state law purposes and taxable as partnerships for federal_income_tax purposes each a property partnership taxpayer intends to form and invest directly or through one or more wholly-owned subsidiary entities subsidiary entities in one or more property partnerships that will acquire and hold commercial real_estate properties taxpayer will contribute capital to and will be the general_partner or managing member of each property partnership in general each of the partners of the property partnerships will share in the income and distributions of such partnership proportionately ----------------------------------- --------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- plr-149311-09 --------------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------- law and analysis to qualify as a reit for any taxable_year under part ii of subchapter_m an entity must derive at least of its gross_income from sources listed in sec_856 and at least of its gross_income from sources listed in sec_856 sec_1_856-3 of the income_tax regulations provides that in the case of a real_estate_investment_trust which is a partner in a partnership as defined in sec_7701 and the regulations thereunder the trust will be deemed to own its proportionate share of each of the assets of the partnership and will be deemed to be entitled to the income of the partnership attributable to such share for purposes of sec_856 the interest of a partner in the partnership's assets shall be determined in accordance with his capital interest in the partnership the character of the various assets in the hands of the partnership and items of gross_income of the partnership shall retain the same character in the hands of the partners for all purposes of sec_856 thus for example if the trust owns a 30-percent capital interest in a partnership which owns a piece of rental property the trust will be treated as owning percent of such property and as being entitled to percent of the rent derived from the property by the partnership similarly if the partnership holds any property primarily_for_sale_to_customers in the ordinary course of its trade_or_business the trust will be treated as holding its proportionate share of such property primarily for such purpose also for example where a partnership sells real_property or a_trust sells its interest in a partnership which owns real_property any gross_income realized from such sale to the extent that it is attributable to the real_property shall be deemed gross_income from the sale or disposition of real_property held for either the period that the partnership has held the real_property or the period that the trust was a member of the partnership whichever is the shorter holding consistent with sec_1_856-3 we conclude that taxpayer must include in its gross_income for purposes of sec_856 and sec_856 the proportionate amount of gross_income of each property partnership which is determined in accordance with taxpayer’s capital interest ------------------------------------------------------------------in each property partnership and that the character of such income in the hands of each property partnership will retain the same character in the hands of taxpayer for all purposes of sec_856 plr-149311-09 except as specifically ruled upon above no opinion is expressed concerning any federal_income_tax consequences relating to the facts herein under any other provisions of the code including any issues regarding the validity of the allocations of the property partnership income to taxpayer for purposes of sec_704 of the code or under any other partnership provision or the determination of reit taxable_income under sec_857 of the code or whether taxpayer otherwise qualifies as a reit under part ii of subchapter_m this 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 representative 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 sincerely david b silber david b silber chief branch associate chief_counsel financial institutions products cc


tcmemo_2003_243 united_states tax_court james e wells petitioner v commissioner of internal revenue respondent docket no filed date james e wells pro_se jason w anderson for respondent memorandum findings_of_fact and opinion chiechi judge respondent determined the following defi- ciencies in additions under sec_6653 b to and fraud_penalty under sec_6663 on petitioner’s federal_income_tax 1all section references are to the internal_revenue_code in effect for the years at issue all rule references are to the tax_court rules_of_practice and procedure tax additions to tax_year deficiency dollar_figure dollar_figure dollar_figure sec_6653 dollar_figure -- -- sec_6653 -- -- sec_6653 -- dollar_figure -- fraud_penalty sec_6663 -- -- dollar_figure of interest due on dollar_figure the only issue remaining for decision2 is whether petitioner is entitled to a credit for the dollar_figure that he forfeited to the united_states we hold that he is not findings_of_fact some of the facts have been stipulated and are so found at the time petitioner filed the petition in this case he resided in rochester minnesota on a date not disclosed by the record the united_states attorney for the northern district of illinois u s attorney instituted a criminal proceeding against petitioner petitioner’s criminal proceeding and charged him in a document entitled superseding information superseding information with four counts four counts alleging violations of u s c sec_666 bribery u s c sec_844 arson u s c sec bank fraud and sec_7201 income_tax evasion the u s attorney further charged petitioner in the superseding 2petitioner concedes all the determinations in the notice_of_deficiency information as follows from on or about date through date at chicago defendant james e wells knowingly and intentionally for the purpose of evading the filing with the internal_revenue_service of a currency transaction report irs form as re- quired by title united_states_code sec_5313 structured and assisted in structuring and attempted to structure and assist in the structuring of a transaction with domestic financial institutions namely by cashing twenty simultaneously-purchased and sequentially-numbered cashier’s checks each drawn on bell federal savings in the amount of dollar_figure and pay- able to defendant james e wells at the following domestic financial institutions in the following amounts on or about the dates cited date amount financial_institution dollar_figure new rush street currency exchange big_number new rush street currency exchange big_number new milwaukee-ogden currency exchange big_number columbia currency exchange big_number new milwaukee-ogden currency exchange big_number new milwaukee-ogden currency exchange in violation of title united_states_code sections and a from on or about date through date at chicago defendant james e wells knowingly and intentionally for the purpose of evading the filing with the internal_revenue_service of a currency transaction report irs form as re- quired by title united_states_code sec_5313 structured and assisted in structuring and attempted to structure and assist in the structuring of a transaction with domestic financial institutions namely by cashing five simultaneously-purchased and sequentially-numbered cashier’s checks each drawn on national security bank in the amount of dollar_figure and payable to defendant james e wells at the following domestic financial institutions in the following amounts on or about the dates cited date amount financial_institution dollar_figure national security bank big_number new milwaukee-ogden currency exchange big_number new milwaukee-ogden currency exchange in violation of title united_states_code sections and a from on or about date to on or about date defendant james e wells engaged in the above-described conduct in violation of title united_states_code section thereby subjecting to forfeiture to the united_states pursuant to title united_states_code sec_982 and title united_states_code sec_853 and p the following property and interests all of the defendant’s property used and intended to be used in any manner or part to commit or to facilitate the commission of defendant’s violations of title united_states_code section specifically this includes the following dollar_figure of the approximately dollar_figure in cash recovered from personal belongings of defendant james e wells at the time of his arrest by officers of the sarasota police department on or about date in violation of title united_states_code sec_853 and p on date petitioner and petitioner’s attorney james i marcus mr marcus entered into a plea agreement petitioner’s plea agreement with the u s attorney peti- tioner’s plea agreement stated in pertinent part this plea agreement is entirely voluntary and represents the entire agreement between the united_states attorney and defendant regarding defendant’s criminal liability in petitioner’s criminal proceeding this plea agreement concerns criminal liability only and nothing herein shall limit or in any way waive or release any administrative or judicial civil claim demand or cause of action whatsoever of the united_states or its agencies moreover this plea agreement is limited to the united_states attorney’s office for the northern district of illinois and cannot bind any other federal state or local prosecuting administrative or regulatory authorities except as expressly set forth in this plea agreement defendant will enter a voluntary plea of guilty to the superseding information in this case defendant will plead guilty because he is in fact guilty of the charges contained in the superseding information in pleading guilty defendant admits the following facts and that those facts establish his guilt beyond a reasonable doubt nothing in this plea agreement shall limit the internal_revenue_service in its collection of any taxes interest or penalties from defendant or defen- dant’s partnership or corporations defendant under- stands that the amount of tax as calculated by the internal_revenue_service may exceed the amount of tax due as calculated for the criminal case defendant acknowledges that the property identified in the forfeiture allegation contained in the information in this case constitutes substitute assets for the structured cash transactions described in that forfeiture allegation defendant further agrees to the entry of an order forfeiting any interest defendant may hold in the property identified in the forfeiture allegation of the information in this case defendant and his attorney acknowledge that no threats promises or representations have been made nor agreements reached other than those set forth in this plea agreement to cause defendant to plead guilty on date the united_states district_court for the northern district of illinois eastern division entered an order and judgment u s district_court judgment in petitioner’s criminal proceeding the u s district_court judgment in peti- tioner’s criminal proceeding adjudged petitioner guilty of the four counts alleged in the superseding information and also ordered petitioner to forfeit the following property to the united_states the amount of dollar_figure to the united_states on date respondent issued to petitioner a notice_of_deficiency notice with respect to his taxable years and in that notice respondent allowed no credit against the deficiencies additions to tax and penalty that respondent determined for those years amounts due for the years at issue for the dollar_figure forfeited to the united_states pursuant to the u s district_court judgment in petitioner’s criminal proceeding opinion although not alleged in the petition petitioner took the position at trial and takes the position on brief that he is entitled to a dollar_figure credit petitioner’s claimed credit against the amounts due for the years at issue in support of his position petitioner relies on his testimony at trial that at the time he signed petitioner’s plea agreement he instructed his attorney mr marcus to enter into an agreement with the u s attorney to have petitioner’s claimed credit applied against the amounts due for the years at issue on brief petitioner con- tends for the first time that he would not have entered into petitioner’s plea agreement without having had an agreement with the u s attorney to apply petitioner’s claimed credit against the amounts due for the years at issue we are unwilling to rely on petitioner’s testimony about an agreement with the u s attorney to apply petitioner’s claimed credit against the amounts due for the years at issue peti- tioner’s testimony is contradicted by petitioner’s plea agreement and the u s district_court judgment in petitioner’s criminal proceeding on the record before us we find that petitioner is not entitled to petitioner’s claimed credit we have considered all of the contentions and arguments of the parties that are not discussed herein and we find them to be without merit irrelevant and or moot 3respondent argues that even if the court were to find that there was an agreement with the u s attorney to have petitioner’s claimed credit applied against the amounts due for the years at issue no such credit should be permitted that is because according to respondent a line of cases including 356_us_30 152_f3d_1200 9th cir 863_f2d_417 5th cir and 226_f2d_115 4th cir has held that allowing that type of credit would be against public continued to reflect the foregoing and the concessions of petitioner decision will be entered for respondent continued policy we shall not address respondent’s argument in light of our finding that petitioner did not have an agreement with the u s attorney to apply petitioner’s claimed credit against the amounts due for the years at issue


o f f i c e o f t h e c h i e f c o u n s e l department of the treasury i n t e r n a l r e v e n u e s e r v i c e w a s h i n g t o n d c date cc ita b04 conex-129032-11 number release date uil the honorable barbara boxer united_states senator montgomery street suite san francisco ca attention ----------------------- dear senator boxer i am responding to your inquiry of date on behalf of your constituent --- -------------------- he wrote about difficulties that he and his partner experienced filing their federal_income_tax returns for as registered domestic partners in california and his concern that federal tax law does not treat registered domestic partners the same as heterosexual married couples states vary in the degree to which they recognize same-sex relationships civil unions same-sex marriages registered domestic partners the internal_revenue_code on the other hand has just two categories married and unmarried registered domestic partners are not married under california law and thus the law does not recognize them as married for federal tax purposes in addition under current law the defense of marriage act defines marriage as a union between a man and a woman consequently the irs cannot recognize same-sex married couples as married individuals or spouses for purposes of federal tax law the irs has taken the position that because federal tax law respects california community_property law registered domestic partners and same-sex married couples in california must each report one-half of his or her community_income for federal_income_tax purposes chief_counsel_advice issued date the irs is aware that the extension of community_property_laws to registered domestic partners in california has caused some taxpayers to incur increased tax_return preparation fees and has raised some additional legal and compliance issues the irs is currently reviewing these issues and considering how best to ensure that registered domestic partners receive the information they need to timely and accurately complete their federal_income_tax returns conex-129032-11 i hope this information is helpful in responding to ------------- if you have any questions please contact me or ---------------------at --------------------- sincerely michael j montemurro chief branch office of associate chief_counsel income_tax accounting


internal_revenue_service number release date index no cc dom p si - plr-119133-99 date x a d1 year dear this responds to a letter dated date and subsequent correspondence submitted by x’s authorized representative on behalf of x requesting a ruling under sec_1362 of the internal_revenue_code the information submitted states that x was incorporated on d1 of year the sole shareholder of x is a a as x's president represents that a intended for x to elect to be an s_corporation for year its first taxable_year x relied on its accountant to file the necessary documents for purposes of obtaining s_corporation status however due to a misunderstanding or a mistake the accountant did not file a timely form_2553 election by a small_business_corporation for x sec_1362 of the code provides that if-- a an election under sec_1362 is made for any taxable_year after the date prescribed by sec_1362 for making such election for such taxable_year or no such election is made for any taxable_year and b the secretary determines that there was reasonable_cause for the failure to timely make such election the secretary may treat such an election as timely made for such taxable_year based solely on the facts and the representations submitted we conclude that x has established reasonable_cause for failing to make a timely election to be an s_corporation for x’s first taxable_year year accordingly provided that x makes an election to be an s_corporation by filing a form_2553 with the appropriate service_center effective for its year taxable_year within days following the date of this letter then such election will be treated as timely made for x’s year taxable_year a copy of this letter should be attached to the form_2553 except as specifically ruled upon above no opinion is expressed concerning the federal tax consequences of the facts described above under any other provisions of the code including whether x was or is a small_business_corporation under sec_1361 of the code this ruling is directed only to the taxpayer who requested it sec_6110 of the code provides that it may not be used or cited as precedent pursuant to the power_of_attorney on file with this office a copy of this letter is being sent to x’s authorized representative sincerely yours h grace kim branch office of the assistant chief_counsel passthroughs and special industries assist to the chief enclosures copy of this letter copy for sec_6110 purposes


department of the treasury internal_revenue_service washington d c cc intl br1 genin-110280-03 uil date office_of_chief_counsel number info release date ------------------------ -------------------------------------------- ------------------------------------------- ---------------------------------------- dear ------------- reference article teachers and article students and trainees of the u s - israel income_tax treaty in response to your request dated date we are providing the following general information pursuant to section dollar_figure of revproc_2003_1 i r b date this information_letter is advisory only and has no binding effect on the internal_revenue_service if you require a definitive determination of the law applicable to your particular facts you should submit a request for a private_letter_ruling pursuant to the rules set forth in section of revproc_2003_1 you have asked two questions whether individuals may claim the benefits of article students and trainees more than once in a lifetime and whether individuals may claim the benefits of article teachers where they have previously enjoyed the benefits of article students and trainees whether individuals may claim the benefits of article students and trainees more than once in a lifetime article provides the following year u s income_tax exemption for israeli students in the united_states an individual who is a resident of one of the contracting states at the time he becomes temporarily present in the other contracting state and who is temporarily present in that other contracting state for the primary purpose of - ii securing training required to qualify him to practice a profession or professional specialty or iii studying or doing research as a recipient of a grant allowance or award from a governmental religious charitable scientific literary or educational_organization shall be exempt from tax by that other contracting state with respect to amounts described in subparagraph b for a period not exceeding taxable years from the date of his arrival in that other contracting state based on an absence of an explicit prohibition in the treaty and technical explanation an individual may claim the benefits of article more than once in their lifetime however article requires an individual to be a resident of one of the contracting states at the time he becomes temporarily present in the other contracting state neither the treaty itself nor the technical explanation defines the length of time required outside of the united_states for an individual to reestablish residency in israel however the service has previously taken the position under the united_states - netherlands income_tax treaty as it existed in that individuals may claim benefits under the student article more than once in a lifetime provided they leave the united_states for at least one year and that upon their return they meet the requirements for the exemption under the applicable treaty revrul_56_164 c b pincite revrul_56_164 expands its provisions beyond the netherlands treaty stating that its principles also apply to other income_tax conventions which contain language similar to that here considered see eg revrul_77_242 c b pincite stating that a visiting professor from the united kingdom must be absent from the united_states for at least year after the expiration of an initial year exemption period before another year exemption period begins therefore an individual must leave the united_states for at least one year and reestablish residence in israel before returning to the united_states as a student whether individuals may claim the benefits of article teachers where they have previously enjoyed the benefits of article students and trainees article teachers provides a two year exemption from u s income taxes under the following circumstances where a resident of one of the contracting states is invited by the government of the other contracting state a political_subdivision or a local authority thereof or by a university or other recognized educational_institution in that other contracting state to come to that other contracting state for a period not expected to exceed years for the purpose of teaching or engaging in research or both at a university or other recognized educational genin-110280-03 institution and such resident comes to that other contracting state primarily for such purpose his income from personal services for teaching or research at such university or educational_institution shall be exempt from tax by that other contracting state for a period not exceeding years from the date of his arrival in that other contracting state article clearly contemplates a situation where an individual claims the benefits of both article teachers and article students and trainees article provides a total time limit of years for individuals claiming the benefits of both articles the benefits provided under article teachers and paragraph of this article shall when taken together extend only for such period of time not to exceed taxable years from the date of arrival of the individual claiming such benefits as may reasonably or customarily be required to effectuate the purpose of the visit furthermore article provides that the benefits provided under article teachers shall not be available to an individual if during the immediately preceding period such individual enjoyed the benefits of paragraph of this article the treasury technical explanation reprinted in tax_treaties cch reiterates the requirement that individuals who have claimed benefits under article must leave the united_states before returning as a teacher a n israeli individual who originally entered the united_states for the purpose of becoming a student and received benefits under paragraph must leave the united_states and if necessary reestablish residence in israel and then return at the invitation of the united_states for the primary purpose of becoming a teacher in order to take advantage of article based on article and its treasury technical explanation an individual may enjoy the benefits of article after previously studying in the united_states and excluding income under article however such an individual must leave the united_states for at least one year and reestablish residence in israel if such status was lost while a student in the united_states before returning to the united_states as a teacher genin-110280-03 if you have any questions please feel free to contact --------------------------of my staff at -------- ------------- sincerely ______________________________ w e williams senior technical reviewer branch associate chief_counsel international


internal_revenue_service department of the treasury number release date index number washington dc person to contact telephone number refer reply to cc psi plr-100191-02 date may legend corporation state a b c d e f g h dear we received your letter requesting rulings under sec_216 of the internal_revenue_code this letter responds to your request the represented facts are as follows corporation is a cooperative_housing_corporation organized under the laws of state corporation owns a building which consists of a residential units and a ground floor with b nonresidential units currently c shares of common_stock have been allocated to the residential units no stock has been plr-100191-02 allocated to the nonresidential space on the ground floor corporation proposes to create one commercial unit attributable to the d square feet currently occupied by one of corporation’s commercial tenants corporation intends to issue and sell e shares of common_stock attributable to the commercial unit the shares for the commercial unit will be fully paid up in an amount which bears a reasonable relationship to the portion of the value of corporation’s equity in the building and land attributable to the commercial unit the proprietary lease will entitle the purchaser to use the commercial unit either for retail or as a residential apartment the lease will also allow the purchaser to make whatever renovations and alterations necessary to convert the commercial space into a dwelling the purchaser will at all times have the right as against corporation to occupy the commercial unit for dwelling purposes corporation has submitted the opinions of a real_estate appraiser and an architectural firm on the reasonableness of converting the commercial unit to residential use the zoning rules and regulations of state allow the commercial unit to be converted as of right to residential use the commercial unit can be converted to a residential apartment similar to other apartments in the building for a total cost of dollar_figuref the fair_market_value of the commercial unit after conversion to a residential apartment is approximately dollar_figureg the cost of conversion is roughly h of the fair_market_value of the commercial unit after conversion to a residential apartment the conversion of the commercial units to residential use is reasonable under all the facts and circumstances you requested the following rulings provided that corporation satisfies the requirements of sec_216 c and d of the code neither the issuance of stock by corporation to be allocated to the commercial unit nor the possible nonresidential use of the commercial unit will prevent corporation from qualifying as a cooperative_housing_corporation within the meaning of sec_216 of the code a person who purchases the stock of corporation attributable to the commercial unit for the commercial use of such space will qualify as a tenant- stockholder for purpose of sec_216 provided such stock is fully paid up and in an amount which bears a reasonable relationship to the portion of the value of corporation’s equity in the building and land attributable to the unit which the purchaser is entitled to occupy sec_216 provides that in the case of a tenant-stockholder as defined in sec_216 there will be allowed as a deduction amounts not otherwise deductible paid_or_accrued to a cooperative_housing_corporation within the taxable_year but only to the extent that such amounts represent the tenant-stockholder’s_proportionate_share of plr-100191-02 -- the real_estate_taxes allowable as a deduction to the corporation under sec_164 which are paid_or_incurred by the corporation on the houses or apartment building and on the land on which such houses or building are situated or the interest allowable as a deduction to the corporation under sec_163 which is paid_or_incurred by the corporation on its indebtedness contracted -- a in the acquisition construction alteration rehabilitation or maintenance of the house or apartment building or b in the acquisition of the land on which the houses or apartment building are situated sec_216 provides that the term cooperative_housing_corporation means a corporation -- a having one and only one class of stock outstanding b each of the stockholders of which is entitled solely by reason of his ownership of stock in the corporation to occupy for dwelling purposes a house or and apartment in a building owned or leased by such corporation c no stockholder of which is entitled either conditionally or unconditionally to receive any distribution not out of earnings_and_profits of the corporation except on a complete or partial_liquidation of the corporation and d percent or more of the gross_income of which for the taxable_year in which the taxes and interest described in sec_216 are paid_or_incurred is derived from tenant- stockholders sec_216 provides that the term tenant stockholder means a person who is a stockholder in a cooperative_housing_corporation and whose stock is fully paid-up in an amount not less than an amount shown to the satisfaction of the secretary as bearing a reasonable relationship to the portion of the value of the corporation’s equity in the houses or apartment building and the land on which situated which is attributable to the house or apartment which such person is entitled to occupy sec_1_216-1 of the income_tax regulations provides that in order for the corporation to qualify as a cooperative_housing_corporation each stockholder of the corporation must be entitled to occupy for dwelling purposes an apartment in a building or a unit in a housing development owned or leased by the corporation the stockholder is not required to occupy the premises the right as against the corporation to occupy the premises is sufficient if conferred on each stockholder solely by reason of ownership of stock in the corporation in other words the stock must entitle the owner thereof to occupy the premises or to a lease of the premises the fact that the right to continue to occupy the premises is dependent upon the payment of charges to the corporation in the nature of rentals or assessments is immaterial revrul_74_241 1974_1_cb_68 provides that for purposes of sec_216 the term apartment in a building means an independent housekeeping unit consisting of one or more rooms containing facilities for cooking sleeping and sanitation normally found in a principal_residence revrul_90_35 1990_1_cb_48 provides that revrul_74_241 does not require that a unit presently contain all the facilities normally found in a principal_residence in order to plr-100191-02 constitute an apartment in a building for purposes of sec_216 accordingly a unit will be treated as meeting that definition if the stockholder is entitled to convert the unit to an apartment as defined in revrul_74_241 solely by reason of ownership of stock in the cooperative_housing_corporation the conversion of the unit would be reasonable under all the facts and circumstances including structural feasability and cost and the applicable zoning building and fire codes permit both the conversion and residential use of the unit as a matter of right whether conversion of a unit to residential use is reasonable will depend on all the facts and circumstances generally conversion will be reasonable where the unit is structurally similar to existing residential units in the building has ready access to plumbing and utility sources and the cost of converting the unit to residential use is not disproportionate to the fair_market_value the unit would have if the unit were sold as a residence revrul_90_35 considers the following facts x corporation is a cooperative_housing_corporation as defined in sec_216 of the code that owns land and a building thereon containing apartments all units in the multistory building are residential apartments except for three units on the ground floor that are leased for use as professional offices all of x’s issued and outstanding shares are allocated to the residential apartments in the building x proposes also to allocate authorized but unissued shares to the professional office units and sell them to the corporate or individual occupants of those offices the professional units are structurally similar to residential units in the building although the offices do not contain sleeping or cooking facilities they do contain one or more rooms that contain sanitation facilities normally found in a dwelling_unit moreover it would be reasonable to add sleeping and cooking facilities normally found in a dwelling_unit to the office units under all the facts and circumstances the cost of adding sleeping and cooking facilities is equal to approximately percent of the fair_market_value the professional units would have if they were sold as residential units ownership of the shares attributable to the office units would entitle the tenant- stockholders to install sleeping and cooking facilities and occupy the units for dwelling purposes upon approval of the board_of directors of the corporation x has agreed that such approval would not be unreasonably withheld and that it would cooperate in effecting the conversion the entire building including the professional office units is located in an area that is zoned for residential use except that the ground floor may have certain enumerated nonresidential uses that include use as plr-100191-02 professional offices the ground floor units could be converted from office use to residential apartment use as a matter of right under the applicable local zoning building and fire codes further in situation of revrul_90_35 the shares allocated to one of the professional offices will be sold to a third party rather than the current occupant the existing commercial lease has one year to run until it terminates if shares are allocated to the unit and sold to a third party the third party will succeed to the lessor’s rights and obligations under the existing commercial lease applying the above standards to the facts and representations submitted and subject_to the below limitations we conclude provided that corporation satisfies the requirements of sec_216 c and d of the code neither the issuance of stock by corporation to be allocated to the commercial unit nor the possible nonresidential use of the commercial unit will prevent corporation from qualifying as a cooperative_housing_corporation within the meaning of sec_216 of the code and a person who purchases the stock of corporation attributable to the commercial unit for the commercial use of such space will qualify as a tenant-stockholder for purpose of sec_216 provided such stock is fully paid up and in an amount which bears a reasonable relationship to the portion of the value of corporation’s equity in the building and land attributable to the unit which the purchaser is entitled to occupy except as specifically ruled herein we neither express nor imply any opinion concerning the federal tax consequences under the cited provisions or any other provision of the code 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 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 your representative a copy of this letter must be attached to any income_tax return to which it is relevant sincerely joseph h makurath special technician reviewer branch office of the associate chief_counsel passthroughs and special industries