internal_revenue_service department of the treasury index number number release date washington dc person to contact telephone number refer reply to cc dom p si plr-117319-98 date date legend x state d1 this responds to your representative’s letter dated date written on behalf of x requesting a ruling that x’s s_corporation status will be effective as of d1 facts x was incorporated under state law on di x’s shareholders intended that x be a subchapter_s_corporation from d1 however the s_corporation_election under sec_1362 of the internal_revenue_code was not timely filed s_corporation sec_1362 provides that a small_business_corporation may elect to be an law and analysis sec_1362 provides the rule on when an s election will be effective if an s election is made within the first two and one-half months of a corporation’s taxable_year then that corporation will be treated as an s_corporation for the year in which the election is made if an s election is made after the first two and one-half months of a cc dom p si plr-117319-98 corporation’s taxable_year then that corporation will not be treated as an s_corporation until the taxable_year after the year in which the s election is made sec_1362 provides that if no sec_1362 election is made for any taxable_year and the secretary determines that there was reasonable_cause for the failure to timely make such election then the secretary may treat such an election as timely made for such taxable_year and effective as of the first day of its tax_year x’s s_corporation_election was not filed timely for the election to be effective as of d1 nevertheless x has established reasonable_cause for not making a timely election and is entitled to relief under sec_1362 conclusion based solely on the facts submitted and representations made and assuming that x otherwise qualifies as a subchapter_s_corporation as of d1 we conclude that x will be recognized as an s_corporation effective d1 please file with the applicable service_center a completed form_2553 reflecting x’s election of subchapter_s_corporation status as of d1 the election must be filed within days of the date of this letter and a copy of this letter must be attached to the election except as specifically set forth above no opinion is expressed concerning the federal tax consequences of the facts described above under any other provision of the code specifically no opinion is expressed concerning whether x otherwise satisfies the s_corporation eligibility requirements this ruling is directed only to the taxpayer who requested it sec_6110 provides that it may not be used or cited as precedent sincerely signed dianna k miosi dianna k miosi chief branch office of the assistant chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes


department of the treasury internal_revenue_service washington d c tax_exempt_and_government_entities_division uniform issue list apr xx xxx xxx xx xxxxx legend taxpayer ira amount financial_institution a financial_institution b dearxxxxx xxx xx xxxxx xxxxx xx xxx xxxxx this is in response to your request dated date as supplemented by correspondence dated date date date and date in which you request a waiver of the 60-day rollover requirement contained in sec_408 of the internal_revenue_code the code the following facts and representations have been submitted under penalty of perjury in support of the ruling requested taxpayer represents that she received a distribution from ira totaling amount taxpayer asserts that her failure to accomplish a rollover within the 60-day period prescribed by sec_408 of the code was due to a mistake made by financial_institution a taxpayer represents that on date she took a distribution from ira totaling amount on date taxpayer contacted an employee of financial_institution a and instructed her to deposit amount into an ira with financial_institution b however the employee of financial_institution a did not transfer amount into an account with financial_institution b until date after the 60-day rollover period deadline taxpayer has provided documentation indicating both that within the 60-day rollover period taxpayer requested amount to be rolled over to an ira with financial_institution band that an employee with financial_institution b stated that amount would be rolled over to an ira at financial_institution b based on the facts and representations you request a ruling that the internal_revenue_service the service waive the 60-day rollover requirement contained in sec_408 d of the code with respect to the distribution of amount sec_408 of the code provides that except as otherwise provided in sec_408 of the code any amount_paid or distributed out of an ira shall be included in gross_income by the payee or distributee as the case may be in the manner provided under sec_72 of the code sec_408 of the code defines and provides the rules applicable to ira_rollovers sec_408 of the code provides that sec_408 of the code does not apply to any amount_paid or distributed out of an ira to the individual for whose benefit the ira is maintained if i the entire amount received including money and any other_property is paid into an ira for the benefit of such individual not later than the 60th day after the day on which the individual receives the payment or distribution or ii the entire amount received including money and any other_property is paid into an eligible_retirement_plan other than an ira for the benefit of such individual not later than the 60th day after the date on which the payment or distribution is received except that the maximum amount which may be paid into such plan may not exceed the portion of the amount received which is includible in gross_income determined without regard to sec_408 of the code sec_408 of the code provides that sec_408 of the code does not apply to any amount described in sec_408 of the code received by an individual from an ira if at any time during the 1-year period ending on the day of such receipt such individual received any other amount described in sec_408 of the code from an ira which was not includible in gross_income because of the application of sec_408 of the code sec_408 of the code provides a similar 60-day rollover period for partial rollovers 201428018' sec_408 of the code provides that the rollover provisions of sec_408 of the code do not apply to any amount required to be distributed under sec_408 of the code sec_408 of the code provides that the secretary may waive the day requirement under sec_408 and sec_408 of the code where the failure to waive such requirement would be against equity or good conscience including casualty disaster or other events beyond the reasonable control of the individual subject_to such requirement only distributions that occurred after date are eligible for the waiver under sec_408 of the code revproc_2003_16 i r s date provides that in determining whether to grant a waiver of the 60-day rollover requirement pursuant to sec_408 of the code the service will consider all relevant facts and circumstances including errors committed by a financial_institution inability to complete a rollover due to death disability hospitalization incarceration restrictions imposed by a foreign_country or postal error the use of the amount distributed for example in the case of payment by check whether the check was cashed and the time elapsed since the distribution occurred the information presented and documentation submitted by taxpayer including documentation showing that within the 60-day rollover period taxpayer requested and an employee at financial_institution b stated that amount would be rolled over to an ira at financial_institution are consistent with her assertion that her failure to accomplish a timely rollover was caused by financial_institution a's delay of the transfer of amount to an ira held by financial_institution b therefore pursuant to sec_408 of the code the service hereby waives the 60-day rollover requirement with respect to the distribution of amount from ira taxpayer is granted a period of days from the issuance of this ruling letter to contribute amount into an ira or other eligible_retirement_plan provided all other requirements of sec_408 of the code except the 60-day requirement are met with respect to such contribution the contribution of amount will be considered a rollover_contribution within the meaning of sec_408 of the code this ruling does not authorize the rollover of amounts that are required to be distributed by sec_401 a of the code no opinion is expressed as to the tax treatment of the transaction described in this ruling under the provisions of any other section of either the code or regulations which may be applicable this letter is directed only to the taxpayer who requested it sec_611 o k of the code provides that it may not be used or cited as precedent if you wish to inquire about this ruling please contact xxxxx at xxxxx please address all correspondence to se t ep ra t2 sincerely yo r u l jason e evi e manager employee_plans technical group fju v enclosures ruling letter notice of intention to disclose


id office uilc cca_2008112011544551 ---------------------------- number release date from -------------------- sent thursday date am to ---------------- cc ---------------------- subject form_900 memo -------- - -----------------------and i have reviewed the transcripts related to the the csed issue addressed in the memo we discussed with you previously the transcript clearly reflects a csed extension on date this is less than days before the indicator of an installment_agreement on date while we recognize that there also is an indicator for an installment_agreement on date we assume that was an installment_agreement that defaulted - and it would seem to us to be completely logical that the irs would demand an extension of the csed after a default as was previously discussed with you the practice of the irs at the time of obtaining extensions in this type of situation as reflected in the transcript would be strong circumstantial evidence of the requirement for the csed extension in connection with the installment_agreement given the closeness in time and the fact that the csed extension preceded the installment_agreement the proper conclusion is that the csed extension was in connection with the installment_agreement thereby making the csed still valid the absence of the actual closing_agreement is not an impediment to making this showing in court because the transcript is presumptively correct consistent with our position on the validity of csed extensions after rra98 the irs should take the position that the csed was extended the memo to ------------------ at the taxpayer_advocate_service should be withdrawn and revised to reflect that conclusion -------- ------------------------ ------- --------------- --------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- ------------------------------------- ------------------------------------


t c memo united_states tax_court perry h kay sr petitioner v commissioner of internal revenue respondent docket no filed date emil r sargent for petitioner portia n rose for respondent memorandum findings_of_fact and opinion goldberg special_trial_judge respondent determined a deficiency in petitioner’s federal_income_tax for the taxable_year in the amount of dollar_figure unless otherwise indicated section references are to the internal_revenue_code in effect for the year at issue and all rule references are to the tax_court rules_of_practice and procedure - - after concessions by respondent ’ the remaining issues for decision are whether petitioner is entitled to deduct certain schedule c profit or loss from business_expenses for the year at issue and whether petitioner is entitled to a casualty_loss deduction of dollar_figure for findings_of_fact some of the facts have been stipulated and are so found the stipulation of facts and the attached exhibits are incorporated herein by this reference at the time the petition was filed petitioner resided in houston texas petitioner holds a master’s degree in music education from the university of north texas petitioner was employed as a full-time band teacher for years of those years at lanier middle school in houston texas since retiring from full-time employment petitioner has taught band part time during petitioner was employed as a part-time assistant band director for the north forest independent school district in a stipulation of settled issues filed with the court on date respondent conceded for the taxable_year that petitioner is entitled to a dependency_exemption claimed for his son head_of_household filing_status an educational credit of dollar_figure and business_expense deductions on schedule c profit or loss from business of dollar_figure for legal or professional expense and dollar_figure for professional and musician dues at trial respondent conceded that petitioner is entitled to a schedule c expense deduction of dollar_figure for music educator and professional convention expenses_incurred with respect to petitioner’s attending the international association of jazz educators convention in new york city during petitioner also operated pk production and management pk production a small_business providing music entertainment services petitioner managed and played in a band for compensation_for the year at issue the band only participated in four or five paid engagements with respect to pk production petitioner claimed that on date he placed_in_service a dodge caravan van which was purchased in during the year at issue petitioner used the van to transport musical equipment to and from the band’s engagements petitioner testified that during the van was used primarily for pk production business purposes on schedule c petitioner claimed various business_expense deductions in the operation of pk production petitioner’s claimed expense deductions that are at issue include a sec_179 expense deduction of dollar_figure for the van expenses in connection with the van for business-related travel of dollar_figure production and management fees of dollar_figure and music educator and professional convention expenses of dollar_figure during petitioner owned a three-bedroom ranch-type house located pincite heatherbrook drive houston texas on date a rain and wind storm damaged the roof and several rooms of petitioner’s house petitioner reported the incident to the state farm insurance_company state farm with q4e- whom petitioner maintained a homeowner’s insurance_policy during on date state farm settled the claim with petitioner for dollar_figure on date petitioner retained a contractor to replace rotten decking and install a new roof on petitioner’s house for the year at issue petitioner claimed a casualty_loss deduction on schedule a itemized_deductions of dollar_figure related to the damage caused by the storm in the notice_of_deficiency respondent disallowed the following the entire sec_179 expense deduction claimed on schedule c because petitioner did not establish the percentage of business use for the van and failed to provide other supporting information required to substantiate the deduction the business-related travel expense for the van claimed on schedule c because petitioner failed to provide the supporting information necessary to establish that the deduction was a incurred during the taxable_year and b an ordinary and necessary business_expense expenses claimed on schedule c for a production and management fees and b music educator and professional convention expenses because petitioner did not substantiate that these expenses were paid_or_incurred during the taxable_year and were ordinary and necessary business_expenses and the entire casualty_loss deduction claimed on schedule a because petitioner did not establish that a a casualty or theft occurred and b any loss was sustained _- _- opinion the determinations of the commissioner in a notice_of_deficiency are presumed correct and the burden is on the taxpayer to show that the determinations are incorrect rule a 290_us_111 deductions are a matter of legislative grace and the taxpayer bears the burden of proving the entitlement to any deduction claimed 503_us_79 292_us_435 a taxpayer 1s required to maintain records sufficient to establish the amount of his or her income and deductions sec_6001 sec_1_6001-1 e income_tax regs schedule c--business expense deductions sec_162 allows a taxpayer to deduct all ordinary and necessary business_expenses paid_or_incurred during the taxable_year in carrying on any trade_or_business to be ordinary the transaction which gives rise to the expense must be of a common or frequent occurrence in the type of business involved 308_us_488 to be necessary an expense must be appropriate and helpful to the taxpayer’s business welch v helvering supra pincite additionally the sec_7491 does not apply in this case to place the burden_of_proof on respondent because petitioner neither alleged that sec_7491 was applicable nor established that he fully complied with the substantiation requirements of sec_7491 a a -- - expenditure must be directly connected with or pertaining to the taxpayer’s trade_or_business sec_1_162-1 income_tax regs generally if a claimed business_expense is deductible but the taxpayer is unable to fully substantiate it the court is permitted to make as close an approximation as it can bearing heavily against the taxpayer whose inexactitude is of his or her own making 39_f2d_540 2d cir the estimate must have a reasonable evidentiary basis 85_tc_731 however sec_274 supersedes the doctrine_of cohan v commissioner supra sec_1_274-5t temporary income_tax regs fed reg date and requires strict substantiation of expenses for travel meals and entertainment and gifts and with respect to any listed_property as defined in sec_280f sec_274 listed_property includes any passenger_automobile or any other_property used as a means of transportation sec_280f d a and ii a taxpayer is required by sec_274 to substantiate a claimed expense by adequate_records or by sufficient evidence corroborating the taxpayer’s own statement establishing the amount time place and business_purpose of the expense sec_274 even if such an expense would otherwise be deductible the deduction may still be denied if there is insufficient - substantiation to support it sec_1_274-5t temporary income_tax regs supra a vehicle-related expenses on schedule c petitioner claimed both a sec_179 expense deduction for dollar_figure and business-related vehicle expenses of sbig_number on the same vehicle it is unclear from the record whether petitioner used actual expenses or the standard mileage rate to calculate the claimed deduction of dollar_figure no evidence was introduced to substantiate any actual expenses_incurred and the number of business miles claimed on schedule c multiplied by the standard mileage rate is not equal to the amount of the claimed deduction actual expenses related to the business use of a vehicle are deductible under sec_274 if substantiated if actual expenses were used to determine the business-related vehicle expenses claimed petitioner having failed to substantiate any such expense is not entitled to the business-related vehicle expenses claimed see sec_274 alternatively a taxpayer may choose to use the business standard mileage rate in lieu of the actual automobile expenses 60_tc_503 parker v commissioner tcmemo_1993_15 revproc_97_58 1997_2_cb_3 petitioner reported big_number business-related miles and claimed a deduction of dollar_figure the standard mileage rate of cents per mile multiplied by big_number miles equals dollar_figure --- - however the business standard mileage rate may not be used to compute deductible expenses if the taxpayer has claimed a sec_179 expense deduction on the same vehicle revproc_97_58 1997_2_cb_587 thus petitioner may not claim deductions on the van for both the sec_179 expense and the standard mileage rate assuming petitioner could substantiate entitlement to a deduction for both expenses petitioner would be limited to either the sec_179 expense deduction or the standard mileage rate deduction but not both sec_179 expense petitioner claimed a sec_179 expense deduction of dollar_figure on schedule c for the year at issue for the taxable_year sec_179 allows a taxpayer to elect to expense as a deduction for the year in which the property was placed_in_service up to dollar_figure of the cost of certain property acquired for use in the active_conduct_of_a_trade_or_business sec_179 b d the term ‘placed in service’ means the time that property is first placed by the taxpayer in a condition or state of readiness and availability for a specifically assigned function whether for use in a trade_or_business for the production_of_income in a tax-exempt activity or in a personal activity sec_1 e income_tax regs petitioner claimed on form_4562 depreciation and amortization that the van was placed_in_service on january --- - however petitioner presented an invoice at trial for the purchase of the van dated date further petitioner testified that the van was driven for personal_use part of the time therefore the only evidence presented on this point indicates that the van was first placed_in_service in a personal activity in the sec_179 expense is allowed as a deduction only in the year the property is placed_in_service see sec_179 hendrix v commissioner tcmemo_1990_221 sec_1_179-4 income_tax regs accordingly petitioner is not entitled to the sec_179 expense deduction claimed on the van in ii bussiness standard mileage rate expense since we found above that petitioner is not entitled toa sec_179 expense deduction petitioner may use the standard mileage rate to calculate the business-related vehicle expenses on the van if substantiated the business standard mileage rate in lieu of operating and fixed costs allows the taxpayer to deduct an amount determined by multiplying the business standard mileage rate for the year at issue by the number of miles driven for business purposes revproc_97_58 1997_2_cb_587 the standard mileage rate for wa sec_32 cents per mile id petitioner reported big_number miles driven for business purposes on schedule c for the year at issue petitioner claimed -- - a vehicle expense deduction of dollar_figure at trial petitioner presented no evidence to substantiate the business mileage reported or the vehicle expense claimed petitioner testified that he did not keep his business mileage petitioner’s witness alonza o c sargent testified that petitioner did maintain a mileage log but no such log was introduced at trial as stated above sec_274 requires strict substantiation for deductions claimed for transportation in a passenger car petitioner is required to provide a mileage log or other corroborative evidence sufficient to establish the amount time place and business_purpose of the expense sec_274 at trial petitioner failed to provide any corroborating evidence whatsoever to satisfy the sec_274 substantiation requirements based on a partial mileage log reviewed by respondent during an examination prior to trial respondent conceded that petitioner was entitled to big_number business miles applying the standard mileage rate for respondent concedes that petitioner is entitled to a vehicle expense deduction of dollar_figure for the year at issue although petitioner did not substantiate entitlement to a deduction in any amount at trial we shall not disturb the respondent’s concession accordingly petitioner is the partial mileage log was not introduced at trial entitled to a vehicle expense deduction of dollar_figure for the year at issue b production and management fees petitioner claimed a business_expense deduction for production and management fees in the amount of dollar_figure on schedule c for the year at issue at trial petitioner presented documentation substantiating dollar_figure of the amount claimed we are satisfied that the substantiated items are ordinary and necessary business_expenses directly connected with petitioner’s schedule c business as required under sec_162 and the regulations thereunder petitioner presented absolutely no evidence either documentary or testimonial to substantiate the additional dollar_figure of expenses claimed petitioner is not entitled toa deduction for business_expenses that are completely unsubstantiated 90_tc_74 therefore petitioner is entitled to a schedule c business_expense deduction only for production and management fees in the amount of dollar_figure for the year at issue c music educator and professional convention expense petitioner claimed a business_expense deduction for music educator and professional convention expenses in the amount of dollar_figure on schedule c for the year at issue after respondent’s concession allowing a deduction of dollar_figure for expenses related to the new york city convention only dollar_figure of the total claimed expense remains at issue the majority of the remaining expenses was incurred in connection with two other conventions attended by petitioner during in date petitioner attended the texas music erducators association convention in san antonio texas petitioner claimed business_expenses relating to the convention in the amount of dollar_figure in date petitioner attended the texas bandmasters association convention in san antonio texas petitioner claimed business_expenses relating to the convention in the amount of dollar_figure respondent asserts that the expenses_incurred with respect to both san antonio texas conventions relate to petitioner’s employment as an assistant band director and not to pk production at trial petitioner testified that the claimed expenses relating to the conventions pertained to both pk production and his employment as a band educator however petitioner failed to allocate the expenses accordingly claiming the expenses entirely as business_expenses on schedule c petitioner further testified that the conventions were related to his schedule c business because the conventions offered seminars and workshops that benefited petitioner as a musician were attended by other bands’ members who shared some different techniques and various things that would benefit any professional musician and provided exhibits featuring manufacturers and distributors selling professional eguipment while petitioner may have attended seminars and engaged in conversations with various individuals about techniques and equipment at the conventions we believe that these activities are not directly connected with or pertaining to petitioner’s schedule c business sec_1_162-1 income_tax regs the fact that petitioner may have derived some incidental or indirect benefit to his business by attending the conventions is not sufficient to satisfy the regquirements of sec_162 see 36_tc_879 the registration forms presented by petitioner at trial clearly establish that the conventions were organized by educational associations for the benefit of music educators the texas music educators association convention membership application requested information pertaining to the applicant’s teaching division and level on the application petitioner selected that he taught band at the middle school junior high school level petitioner completed the texas bandmasters association convention registration form indicating that he was affiliated with the oak village middle school further petitioner only selected the middle school option when asked to select the appropriate options that applied to the applicant petitioner unequivocally completed both applications as an educator making no mention whatsoever of pk production petitioner testified that he had a choice of associating himself with the school or pk production when completing the applications yet petitioner chose to affiliate himself with the school on both occasions it appears to the court that from the evidence presented that petitioner attended both san antonio texas conventions primarily in his capacity as an assistant band director the record is clear that petitioner has failed to establish that the expenses associated with the san antonio texas conventions claimed on schedule c were ordinary and necessary expenses directly related to pk production see sec_162 sec_1 l a income_tax regs petitioner presented absolutely no evidence either documentary or testimonial to substantiate the additional dollar_figure of expenses claimed as music educator and professional convention expenses petitioner is not entitled to a deduction for business_expenses that are completely unsubstantiated ronnen v commissioner supra therefore petitioner is not entitled to a schedule c -- - deduction in any amount for the dollar_figure of expense claimed as music educator and professional convention expenses however since we found that petitioner incurred convention expenses of dollar_figure relating to his employment as an assistant band director we must determine whether these expenses are deductible as unreimbursed employee_expenses on schedule a itemized_deductions subject_to the 2-percent floor under sec_67 a a taxpayer is not allowed an unreimbursed employee expense deduction if the employer maintains a reimbursement plan and the employee fails to seek reimbursement for work-related expenses 85_tc_798 there is absolutely nothing in the record to indicate whether petitioner’s employer maintained a reimbursement plan in the year at issue nor has petitioner provided any evidence to establish that he sought reimbursement for the convention expenses accordingly petitioner is not entitled to claim unreimbursed employee_expenses on schedule a for the expenses related to either of the san antonio texas conventions assuming arguendo that petitioner was entitled to claim unreimbursed employee_expenses of dollar_figure on schedule a petitioner would not be entitled to a deduction because the total unreimbursed employee_expenses are not greater than percent of the recomputed adjusted_gross_income as required under sec_67 a -- - d result of schedule c adjustments above consistent with the findings above we have recalculated petitioner’s schedule c loss from pk production petitioner is entitled to a loss of dollar_figure on schedule c for the year at issue petitioner’s adjusted_gross_income is also recomputed to reflect this amount petitioner’s recomputed adjusted_gross_income is dollar_figure for the year at issue casualty_loss deduction sec_165 allows a taxpayer to deduct any loss sustained during the taxable_year and not_compensated_for_by_insurance_or_otherwise as relevant here sec_165 allows a deduction to an individual for loss of property not connected with a trade_or_business or a transaction entered into for profit if such loss arises from fire storm shipwreck or other_casualty pursuant to sec_165 personal casualty losses described under sec_165 are deductible only to the extent that the loss exceeds dollar_figure and percent of the taxpayer’s adjusted_gross_income moreover such losses are deductible as itemized_deductions on schedule a of the taxpayer’s return pursuant to sec_1_165-7 income_tax regs in the case of property partially destroyed by casualty the loss deductible for purposes of sec_165 is the difference - between the fair_market_value of the property immediately before the casualty and the fair_market_value of the property immediately after the casualty with the deductible amount not to exceed the adjusted_basis of the property fair_market_value approach to establish the amount of the loss the relevant fair market values of the property shall generally be ascertained by competent appraisal sec_1_165-7 income_tax regs the appraisal must be conducted in a manner to ensure that any casualty_loss deduction be limited to the actual loss resulting from damage to the property id sec_1_165-7 income_tax regs provides that the cost of repairs to the damaged property is acceptable as evidence of the loss of value to the property cost of repairs approach in order to use this alternative approach the taxpayer must show the repairs are necessary to restore the property to its condition immediately before the casualty the amount spent for such repairs is not excessive the repairs do not care for more than the damage suffered and the value of the property after the repairs does not as a result of the repairs exceed its value immediately before the casualty id for the year at issue petitioner claimed a casualty_loss deduction of dollar_figure on schedule a petitioner determined the - - casualty_loss amount on form_4684 casualties and thefts applying the fair_market_value approach on form_4684 petitioner reported the fair_market_value of the property before and after the casualty to be dollar_figure and dollar_figure respectively the dollar_figure difference in the fair market values reported was first reduced by dollar_figure then further reduced by dollar_figure percent of the adjusted_gross_income shown on the return thereby petitioner computed a casualty_loss of dollar_figure no insurance reimbursement was reported on the form_4684 a fair_market_value approach at trial petitioner offered no evidence to substantiate the fair market values reported on form_4684 petitioner did present a uniform residential appraisal report report which estimated the market_value of petitioner’s residence as of date to be dollar_figure the report makes no mention of the damage claimed by petitioner nor states that the appraised amount was based on a value before or after the date of the storm because the appraised value was determined as of date approximately month after the storm and before any repairs were made we believe the dollar_figure figure represents the fair_market_value of the property taking into consideration any damage resulting from the storm since no evidence of the fair market the uniform residential appraisal report states that date was the date of inspection of the property - - value of the property immediately prior to the storm was presented at trial petitioner has failed to provide the information necessary to apply the fair_market_value approach thus petitioner is not entitled to the dollar_figure casualty_loss deduction claimed applying the fair_market_value approach b cost of repairs approach at trial petitioner presented many documents in his attempt to substantiate the casualty_loss deduction applying the cost of repairs approach the documents were stipulated by the parties and are part of the record petitioner presented a copy of the insurance settlement claim from state farm in the amount of dollar_figure a contract with carl b adams to install a new roof and replace rotten decking for dollar_figure three receipts from carl b adams acknowledging payment of dollar_figure a receipt to haul and dump roofing materials for dollar_figure two receipts from commercial sand totaling dollar_figure three receipts from builders square store totaling dollar_figure a receipt from olshan lumber company for dollar_figure and a credit invoice from olshan lumber company for items returned in the amount of dollar_figure accordingly petitioner presented documentation totaling dollar_figure to replace his roof and received dollar_figure in insurance proceeds thus petitioner’s net out-of- pocket expense was dollar_figure net expense petitioner testified that he spent over dollar_figure to repair - - the damage to his residence but could not remember the exact amount while we are permitted to estimate the amount of a deduction under certain circumstances there must be evidence in the record upon which to base our decision 39_f2d_540 2d cir petitioner did not corroborate his testimony with any evidence whatsoever to establish the dollar_figure figure it is well settled that we are not required to accept a taxpayer’s self-serving testimony in the absence of corroborating evidence 99_tc_202 petitioner presented receipts totaling only dollar_figure for labor and materials to replace the roof and received dollar_figure in insurance proceeds therefore only the dollar_figure of net expense corroborated by documentary_evidence is considered in determining petitioner’s casualty_loss deduction we need not determine on the merits if petitioner has met the four substantiation requirements of sec_1 a income_tax regs because petitioner’s net expense is less than the amount of the sec_165 limitations applying the sec_165 limitations petitioner’s net expense of dollar_figure minus the dollar_figure limitation or dollar_figure is far less --- - than percent of petitioner’s recomputed adjusted_gross_income for the year at issue ’ petitioner has failed to meet the minimum dollar amount threshold required to deduct a casualty_loss since petitioner’s net expense does not exceed the limitations under sec_165 petitioner is precluded from deducting any of the net expense incurred accordingly petitioner is not entitled to a casualty_loss deduction applying the cost of repairs approach to reflect the foregoing decision will be entered under rule we recomputed petitioner’s adjusted_gross_income to be dollar_figure percent of which is dollar_figure see supra p assuming arguendo that petitioner had corroborated dollar_figure of expense the casualty_loss deduction after the sec_165 limitations would be reduced to such a small amount that when added to the other items claimed on schedule a petitioner’s total itemized_deductions would be less than the standard_deduction for the year at issue


significant index no tax exempt and government entities es department of the treasury internal_revenue_service washington d c jul je cell ti ae this jetter is in response to your request with respect to the above-referenced defined benefit pension_plan pursuant to revproc_90_49 for the plan_year commencing date - revproc_90_49 sets forth the procedure whereby under certain circumstances a disallowance of the deduction of employer contributions to a qualified defined benefit pension_plan may be obtained thereby fulfilling a condition under which such contributions could revert to the employer based upon the information submitted we have determined that contributions amounting to dollar_figure which were made for the plan_year commencing date may be considered as disallowed to the extent that they are not deductible solely for the purpose of applying revrul_91_4 1991_1_cb_57 therefore the return of contributions not exceeding dollar_figure would not adversely affect the qualified status of the plan provided this reversion occurs no later than one year from the date of this letter however if it is not returned by your tax filing_date including extensions filed for and granted the tax under sec_4972 would apply in granting this approval we are not expressing any opinion as to the accuracy or acceptability of any calculations or other material submitted with your request this ruling is directed only to the taxpayer that requested it sec_6110 of the internal_revenue_code provides that it may not be used or cited by others as precedent when filing form_5500 for the plan_year commencing date a copy of this letter must be attached to the schedule b actuarial information hence a copy of this letter should be provided to the enrolled_actuary servicing the plan we have sent a copy of this letter to the manager ep classification in - manager ep compliance unit in - pursuant to a power_of_attorney on file in this office this matter please contact ' and to your authorized representative if you require further assistance in ' to the - sincerely yours ye- donna m prestia manager employee_plans actuarial group


internal_revenue_service number release date index number ------------------------------------------------------------ ------------------- -------------------------------------------- ------------------------------- ------------------------------------------ department of the treasury washington dc third party communication none date of communication not applicable_person to contact ---------------------- id no ----------------- telephone number --------------------- refer reply to cc psi b03 plr-124570-13 date date company ----------------------------------------------------------------------------------------------------------------------- legend state ------------- dear ----------------- this responds to a letter dated date and subsequent correspondence submitted on behalf of company requesting a ruling concerning the qualifying_income exception to the publicly_traded_partnership rules of sec_7704 of the internal_revenue_code code facts company is a limited_partnership organized under the laws of state company is a publicly_traded_partnership within the meaning of sec_7704 of the code company through affiliated limited_partnerships or disregarded entities represents that it will provide essential fluid handing and disposal services to oil and natural_gas producers engaged in the exploration development and production of oil and natural_gas this ruling_request involves income company derives from the supply of water in the fracturing process the disposal of flowback produced water pit water drilling mud and other drilling and production wastes and hydrocarbon remediation fracturing is a technique by which fluids are pumped into an oil or gas well at high pressure to fracture geologic formations and open up pathways for the oil or gas to flow up for extraction company will earn income from the supply of water used in the fracturing process company will provide transportation services for the water via trucks tanks and pipelines as the business grows company expects to source a plr-124570-13 portion of its water from third parties with respect to the water sourced from third parties company will repurpose an existing gas gathering system that it owns and convert that system into a water transportation system company will also provide inter- well site transportation services for which company will charge on a per barrel daily or hourly rate or on a per-volume transported basis in addition company represents it will earn income from the disposal of flowback produced water pit water drilling mud and other drilling and production wastes which result during the fracturing process in compliance with environmental regulations company also represents that will earn income from hydrocarbon remediation services in connection with its fluid and other oilfield waste handling and disposal services company will remove skim oil and other similar hydrocarbons from the drilling waste at its facilities during the disposal process and to sell the reclaimed hydrocarbons in the relevant markets law and analysis sec_7704 provides that a publicly_traded_partnership shall be treated as a corporation sec_7704 provides that the term publicly_traded_partnership means any partnership if interests in that partnership are traded on an established_securities_market or interests in that partnership are readily_tradable on a secondary market or substantial equivalent thereof sec_7704 provides that sec_7701 shall not apply to any publicly_traded_partnership for any taxable_year if such partnership met the gross_income requirements of sec_7704 for such taxable_year and each preceding_taxable_year beginning after date during which the partnership or any predecessor was in existence sec_7704 explains that a partnership meets the gross_income requirements of sec_7704 for any taxable_year if percent or more of the gross_income of such partnership is qualifying_income sec_7704 provides that the term qualifying_income means income or gains derived from the exploration development mining or production processing refining transportation including pipelines transporting gas oil or products thereof or the marketing of any mineral_or_natural_resource including fertilizer geothermal_energy or timber industrial source carbon dioxide or the transportation or storage of any fuel described in sec_6426 c d or e or any alcohol fuel defined in sec_6426 or any biodiesel fuel defined in sec_40a plr-124570-13 the conference_report accompanying the omnibus budget reconciliation act of in discussing the type of qualifying_income described in sec_7704 provides the following income and gains from certain activities with respect to minerals or natural_resources are treated as passive-type income specifically natural_resources include fertilizer geothermal_energy and timber as well as oil gas or products thereof for this purpose oil gas or products thereof means gasoline kerosene number fuel oil refined lubricating oils diesel_fuel methane butane propane and similar products which are recovered from petroleum refineries or oil field facilities oil gas or products thereof are not intended to encompass oil or gas products that are produced by additional processing beyond that of petroleum refineries or field facilities such as plastics or similar petroleum derivatives income of certain partnerships whose exclusive activities are transportation and marketing activities is not treated as passive-type income for example the income of a partnership whose exclusive activity is transporting refined petroleum products by pipeline is intended to be treated as passive-type income but the income of a partnership whose exclusive activities are transporting refined petroleum products by truck or retail marketing with respect to refined petroleum products eg gas station operations is not intended to be treated as passive type income h_r rep no 100th cong 1st sess c b the senate report accompanying the technical_and_miscellaneous_revenue_act_of_1988 provides the following with respect to marketing of minerals and natural_resources eg oil_and_gas and products thereof the committee intends that qualifying_income be income from marketing at the level of exploration development processing or refining oil_and_gas by contrast income from marketing minerals and natural_resources to end users at the retail level is not intended to be qualifying_income for example income from retail marketing with respect to refined petroleum products eg gas station operations is not intended to be treated as qualifying_income s rep no 100th cong 2d sess conclusion based solely on the facts submitted and representations made we conclude that the income derived by company from the supply of water in the fracturing process the disposal of flowback produced water pit water drilling mud and other drilling and production wastes and hydrocarbon remediation is qualifying_income within the meaning of sec_7704 plr-124570-13 except as expressly provided herein no opinion is expressed or implied concerning the federal tax consequences of any transaction or item discussed or referenced in this letter in particular no opinion is expressed as to whether company meets the percent gross_income requirement of sec_7704 in any taxable_year for which this ruling may apply 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 this ruling is directly only to the taxpayer requesting it sec_6110 provides that it may not be used or cited as precedent however in the event of a technical_termination of company under sec_708 the resulting_partnership may continue to rely on this ruling in determining its qualifying_income under sec_7704 pursuant to the power_of_attorney on file with the office a copy of this ruling will be sent to taxpayer’s authorized representatives sincerely 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


internal_revenue_service department of the dollar_figure index number washington dc person to contact telephone number refer reply to cc dom corp 1-plr-121117-98 date date re parent distributing controlled business a business b business c_corporation d product a individual e corporation f plr-121117-98 aa bb cc dd ee gg hh i kk mm an oo s plr-121117-98 pp aq date date date date date date date dear this letter responds to your request dated date for rulings concerning the federal_income_tax consequences of a proposed transaction the proposed transaction additional information was provided in submissions dated date apri date date date july plr-121117-98 s date and date the facts submitted are summarized below parent is a publicly traded company and the common parent of an affiliated_group_of_corporations that file a consolidated_return for federal_income_tax purposes parent owns all of the stock of distributing which represents substantially_all of parent's assets distributing owns all the stock of controlled and numerous other direct and indirect subsidiaries distributing is directly engaged in business a and indirectly operates a variety of other businesses including business c controlled is directly engaged in business b parent has two classes of common_stock outstanding parent class a voting common_stock and parent class b nonvoting common_stock except for voting rights the two classes are identical both classes of stock are publicly traded as of date there were approximately aa shares of parent class a stock outstanding and approximately bb shares of parent class b stock outstanding as of date approximately cc shares of parent class a stock representing dd percent of the outstanding parent class a stock and ee shares of parent class b stock representing as ff percent of the outstanding parent class b stock were owned by corporation d of date approximately gg shares of parent class a stock and hh shares of parent class b stock are owned by individual e who is the chief_executive_officer and chairman of the board_of directors of parent individual e and members of his family directly and indirectly also own all of the stock of corporation d there are also four institutional shareholders that through various funds and entities own more than percent of the parent class a and parent class b stock to the best knowledge of parent the remainder of the parent class a and parent class b stock is held by less than percent shareholders parent acquired ownership of controlled on date more than five years prior to the date of the proposed transaction in a transaction in which corporation f the former parent of the consolidated_group of which controlled was a member was merged with and into parent the z merger subsequently as part of a separate transaction several other subsidiaries that were also acquired by parent in the z merger and that were engaged in business b were merged with and into controlled in addition controlled acquired the stock and or assets of certain other parent subsidiaries that are engaged in business b outside of the united_states on date controlled declared a dividend to distributing in the form of a dollar_figureii promissory note the dividend note on date controlled entered into term and revolving credit agreements with unrelated third-party lenders in the aggregate of dollar_figure ji dollar_figurekk was drawn down on date such proceeds were used to pay i a portion of the purchase_price for the acquisition of the non-u s business b operations ii the dividend note and other notes owed to distributing and iii certain fees and expenses plr-121117-98 incurred in connection with the draw down of funds controlled derives the majority of its income from the renta of product a it recently developed a new business practice whereby it enters arrangements to procure product a from its suppliers at a greatly reduced initial price in return for a portion of the revenue derived from the rental of product a over a specific period of time the revenue sharing arrangements these new arrangements have resulted in greatly increasing controlled’s revenues and profitability however this arrangement necessitates a closer working relationship between controlled and its suppliers and requires its suppliers to share confidential information with controlled ts suppliers have indicated that their relationship with controlled is strained by controlled’s affiliation with distributing because one of the major businesses of distributing is in direct competition with controlled’s suppliers parent fears that controlled’s affiliation with a competitor of the suppliers may cause the suppliers to take action with respect to the revenue sharing arrangements which would materially adversely affect controlled’s revenues and profitability in order to address these issues management of distributing and controlled has determined that distributing and controlled should be separated accordingly they propose the following proposed transaction a parent and controlled will enter into several transaction agreements the transaction agreements the transactions agreements will provide for sharing of certain resources until the remainder of the transaction is consummated the transaction agreements will also allocate tax and other contingent liabilities of the parent consolidated_group between controlled and other members of the parent consolidated_group b controlled will recapitalize providing for two classes of common_stock a class a with x votes per share and a class b with y votes per share this new class b common_stock will have the following characteristics i ii each share may be converted into a share of class a stock at the holder's option prior to the split-off transaction described in step d and step e if z percent or less by value of controlled’s aggregate outstanding_stock is issued prior to the split-off transaction each share of class b stock will automatically convert pursuant to its terms into a share of class a stock iii unless approved by the majority of the holders of the class a stock and the majority of the holders of the class b stock in the event of controlled s reorganization or consolidation with one or more corporations plr-121117-98 in which class a controlled stock and class b controlled stock is converted into or exchanged for shares of stock other_securities or property including cash all holders of controlled stock regardless of class will be entitled to receive the same kind and number of shares of stock and other_securities and property except that the relative voting rights of the class a stock and the class b stock may be retained c in an initial_public_offering shortly after the recapitalization controlled will issue class a stock representing no more than twenty percent by vote of controlled's aggregate outstanding_stock but between mm and nn percent by value prior to the first distribution controlled may also issue class a controlled stock in connection with acquisitions and or pursuant to a second public offering in any event distributing will continue to own at least eighty percent by vote and oo percent by value of controlled s aggregate outstanding_stock until the first distribution the shares issued in a second offering or in connection with acquisitions may represent sufficient value to disaffiliate controlled from the parent group under sec_1504 however distributing will continue to own stock possessing at least eighty percent of controlled’s voting power additionally controlled will issue compensatory employee stock_options for its class a stock controlled stock_options that will satisfy the safe_harbor for compensatory options under sec_1_1504-4 d after date distributing will distribute all of its controlled stock to parent the first distribution’ e immediately after the first distribution parent will make a distribution of all of if the amount of parent stock tendered by parent shareholders in the the controlled stock received by parent pursuant to the first distribution to certain parent shareholders the second distribution together with the first distribution the split-off transaction the second distribution will be accomplished through the mechanism of an exchange_offer a dutch auction in which parent offers its shareholders the opportunity to tender their parent shares and receive shares of controlled in exchange neither corporation d nor individual e will participaté in the exchange_offer exchange_offer is not sufficient to result in a distribution of percent of parent's controlled stock parent will distribute as soon as practicable all remaining shares pro_rata to its shareholders of record at the close of business on a record_date promptly after consummation of the exchange_offer a backup distribution the terms of the exchange_offer will be structured in such a way as to ensure that if a backup distribution is necessary corporation d and individual e together will receive no more than pp percent of the total number of shares of controlled stock if corporation d and individual e should receive more than pp percent of the controlled stock in the backup distribution the split-off transaction will not occur and controlled will remain a subsidiary of distributing plr-121117-98 ‘ f after the split-off transaction controlled and parent may share up to qq employees until no later than date the shared employees the shared employees will remain employees of controlled and will also work for a newly-created special purpose subsidiary of distributing to assist in transition services after the proposed transaction including implementation of controlled and parent's obligations under the transaction agreements the taxpayer has made the following representations in connection with the proposed transaction a b c d f g no part of the consideration to be distributed by either parent or distributing will be received by a shareholder as a creditor employee or in any capacity other than that of a shareholder the five years of financial information submitted on behalf of distributing and controlled is representative of each respective corporations’ present operation and with regard to each such corporation there have been no substantial operational changes since the date of the last financial statements submitted immediately after the split-off transaction distributing and controlled will each continue independently and with its separate employees the active_conduct of their respective businesses except for the shared employees described above immediately after the split-off transaction at least percent of the fair_market_value of the gross assets of parent will consist of the stock of distributing which is engaged in the active_conduct_of_a_trade_or_business as defined in sec_355 the transaction is being carried out to resolve controlled’s probfems with suppliers who object to controlled ‘s being associated with distributing which is engaged in business c a business that directly competes with such suppliers the split-off transaction is motivated in whole or substantial part by this corporate business_purpose except for the disposition of controlled stock by distributing in the split-off transaction there is no plan or intention by parent to sell exchange transfer by gift or otherwise dispose_of distributing or controlled stock after the first distribution there is no plan or intention by any shareholder who own sec_5 percent or plr-121117-98 s more of the stock of parent and the management of parent to its best knowledge is not aware of any plan or intention on the part of any particular remaining shareholder or security holder of parent to sell exchange transfer by gift or otherwise dispose_of either parent or controlled stock after the split-off transaction there is no plan or intention by parent distributing or controlled directly or through any subsidiary_corporation to purchase any of its outstanding_stock after the split-off transaction other than through stock purchases meeting the requirements of sec_4 b of revproc_96_30 there is no plan or intention to liquidate parent distributing or controlled to merge them with any other corporation or to sell or otherwise dispose_of their assets after the split-off transaction except in the ordinary course of business except for contingent liabilities arising from the intercompany agreements governing the separation of controlled from the parent group and except for agreements entered into in the ordinary course of business no intercorporate debt will exist between parent distributing and controlled at the time of or subsequent to the distribution of the controlled stock immediately before controlled is disaffiliated from the parent group under sec_1504 items of income gain loss deduction and credit will be taken into account as required by the applicable intercompany_transaction regulations neither parent nor distributing will have an excess_loss_account with respect to controlled stock payments made in connection with all continuing transactions among parent distributing and controlled will be for approximate fair_market_value based on terms and conditions arrived at by the parties bargaining at arm's length sec_355 immediately after the first and second for purposes of distributions no person will hold disqualified_stock under sec_355 in parent or controlled possessing percent or more of the total combined voting power of all classes of parent or controlled stock entitled to vote or percent or more of the total value of shares of all classes of parent or controlled stock h i k m n the first and second distributions are not within the meaning of sec_355 part of a plan or series of related transactions pursuant to which plr-121117-98 p q one or more persons will acquire directly or indirectly stock possessing percent or more of the total combined voting power of all classes of stock of either parent or controlled or stock possessing percent or more of the total value of all classes of stock of either parent or controlled none of distributing parent or controlled is or will be a foreign_corporation to the best knowledge of distributing no foreign shareholder is expected to own percent or more of any class of distributing or controlled stock after the second distribution neither distributing nor controlled have been nor will they be a united_states_real_property_holding_corporation as defined in sec_897 at any time during the 5-year period ending on the date of the first distribution or the second distribution and neither of them will be a united_states_real_property_holding_corporation immediately after the first distribution or the second distribution based solely on the information submitted and the representations set forth above we rule as follows with respect to the first distribution no gain_or_loss will be recognized by distributing on the distribution of the controlled stock to parent sec_355 no gain_or_loss will be recognized by and no amount will be included in the income of parent on the receipt of the controlled stock sec_355 the aggregate basis of the controlled stock and the distributing stock in the hands of parent immediately following the first distribution will be the same as the basis of the distributing stock held by parent inimediately before the first distribution allocated in proportion to the relative fair market values of each at the time of the first distribution in accordance with sec_1_358-2 sec_358 b and b the holding_period of the controlled stock received by parent will include the holding_period of the distributing stock with respect to which the distribution will be made provided that the distributing stock is held as a capital_asset on the date of the distribution sec_1223 as provided in sec_312 proper allocation of earnings_and_profits between distributing and controlled will be made under sec_1_312-10 and plr-121117-98 based solely on the information submitted and the representations set forth above we rule as follows with respect to the second distribution no gain_or_loss will be recognized by parent on the distribution of the controlled stock to the parent shareholders sec_355 no gain_or_loss will be recognized by and no amount will be included in the income of the parent shareholders on the receipt of the controlled stock sec_355 the aggregate basis of the controlled stock and the parent stock in the hands of the shareholders of parent immediately following the second distribution will be the same as the basis of the parent stock held by parent shareholders immediately before the second distribution allocated in proportion to the relative fair market values of each at the time of the second distribution in accordance with sec_1_358-2 sec_358 b and b the holding_period of the controlled stock received by parent shareholders will include the holding_period of the parent stock with respect to which the distribution will be made provided that the parent stock is held as a capital_asset on the date of the distribution sec_1223 as provided in sec_312 proper allocation of earnings_and_profits between parent and controlled will be made under sec_1_312-10 and sec_1_1502-33 pursuant to the temporary regulations under sec_367 that are currently in effect if distributing does not distribute controlled stock to its shareholders having a value of more than percent of the total value of the total outstanding class a and class b common_stock in connection with the second distribution distributing will recognize gain in connection with the second distribution pursuant to sec_367 to the extent that the distributees of the controlled stock are not qualified u s persons within the meaning of temporary_regulation sec_1_367_e_-1t b i temporary or final regulations pertaining to one or more of the issues addressed in this ruling letter have not yet been adopted therefore this ruling letter may be revoked or modified upon the issuance of temporary or final regulations or a notice with respect to their future issuance see section dollar_figure of revproc_99_1 1999_1_irb_6 which discusses in greater detail the revocation or modification of ruling letters plr-121117-98 however when the criteria in section dollar_figure of revproc_99_1 are satisfied a ruling is not revoked or modified retroactively except in rare or unusual circumstances the rulings contained in this letter are predicated upon the facts and representations submitted by the taxpayer and accompanied by a penalties of perjury statement executed by an appropriate party this office has not verified any of the materials submitted in support of the request for a ruling verification of the information representations and other data may be required as part of the audit process no opinion is expressed about the tax treatment of the proposed transaction under any other provisions of the code and regulations or the tax treatment of any conditions existing at the time of or effects resulting from the proposed transaction that are not specifically covered by the above rulings this ruling is directed only to the taxpayer s requesting it sec_6110 of the code provides that it may not be used or cited as precedent a copy of this letter must be attached to any income_tax return to which it is relevant a copy of this letter is being sent to your authorized representative sincerely assistant chief_counsel corporate mark s jennings senior technician reviewer branch -


department of the treasury internal_revenue_service washington d c date number release date cc dom fs it a uilc internal_revenue_service national_office field_service_advice memorandum for james e keeton jr district_counsel kentucky tennessee district nashville cc ser kyt nas from deborah a butler assistant chief_counsel field service cc dom fs it a subject field_service_advice application of sec_481 this field_service_advice responds to your memorandum dated date field_service_advice is not binding on examination or appeals and is not a final case determination this document is not to be cited as precedent legend taxpayers taxpayer profession profession university subject credential credential credential publications company date year year dollar_figurea dollar_figureb dollar_figurec dollar_figured dollar_figuree issues whether funds held by a publishing services company in an account for benefit of taxpayer and subject_to draws by taxpayer were income to taxpayer when received by the company and credited to taxpayer’s accounts whether if such funds were income to taxpayer the service may change taxpayer’s method_of_accounting under sec_446 and sec_446 and adjust taxpayer’s income accordingly under sec_481 conclusions the amounts held by the publishing services company constituted income to taxpayer when received by the company not when withdrawn by taxpayer furthermore the service’s adjustment of taxpayer’s income_tax_liability involved the proper timing of taxpayer’s receipt of income not a question of permanent inclusion in or exclusion from taxpayer’s income accordingly this adjustment constituted a change_of taxpayer’s method_of_accounting warranting an adjustment under sec_481 facts taxpayer is a profession and profession of subject at university he holds several degrees including a credential and a credential and is a credential he derives most of his income from writing publications in year taxpayer engaged company to provide certain subscription services regarding taxpayer’s publishing activities including the handling of subscriber payments company received subscription payments payable to company on taxpayer’s behalf and credited the payments to taxpayer’s various publications accounts you have represented to us your understanding that the duration of these subscriptions was generally one or two years company sent monthly statements to taxpayer showing the revenues from the publications company did not make routine payments to taxpayer rather taxpayer would make periodic cash draws upon the accounts at intervals and in amounts that taxpayer chose company placed no restriction upon the amounts or timing of taxpayer’s withdrawals company did not issue forms to taxpayer since beginning the publications business in year taxpayer has allowed the balances in his accounts with company to accumulate on taxpayers’ joint income_tax returns taxpayer did not report the full amount of income that he received from the publications business but only the amounts that he actually withdrew from his accounts with company for their year taxable_year taxpayers reported total taxable_income of dollar_figurea while failing to report income earned during that year in the amount of dollar_figureb by the end of taxable_year year taxpayer had accumulated and had failed to report income totaling dollar_figurec on date the service issued a notice_of_deficiency to taxpayers for year asserting an increase in tax of dollar_figured plus a penalty under sec_6663 in the amount of dollar_figuree in the alternative to the sec_6663 penalty the service asserted an accuracy-related_penalty under sec_6662 in computing taxpayers’ deficiency for year the service imposed a change in method_of_accounting under sec_446 plus an adjustment under sec_481 law and analysis issue whether funds held by a publishing services company in an account for benefit of taxpayer and subject_to draws by taxpayer were income to taxpayer when received by the company and credited to taxpayer’s accounts as a general proposition an individual cash_basis taxpayer is taxed upon receipt of an item_of_income sec_451 under the cash_receipts_and_disbursements_method of accounting a taxpayer must report income in the year that it is actually or constructively received sec_1_451-1 a taxpayer constructively receives income even though the income is not actually in the taxpayer’s possession in a taxable_year during which it is credited to the taxpayer’s account set apart for the taxpayer or otherwise made available so that the taxpayer can draw upon it at any time sec_1_451-2 the latter condition is satisfied merely by the taxpayer’s having been able to draw upon the income if the taxpayer had given notice of intent to withdraw id the taxpayer does not constructively receive income if the taxpayer’s control of its receipt is subject_to substantial limitations or restrictions id the test of the presence or absence of substantial limitations or restrictions is whether the taxpayer has unfettered control of when the income is paid whether or not the taxpayer chooses to exercise such control 281_us_376 437_f2d_577 6th cir a taxpayer need not personally receive income for it to be taxable in the current_year it is sufficient that the taxpayer’s agent acting for the taxpayer be in receipt of the income 283_f2d_257 6th cir acq 1964_2_cb_4 in the present case company received income from subscribers for benefit of taxpayer although we have not seen a contract between company and taxpayer it appears that company acted as taxpayer’s agent taxpayer could have drawn as much of the income as he desired and could have withdrawn it whenever he chose but chose not to do so accordingly taxpayer had unfettered control_over the monies in the accounts that company maintained for his benefit therefore taxpayer received income in each year that company received the subscription money in his behalf issue whether if such funds were income to taxpayer the service may change taxpayer’s method_of_accounting under sec_446 and sec_446 and adjust taxpayer’s income accordingly under sec_481 a taxpayer must compute taxable_income under the method_of_accounting by which the taxpayer keeps books and financial records sec_446 if a taxpayer does not regularly use a method_of_accounting or if the method_of_accounting used does not clearly reflect income the secretary may change the taxpayer’s method_of_accounting to one that in the secretary’s opinion does clearly reflect income sec_446 the regulations define a method_of_accounting to include not only a taxpayer’s overall_method_of_accounting such as the cash_receipts_and_disbursements_method or an accrual_method but also the taxpayer’s treatment of material items sec_1_446-1 a material_item is one involving the proper time for including an item in income or taking a deduction sec_1_446-1 if the treatment of an item does not affect a taxpayer’s lifetime income then that treatment constitutes a method_of_accounting sec_1_446-1 revproc_97_27 1997_1_cb_680 in general an accounting practice must be consistently applied from year to year to be a method_of_accounting sec_1_446-1 consistent but erroneous treatment of an item may constitute a method_of_accounting also 356_f2d_975 6th cir cert_denied 385_us_822 revrul_90_38 1990_1_cb_57 a taxpayer using an improper method_of_accounting must obtain the commissioner’s prior approval to change to a proper method 891_f2d_1579 fed cir cert_denied 498_us_823 sec_1_446-1 a taxpayer filing either its first return or the first return in which a material_item is reported may adopt any permissible method_of_accounting without the commissioner’s prior approval sec_1_446-1 but may not change that method later without first obtaining the commissioner’s approval sec_1_446-1 by contrast a taxpayer adopts an improper method_of_accounting when the taxpayer files its second consecutive tax_return using that improper method even if the statute_of_limitations does not bar the taxpayer from filing an amended_return for the first year of improper treatment of the item diebold f 2d pincite revrul_90_38 if there is a change in a taxpayer’s method_of_accounting whether initiated by the taxpayer voluntary or by the service involuntary sec_481 requires an adjustment in the year_of_change to correct any duplications or omissions caused by the accounting_method change sec_481 this adjustment is cumulative and in the case of involuntary method changes encompasses all applicable tax years back to revproc_97_27 furthermore if the method change is involuntary the taxpayer must include the entire sec_481 adjustment in income in the year_of_change which is the taxpayer’s earliest taxable_year under examination id in this case taxpayer was required to recognize income each year since year for the full amount of subscription monies received on his behalf by company instead taxpayer improperly declared as income only the amounts that he actually withdrew from his accounts with company and did not declare the funds that he left in his accounts thus taxpayer improperly deferred indefinitely the recognition of this income this deferral was a method_of_accounting within the meaning of sec_446 by filing two consecutive tax returns failing to recognize this improperly deferred income taxpayer adopted this practice as a method_of_accounting furthermore because taxpayer’s method_of_accounting did not clearly reflect income and is contrary to sec_451 the service correctly changed it under sec_446 and sec_446 to more clearly reflect income having changed taxpayer’s method_of_accounting the service was required by sec_481 to adjust his income to correct any duplications or omissions caused by the change in method because this was an involuntary change_of taxpayer’s method_of_accounting the service correctly applied the entire sec_481 adjustment to taxpayer’s income for year his earliest taxable_year under examination please call if you have any further questions deborah a butler assistant chief_counsel field service by gerald m horan senior technician reviewer income_tax and accounting branch field service division


internal_revenue_service number info release date march cc psi 1-genin-108067-03 uilc dear we are responding to correspondence submitted on your behalf by cpa requesting relief in order to establish an s_corporation effective of date your account has since been updated to reflect an election as requested you should receive an acceptance letter from the service_center within the next days reflecting the appropriate effective date no further action is needed on your part unless you either fail to receive an acknowledgment letter or if the effective date listed is incorrect if you must take follow-up action you may call the contact person listed on the above letterhead in addition the irs has developed two new cd-roms to help educate small_business owners on their tax responsibilities introduction to federal taxes for small_business self-employed and a virtual small_business workshop these two cd- roms are free and can be ordered by calling the irs also provides a special resource website www irs gov smallbiz which is dedicated to providing information to small_business taxpayers please keep this letter with your tax records and feel free to provide a copy of it to your authorized representative we hope that the above information proves helpful sincerely yours s dianna k miosi dianna k miosi chief branch associate chief_counsel passthroughs and special industries


significant index no department of the treasury internal_revenue_service washington d c nov t epa ad re change in funding method request taxpayer plan dear ein - - pn this letter constitutes notice that approval has been granted for the change in assumptions as described below the approval applies for the plan_year beginning january of the internal_revenue_code code and sec_303 of the employee_retirement_income_security_act_of_1974 erisa this approval has been granted in accordance with sec_430 in granting this approval we have considered only the acceptability of the new current_liability assumptions and as necessary the method by which the transition is to be made between the prior and the new method the taxpayer has represented under penalty of perjury that the plan did not engage in any lump sum windows or annuity purchase activities during the period reviewed for the experience study used to develop these new assumptions we are not expressing any opinion as to the accuracy or acceptability of any calculations or other material submitted with your request please note that this letter addresses only issues arising under sec_430 of the code and the approval granted herein should not be read to imply that the plan as it stands satisfies the requirements of other sections of the code this approval applies to the revisions of the following assumptions the revision of the rates of retirement the revision of the rates of withdrawal and the revision of the rates of disability rates of retirement less than years_of_service current proposed rates of retirement years_of_service current proposed age age rates of retirement years_of_service current proposed rates of retirement more than years_of_service current proposed age i age dollar_figure rates of retirement more than years_of_service current proposed rates of withdrawal current proposed age age rates of withdrawal current proposed age age rates of disability current proposed age rates of disability current proposed when filing form_5500 for the plan_year beginning january indicate on line of the schedule sb by checking the yes box that a change in non-prescribed assumptions has been made for the current_year you should also include a copy of this letter as an attachment to the schedule sb labeled schedule sb line - change in non-prescribed actuarial assumptions this ruling is directed only to the taxpayer that requested it sec_61 k of the code provides that it may not be used or cited by others as precedent this ruling is intended to solely address the issues specifically described above for any issue not specifically addressed in this ruling the plan must satisfy any and all applicable sections of the code and or regulations as in effect for the relevant plan_year s a copy of this letter is being sent to your authorized representative pursuant to a power_of_attorney form on file in this office matter please contact if you have any questions regarding this id yat - sincerely yours david m ziegler manager employee_plans actuarial group


id office uilc cca-126141-10 ------------ number release date from ------------------------ sent tuesday date am to ---------------------- cc ---------------------------- subject transferee_liability for foreign corporate shareholders our branch doesn’t deal with transferee_liability questions other than perhaps withholding_tax under sec_1445 on the distribution of u s real_property interests sec_367 causes recognition in certain instances where there is a sec_332 liquidation of a domestic subsidiary and the parent_corporation is foreign we would handle questions regarding whether sec_367 is applicable transferee_liability is not a matter under those rules if there is no foreign parent owning percent of the domestic subsidiary sec_331 might apply we do not cover transferee_liability after a sec_331 liquidation i think this is an issue for ------ i would suggest contacting their front office to find the right person


internal_revenue_service number info release date index number ----------------------------------- --------------------------------- ------------------ ------------------------ in re department of the treasury washington dc person to contact -------------------- id no ------------- telephone number --------------------- refer reply to cc psi - genin-169594-03 date january announcement copy enclosed provides guidance on seeking relief for late we are answering correspondence submitted by your representative requesting dear ------------- relief under revproc_97_48 in order to establish date as the effective date for your s_corporation_election in your situation automatic relief under revproc_97_48 is unavailable because the internal_revenue_service failed to receive a timely tax_return form_1120s for the taxable_year although we are unable to respond to your request as submitted this letter provides information about rectifying your situation s_corporation elections generally to request relief for a late s_corporation_election back to the date of incorporation you must request a private_letter_ruling from the national_office the information forwarded to our office is insufficient for us to process a private_letter_ruling request the procedures for requesting a private_letter_ruling are set forth in revproc_2003_1 copy enclosed in addition taxpayers must submit a user_fee along with their ruling_request the standard user_fee for a private_letter_ruling is dollar_figure however taxpayers with gross_income of less than dollar_figure million on their tax_return for the most recent 12-month taxable_year qualify for a reduced user_fee in the amount of dollar_figure if you are qualified for the reduced fee please include a statement certifying that your gross_income for the was less than dollar_figure million if you decide to submit a formal request for a private_letter_ruling please follow the sample format provided in appendix b of revproc_2003_1 your request should include all required procedural statements a check for the user_fee and any documents that substantiate your intent to be an s_corporation from inception please refer your request to our office by adding the following to the address room direct to cc psi in addition the irs has developed two new cd-roms to help educate small internal_revenue_service attn cc pa t p o box ben franklin station washington dc genin-169594-03 business owners on their tax responsibilities introduction to federal taxes for small_business self-employed and a virtual small_business workshop these two cd- roms are free and can be ordered by calling the irs also provides a special website www irs gov businesses small which is dedicated to providing information to small_business taxpayers please keep this letter with your tax records and feel free to provide a copy of it to your authorized representative we hope that the above information proves helpful s dianna k miosi chief branch associate chief_counsel passthroughs and special industries sincerely yours