internal_revenue_service number release date index number ----------------- ------------------------- ------------------------------- ------------------------------------- ------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact -------------------------- id no -------------- telephone number -------------------- refer reply to cc corp b03 plr-115616-16 date november legend distributing controlled distributing us controlled us distributing operations controlled operations distributing support ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ----------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ----------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ----------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ----------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ----------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ----------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- plr-115616-16 controlled support distributing foreign controlled foreign distributing foreign controlled foreign corporation s business x segment a segment b year year year country ----------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ------------------------ ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- -------------------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- -------------------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ---------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- -------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ----------------------- -------------------------------------------- ---------------- -------------------------------------------------------------------------- ------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- plr-115616-16 country operation a operation b dear ------------------ ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- -------------------------------- this letter responds to your letter dated date requesting rulings on certain federal_income_tax consequences of a series of transactions the proposed transaction as defined below the material information submitted in that request and in subsequent correspondence is summarized below 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 this office has not verified any of the material submitted in support of the request for rulings verification of the facts representations and other information may be requested as part of the audit process this letter is issued pursuant to section dollar_figure of revproc_2016_1 2016_1_irb_18 regarding rulings on one or more significant issues that involve the tax consequences of a transaction or part of a transaction occurring in the context of a distribution under sec_355 of the internal_revenue_code the code this office has not reviewed any information pertaining to and expresses no opinion as to the overall tax consequences of the proposed transaction as defined herein including qualification under sec_355 of the code or as to any issue or step not specifically addressed by this letter rather the rulings contained in this letter only address discrete legal issues involved in the transaction further except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter facts distributing through the members of its separate_affiliated_group within the meaning of sec_355 the dsag is engaged in business x that includes segment a and segment b each of segment a and segment b is engaged in operation a and operation b distributing wholly owns distributing operations distributing operations wholly owns distributing us distributing foreign distributing foreign distributing support and corporation s plr-115616-16 financial information submitted by distributing indicates that business x’s segment b has had gross_receipts and operating_expenses representing the active_conduct_of_a_trade_or_business for each of the past five years in year distributing acquired_corporation s a company engaged in the development of segment a products in business x as part of a strategy of product expansion the year acquisition after distributing’s acquisition of corporation s distributing employed its experience in business x to further develop corporation s’s products and successfully bring them to market in year distributing reevaluated its business strategy and decided to focus on areas related to segment b products it terminated its efforts in other unrelated areas and disposed of other assets and concentrated its research_and_development primarily on segment b products despite the abandonment of these other programs distributing continued the development of segment a products sales of segment a products commenced in year proposed transaction for what is represented to be a valid business_purpose distributing proposes to separate segment a from segment b by contributing it to controlled and distributing the controlled stock to its shareholders together the proposed transaction i distributing us will contribute the assets and liabilities including employees associated with segments a’s operation a to controlled us a newly-formed state a limited_liability_company disregarded as an entity separate from distributing us for federal tax purposes in exchange for all of the interests in controlled us controlled us will elect to be treated as a corporation for federal tax purposes ii distributing support will contribute all of its assets and liabilities including employees associated with segment a’s operation a to controlled support a newly-formed state a limited_liability_company disregarded as an entity separate from distributing support for federal tax purposes in exchange for all of the interests in controlled support controlled support will elect to be treated as a corporation for federal tax purposes iii distributing foreign will contribute the assets and liabilities including employees associated with segment a’s operation a to controlled foreign a newly-formed country corporation in exchange for all of the stock of controlled foreign iv distributing us distributing support and distributing foreign will distribute their respective interests in controlled us controlled support and controlled foreign to distributing operations plr-115616-16 v before controlled foreign has any assets other than nominal capital distributing foreign will transfer shares of controlled foreign to distributing operations distributing foreign will then transfer the assets and liabilities including employees associated with segment a’s operation a held by distributing foreign to controlled foreign via demerger under country law vi distributing operations will contribute the assets and liabilities including employees associated with segment a’s operation b to controlled operations a newly-formed state a limited_liability_company disregarded as an entity separate from distributing operations for federal tax purposes vii distributing operations will contribute the interests in controlled operations and the stock of each of controlled us controlled foreign controlled foreign and controlled support to corporation s viii distributing operations will distribute the stock of corporation s to distributing ix distributing will contribute the stock of corporation s and additional assets and liabilities associated with segment a to controlled x distributing will distribute all of the controlled stock on a pro_rata basis to distributing’s public shareholders the spin-off other than certain continuing arrangements on a transitional basis following the spin- off the dsag will continue the active_conduct of business x except as it relates to segment a and controlled and its separate_affiliated_group will continue the active_conduct of business x related to segment a in each case independently and with its separate employees representation a the dsag has been engaged in the active_conduct of segment b of business x for greater than years rulings based solely on the facts and information submitted and the representations set forth above we rule as follows the segment a operation a business constitutes an expansion of segments b’s operation a business and does not constitute the acquisition of a new or different business treas reg b ii and revrul_2003_38 2003_17_irb_811 and revrul_2003_18 2003_7_irb_467 plr-115616-16 the segment a operation b business constitutes an expansion of segments b’ operation b business and does not constitute the acquisition of a new or different business treas reg b ii and revrul_2003_38 2003_17_irb_811 and revrul_2003_18 2003_7_irb_467 caveats except as expressly provided herein no opinion is expressed or implied concerning the tax treatment of the proposed transaction under any provision of the code and regulations or the tax treatment of any condition existing at the time of or effects resulting from the proposed transaction that is not specifically covered by the above rulings procedural statements 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 in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representatives a copy of this letter must be attached to any income_tax return to which it is relevant alternatively taxpayers filing their returns electronically may satisfy this requirement by attaching a statement to their return that provides the date and control number of the letter_ruling sincerely _richard k passales________ richard k passales senior counsel branch office of associate chief_counsel corporate


t c summary opinion united_states tax_court michael i agugo and chioma agugo petitioners v commissioner of internal revenue respondent docket no 1649-13s filed date michael i agugo and chioma agugo pro sese elizabeth mourges for respondent summary opinion gerber judge this case was heard pursuant to the provisions of sec_7463 of the internal_revenue_code in effect when the petition was filed unless otherwise indicated all section references are to the internal_revenue_code in effect for the years at issue and all rule references are to the tax_court rules_of_practice and procedure all amounts are rounded to the nearest dollar 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 and accuracy-related_penalties with respect to petitioners’ federal_income_tax for and years at issue as follows year deficiency sec_6662 penalty dollar_figure big_number big_number dollar_figure big_number big_number after concessions there are two issues for decision the first issue is whether petitioners are entitled to various business_expense deductions for the years at issue we hold they are not the second issue is whether petitioners are liable for accuracy-related_penalties under sec_6662 for the years at issue we hold they are background petitioners resided in maryland when they filed the petition mr agugo worked at two different hospitals as a registered nurse hours a week during the years at issue he has several bachelor’s degrees and is currently enrolled in a program to become a medical doctor mrs agugo is a medical doctor although during the years at issue she did not practice medicine and was instead a stay-at- home parent caring for petitioners’ children during petitioners became involved in an insurance sales program known as world financial services wfs wfs was designed to promote the sale of insurance through networking with friends and family and by recruiting others to sell insurance petitioners attended various wfs seminars and became licensed to sell wfs insurance products insurance activity in but ceased the insurance activity in after failing to make any sales in petitioners began offering a home nursing care service for medicaid patients home care activity petitioners did not obtain the license necessary to be a medicaid heath care provider and as of the start of the trial had never had a home care activity client petitioners filed tax returns for the years at issue petitioners’ reported wages exceeded dollar_figure for and and exceeded dollar_figure for for each return petitioners attached a schedule a itemized_deductions and a schedule c profit or loss from business the schedules c for concerned the insurance activity and the one for concerned the home care activity on both the schedules a and the schedules c petitioners claimed deductions for tens of thousands of dollars of purported expenses on the schedules c petitioners did not report that they earned any income from the insurance activity or the home care activity the claimed itemized_deductions and business_expense deductions reduced petitioners’ reported federal_income_tax to zero for to approximately dollar_figure for and to approximately dollar_figure for mr agugo’s acquaintance mathias bama prepared petitioners’ returns for the years at issue mr bama did not testify and the record does not establish his credentials or experience respondent issued petitioners a notice_of_deficiency disallowing the deductions for all of the schedule c expenses and substantially_all of the schedule a expenses for each year at issue petitioners filed a petition with this court for redetermination petitioners have conceded that they are not entitled to the disallowed schedule a expense deductions discussion i burden_of_proof generally the commissioner’s determinations are presumed correct and the taxpayer bears the burden of proving otherwise rule a see 290_us_111 the burden_of_proof may shift to the commissioner if the taxpayer proves that he or she has satisfied certain requirements sec_7491 see 122_tc_143 petitioners have neither claimed that the burden shifts to respondent nor shown that they complied with the requirements of sec_7491 the burden_of_proof therefore remains on petitioners ii carrying_on_a_trade_or_business sec_162 provides that t here shall be allowed as a deduction all the ordinary and necessary expenses paid_or_incurred during the taxable_year in carrying on any trade_or_business respondent contends that petitioners have not shown that their insurance activity and home care activity rise to the level of carrying_on_a_trade_or_business within the meaning of sec_162 and therefore are not entitled to deduct any expenses for those activities we agree a taxpayer generally may deduct ordinary and necessary business_expenses paid_or_incurred in carrying on any trade_or_business sec_162 the taxpayer must satisfy two criteria to be engaged in a trade_or_business namely the taxpayer must be involved in the activity with continuity and regularity and the taxpayer’s primary purpose for engaging in the activity must be for income or profit 480_us_23 petitioner worked to hours a week as a nurse during the years at issue and never earned any income from either the insurance activity or the home care activity besides an insurance license petitioners offered no documentation to show that either the insurance activity or the home care activity was a bona_fide trade_or_business instead petitioners relied on mr agugo’s testimony petitioner’s testimony was vague incomplete inconsistent and wholly insufficient to establish that petitioners conducted the insurance activity or the home care activity continually regularly and with the primary purpose of earning a profit we therefore hold that petitioners are not entitled to deduct any expenses with respect to the insurance activity or the home care activity it is therefore unnecessary to decide whether petitioners have substantiated the expenses reported on the schedules c in any event most of the amounts would not meet the more stringent substantiation requirements of sec_274 iii accuracy-related_penalties respondent also determined accuracy-related_penalties under sec_6662 on the underpayments of tax for the years at issue respondent determined that petitioners are liable for the penalties because they substantially because petitioners did not have gross_income from the insurance activity or the home care activity they are not entitled under sec_183 to any deductions with respect to those activities understated their income_tax for each year within the meaning of sec_6662 and d an understatement means the excess of the amount of the tax required to be shown on the return over the amount of the tax imposed which is shown on the return reduced by any rebate sec_6662 in the case of an individual an understatement is substantial if it exceeds the greater of of the tax required to be shown on the income_tax return or dollar_figure sec_6662 respondent bears the burden of production with respect to petitioners’ liability for the accuracy-related_penalties determined in the notice_of_deficiency and must therefore produce evidence that it is appropriate to impose these penalties see sec_7491 see also 116_tc_438 for each year at issue petitioners’ understatement of income_tax exceeds the greater of of the tax required to be shown on the return or dollar_figure accordingly respondent has met his burden of production an accuracy-related_penalty is not imposed on any portion of the understatement as to which the taxpayer acted with reasonable_cause and in good_faith sec_6664 reliance on the advice of a tax professional may constitute reasonable_cause and good_faith if under all the facts and circumstances the reliance is reasonable and in good_faith 115_tc_43 aff’d 299_f3d_221 3d cir sec_1_6664-4 income_tax regs to qualify for this exception a taxpayer must prove by a preponderance_of_the_evidence that the adviser was a competent professional who had sufficient expertise to justify reliance the taxpayer provided necessary and accurate information to the adviser and the taxpayer actually relied in good_faith on the adviser’s judgment neonatology assocs p a v commissioner t c pincite petitioners contend that they relied on mr bama to prepare their returns for the years at issue correctly mr bama did not testify and petitioners failed to establish with credible_evidence mr bama’s credentials and experience with respect to preparing federal_income_tax returns additionally petitioners did not establish with any specificity the information provided to mr bama regarding the insurance activity or the home care activity we find that petitioners have failed to show mr bama was a competent professional with sufficient expertise to justify reliance and that they provided him with necessary and accurate information petitioners failed to otherwise show that they acted with reasonable_cause and in good_faith with respect to the relevant underpayments accordingly we hold that petitioners are liable for accuracy-related_penalties for the years at issue to reflect the foregoing decision will be entered for respondent


id office uilc cca-303349-09 -------------- number release date from ----------------------- sent to ---------------------- cc subject e and perhaps priority and perhaps levy hi--i spoke with ----------------about your question this a m as she is an expert on overpayment issues she confirmed that if one of the offset provisions in sec_6402 does not apply we are without authority to pay the refund to someone other than the taxpayer the offsets are done by fms as part of the treasury offset program which was set up to provide for an orderly mechanism to offset certain debts without this mechanism any party could attempt to assert a prior claim to the refund which would lead to having to evaluate different priority claims etc so a state cannot just submit a levy for example and get the refund proceeds qualified parties can follow the procedures to seek offset of refunds under the terms of the treasury offset program specifically set forth in sec_6402 and treas reg as you note however those provisions would not apply in your case because the address on the return is a different state from the state with an unpaid tax_liability


internal_revenue_service department of the treasury index number washington dc ruling release date person to contact refer reply to cc dom p si 1-plr-119878-98 date date legend x date this responds to a letter dated date submitted on behalf of x requesting relief under sec_1362 of the internal_revenue_code facts x was incorporated on date the sole shareholder of x desired that x elect s_corporation treatment for x effective on date but the election to be treated as an s_corporation was not timely filed accordingly x requests a ruling that it will be treated as an s_corporation effective date law and analysis sec_1362 provides that a small_business_corporation may elect to be an s_corporation cc dom p si 1-plr-119878-98 sec_1362 provides the rule on when an s election will be effective sec_1362 provides in relevant part that if an s election is made within the first two and one-half months of a corporation’s taxable_year then the corporation will be treated as an s_corporation for the year in which the election is made under sec_1362 however if an s election is made after the first two and one-half months of a corporation's taxable_year then that corporation will not be treated as an s_corporation until the taxable_year after the year in which the s election is filed sec_1362 provides that if no sec_1362 election is made for any taxable_year and the secretary determines that there was reasonable_cause for the failure to timely make such election then the secretary may treat such an election as timely made for such taxable_year and sec_1362 shall not apply x did not file an election to be treated as an s_corporation under sec_1362 x has however established reasonable_cause for not making a timely s election and is entitled to relief under sec_1362 conclusion based solely on the facts submitted and the representations made and provided that x otherwise qualifies as an s_corporation we conclude that x will be treated as an s_corporation effective date within days from the date of this letter x should submit a properly completed form_2553 with a copy of this letter attached to the relevant service_center in addition x and the shareholder of x must file all amended returns required as a result of the treatment of x as an s_corporation effective date prior to the expiration of the applicable statute_of_limitations period this ruling shall be null and void should x or the shareholder of x fail to comply with the requirements of this paragraph except as specifically set forth above no opinion is expressed or implied as to the federal_income_tax consequences of the transaction described above under any other provision of the code specifically no opinion is expressed concerning whether x is in fact an s_corporation for federal tax purposes this ruling is directed only to the taxpayer s requesting it sec_6110 of the code provides that it may not be used or cited as precedent cc dom p si 1-plr-119878-98 in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative sincerely david r haglund senior technician reviewer branch assistant chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes


internal_revenue_service index no number release date date cc dom fi p plr-112416-99 x state fund edc1 law law date k m n p dear this is in reply to a letter dated date requesting a private_letter_ruling on behalf of x the rulings requested are under sec_115 sec_170 sec_3121 and sec_3306 of the internal_revenue_code this letter responds to the request under sec_115 rulings under the other code sections will be considered separately by the offices with those subject matter responsibilities plr-112416-99 facts the state law provides that a public agency of state may exercise jointly with any other public agency of state any power that the agencies have in common and may exercise separately the agencies may create by interlocal agreement a separate legal entity for purposes of state law to exercise that power under law the entity created is a public body corporate or politic the term public agency includes state and local_government units an economic development_corporation edc is also a public agency for purposes of law state law provides for the creation of edcs no part of the net_earnings of an edc may inure to any private person and upon an edc’s dissolution all net assets must be distributed to the municipality that created it of the k counties in state m have edcs and most or all of the rest have within them one or more cities or townships that have formed an edc edcs have the power to receive property condemned by a local unit of government and the power to issue bonds edcs conduct economic development projects involving industrial or commercial enterprises within the local unit of government an edc’s board_of directors consists of representatives of the governing body of the unit of government that created it and members from the private sector the chief_executive_officer of a municipality with the advice and consent of its governing body or in the case of a county where there is not an elected chief_executive_officer the chairperson of the county board_of commissioners with the advice and consent of the county board_of commissioners appoints the members of the board_of directors of the edc a director may be removed by the governing body for cause on date fund and edc1 formed x an edc by interlocal agreement pursuant to law fund was established by executive_order of the governor of state and edc1 is an edc formed by a county of state any edc may participate in x provided certain procedural requirements are met x has an executive committee of n members all the members are appointed by the governor of state the committee includes m representatives from the edcs and n additional members of which p are from the private sector terms of office are staggered the governor of state serves ex officio as chairperson the corporation board_of x authorizes and approves the annual audit of x and evaluates its performance pursuant to standards established by the executive committee and reviews its acts the board consists of one member from each participant and plr-112416-99 up to two additional members per each participant-appointed member these additional members are appointed by the governor members of the board and executive committee receive no compensation but do receive reimbursements for reasonable expenses in discharging their duties employees of state have been detailed to work for x x will also hire its own employees including a chief_executive_officer and other executives on x’s termination its assets remaining after provision for satisfaction of debts and liabilities will be distributed to fund or its statutory successor or in failure thereof state no participant will receive any assets upon termination applicable law sec_115 of the code provides that gross_income does not include income derived from any public_utility or the exercise of any essential_governmental_function and accruing to a state or any political_subdivision of a state revrul_71_589 1971_2_cb_94 provides that the income from property held in trust by a city that was to be used by the city for certain charitable purposes is not subject_to federal_income_tax although revrul_71_589 does not explicitly so state the holding in the revenue_ruling means that a determination was made that the income in question was derived from the exercise of an essential_governmental_function and accrued to a political_subdivision within the meaning of sec_115 of the code revrul_71_589 specifically mentions several types of functions that the trust might perform such as support of a hospital schools maintenance of a park or other purposes ordinarily recognized as municipal functions under revrul_77_261 1977_2_cb_45 the income from a fund established under a written declaration of trust by a state for the temporary investment of cash balances of the state and its political subdivisions which purchase units of participation and have an unrestricted right of withdrawal is excludable from gross_income the fund however is classified as a corporation and must file a federal_income_tax return revrul_90_74 1990_2_cb_34 concerns an organization that is formed operated and funded by political subdivisions to pool their casualty risks or other risks arising from their obligations concerning public liability workers'_compensation or employees' health revrul_90_74 states that the income of the organization is excluded from gross_income under sec_115 of the code if private interests do not participate in the plr-112416-99 organization or benefit more than incidentally from the organization in revrul_90_74 the benefit to the employees of the political subdivisions was excepted as incidental analysis and holding x was created to stimulate economic development in state x’s income is a component of its purpose expenditures are controlled by persons acting under authority granted by gubernatorial appointment and appointment by edcs that have been established by the official action of local units of government no income inures to the benefit of private persons other than incidentally and upon dissolution the net assets of x are not distributed to or for the benefit of any private person accordingly provided that fund and all participant edcs are either political subdivisions of state or integral parts of state or political subdivisions of state x’s income is excludable from gross_income under sec_115 of the code this ruling is directed only to the taxpayer that requested it sec_6110 of the code provides that it may not be used or cited as precedent except as specifically provided otherwise no opinion is expressed on the federal_income_tax consequences of the transaction described above in particular no opinion is expressed whether fund or participant edcs are political subdivisions of or integral parts of political subdivisions of state in accordance with the terms of a power_of_attorney on file in this office a copy of this letter is being sent to your authorized representative a copy of this letter must be attached to x’s income_tax return for the taxable_year to which it relates sincerely assistant chief_counsel financial institutions products by ______________________________ william e coppersmith chief branch


t c memo united_states tax_court lance standifird petitioner v commissioner of internal revenue respondent docket no 8977-o1l filed date lance standifird pro_se erin k huss for respondent memorandum opinion laro judge petitioner while residing in mesa arizona petitioned the court under sec_6330 to review respondent’s determination as to his proposed levy upon petitioner’s property respondent proposed the levy to collect and federal income taxes plus frivolous tax_return penalties and interest -2 - of approximately dollar_figure for and dollar_figure for currently the case is before the court on respondent’s motion for summary_judgment under rule and to impose a penalty under sec_6673 petitioner responded to respondent’s motion under rule b we shall grant respondent’s motion for summary_judgment and shall impose a dollar_figure penalty against petitioner in addition we dismiss for lack of jurisdiction the part of the petition with respect to the frivolous_return penalties and related interest unless otherwise noted section references are to the applicable versions of the internal_revenue_code rule references are to the tax_court rules_of_practice and procedure background on date petitioner filed a u s nonresident_alien income_tax return in which he reported zero taxable_income petitioner reported that he was not a u s citizen and had not visited the u s in petitioner stated that his country of residence was america on date respondent issued to petitioner a notice_of_deficiency for the notice determined that petitioner was liable for an dollar_figure deficiency in his income_tax and a dollar_figure addition_to_tax under sec_6651 a ' we use the term approximately because these amounts were computed before the present proceeding and have since increased on account of interest -3- for failure_to_file a timely federal_income_tax return petitioner did not petition the court with respect to the notice on date respondent assessed petitioner’s tax_liability for as per the notice_of_deficiency on date petitioner filed a u s nonresident_alien income_tax return in which he again reported zero taxable_income he further reported that he was not a u s citizen and that he was stateless once again petitioner stated that his country of residence was america on date respondent issued to petitioner a notice_of_deficiency for the notice determined that petitioner was liable for a dollar_figure deficiency in his income_tax a dollar_figure addition_to_tax under sec_6651 for failure_to_file a timely federal_income_tax return and a dollar_figure addition_to_tax under sec_6654 for failure to pay estimated_tax petitioner petitioned the court with respect to the notice on date this court dismissed that case for failure to state a claim upon which relief may be granted standifird v commissioner tcmemo_1995_348 on date respondent assessed petitioner’s tax_liability for as per the notice_of_deficiency on date respondent mailed to petitioner a form l1058 final notice -- notice_of_intent_to_levy and notice of your right to a hearing final notice the final notice informed petitioner of respondent’s intention to levy under sec_6331 and petitioner’s right under sec_6330 to a hearing with respondent’s office of appeals appeals enclosed with the final notice was a copy of form request for a collection_due_process_hearing on date petitioner sent to respondent the form requesting the referenced hearing on date appeals officer patrick j wilcox held with petitioner a hearing under sec_6330 at the hearing the appeals officer provided petitioner with copies of the metra-- x transcript with respect to petitioner’s income_tax liabilities for and on date the appeals officer mailed to petitioner copies of the txmoda transcripts for and additionally on date the appeals officer mailed to petitioner two forms certificate of assessments payments and other specified matters the forms were dated date and were for and respectively on date respondent issued to petitioner a notice_of_determination concerning collection action s under sec_6320 and or for and this notice reflected the determination of appeals to sustain the proposed levy - on date petitioner filed a complaint with the united_states district_court for the district of arizona the court dismissed that complaint on date stanifird v wilcox aftr 2d ustc par big_number d ariz discussion sec_6331 provides that if any person liable to pay any_tax neglects or refuses to pay such tax within days after notice_and_demand for payment the secretary may collect such tax by levy on the person’s property sec_6331 provides that at least days before enforcing collection by levy on the person’s property the secretary must provide the person with a final notice_of_intent_to_levy including notice of the administrative appeals available to the person sec_6330 generally provides that the commissioner cannot proceed with collection by levy until the person has been given notice and the opportunity for an administrative review of the matter in the form of an appeals_office hearing and if dissatisfied with judicial review of the administrative determination 115_tc_35 114_tc_176 in the case of such judicial review the court will review a taxpayer’s liability under the de novo standard where the validity of the underlying tax_liability is at issue the court will review the commissioner’s administrative determination for abuse of --6- discretion with respect to other issues 114_tc_604 here respondent notified petitioner that he was proposing to levy upon petitioner’s property in order to collect petitioner’s federal_income_tax debt for and following the determination by appeals that respondent’s proposed levy was proper petitioner sought relief in this court the only allegation by petitioner is that the determination was made without verification that the law and procedures were complied with summary_judgment is intended to expedite litigation and avoid unnecessary and expensive trials fla peach corp v commissioner 90_tc_678 summary_judgment may be granted with respect to all or any part of the legal issues in controversy if the pleadings answers to interrogatories depositions admissions and any other acceptable materials together with the affidavits if any show that there is no genuine issue as to any material fact and that a decision may be rendered as a matter of law rule a and b 98_tc_518 affd 17_f3d_965 7th cir the moving party bears the burden of proving because we lack jurisdiction over the assessment of the sec_6702 frivolous_return penalties we shall dismiss for lack of jurisdiction the related part of the petition 115_tc_324 _7- that there 1s no genuine issue of material fact and factual inferences are drawn in a manner most favorable to the party opposing summary_judgment 85_tc_812 79_tc_340 as will be shown in the discussion that follows petitioner has raised no genuine issue as to any material fact accordingly we conclude that this case is ripe for summary_judgment petitioner argues that the appeals officer failed to obtain verification from the secretary that the requirements of all applicable laws and administrative procedures were met as required by sec_6330 we disagree first sec_6330 does not require the commissioner to rely upon a particular document eg the summary record itself rather than transcripts of account to satisfy this verification requirement kuglin v commissioner tcmemo_2002_51 see also weishan v commissioner tcmemo_2002_88 second the appeals officer is not required to give the taxpayer a copy of the verification that the requirements of any applicable law or administrative procedure have been met sec_6330 sec_301_6330-1 proceed admin regs see also 118_tc_162 more importantly in this case petitioner not only -8- received copies of the mftra-x transcript but also forms and txmoda transcripts even standing alone the mftra-x transcript which was reviewed by the appeals officer at the hearing is a valid verification that the requirements of any applicable law or administrative procedure have been met ’ 118_tc_365 mudd v commissioner tcmemo_2002_204 howard v commissioner tcmemo_2002_81 mann v commissioner tcmemo_2002_48 we hold that the appeals officer satisfied the verification requirement of sec_6330 yacksyzn v commissioner tcmemo_2002_99 cf 117_tc_117 petitioner further contends that he did not receive the notices of assessment for the alleged assessment of the income petitioner is not prejudiced by the fact that he received forms after the appeals_office hearing 118_tc_162 federal tax assessments are formally recorded on a record of assessment sec_6203 the summary record of assessment must provide identification of the taxpayer the character of the liability assessed the taxable_period if applicable and the amount of the assessment sec_301_6203-1 proceed admin regs the mftra-x transcript received by petitioner at the appeals_office hearing contained all this information petitioner has not demonstrated in this proceeding any irregularity in the assessment procedure that would raise a guestion about the validity of the assessment or the information contained in the mftra-x transcript see mann v commissioner tcmemo_2002_48 we hold that the assessment made by respondent is valid see kuglin v commissioner tcmemo_2002_51 see also duffield v commissioner tcmemo_2002_53 -9- taxes he argues that there is no proof of mailing by respondent of the notices of assessment required by sec_6303 the record shows otherwise the secretary shall as soon as practicable and within days after the making of an assessment of a tax pursuant to sec_6203 give notice to each person liable for the unpaid tax stating the amount and demanding payment thereof sec_6303 if mailed this notice_and_demand is required to be sent to the taxpayer’s last_known_address id forms show that respondent sent petitioner notices of balance due on the same dates that respondent made assessments against petitioner for and a notice of balance due constitutes a notice_and_demand for payment within the meaning of sec_6303 schaper v commissioner tcmemo_2002_203 in addition petitioner in this case received numerous final notices notices of intention to levy as well as notices of deficiency receipt of which petitioner does not dispute these numerous notices were sufficient and met the requirements of sec_6303 7_f3d_137 9th cir 953_f2d_531 9th cir weishan v commissioner tcmemo_2002_88 the form on which a notice of assessment and demand for payment is made is irrelevant as long as it provides the taxpayer with all the information required --10- under sec_6303 908_f2d_521 9th cir petitioner argues that the declaration of erin k huss accompanying respondent’s motion for summary_judgment is insufficient to prove that the notices were mailed to the petitioner’s ‘last known address’ as required by sec_6303 petitioner claims that ms huss is not gualified to testify as to what address the notices may or may not have been mailed because she has absolutely no personal knowledge of the facts that would establish that the notices were mailed we disagree with petitioner that the declaration is deficient the declaration merely identifies documents contained in respondent’s administrative file all of which were submitted to the court as part of respondent’s motion for summary_judgment this argument by petitioner is without merit for the foregoing reasons we sustain respondent’s determination as to the proposed levy as a permissible exercise of discretion we now turn to the requested penalty under sec_6673 sec_6673 authorizes the court to require a taxpayer to pay to the united_states a penalty not in excess of dollar_figure whenever it appears that proceedings have been instituted or maintained by the taxpayer primarily for delay or that the taxpayer’s position in such proceeding is frivolous or --11- groundless we have repeatedly indicated our willingness to impose such penalties in collection review cases roberts v commissioner supra in 115_tc_576 taxpayers advancing frivolous and groundless claims and instituting proceedings under sec_6330 for the purposes of delay were given unequivocal warning that the court would impose penalties see also hoffman v commissioner tcmemo_2000_ moreover we have imposed penalties in such proceedings when the underlying tax_liability was not at issue and the taxpayer raised frivolous and groundless arguments as to the legality of the federal tax laws yacksyzn v commissioner supra watson v commissioner tcmemo_2001_213 davis v commissioner tcmemo_2001_87 petitioner is a frequent litigator of groundless challenges to the validity of the internal_revenue_code see g standifird v 41_fedappx_99 9th cir standifird v augustine aftr 2d ustc par big_number d ariz 32_fedclaims_731 in a prior proceeding this court imposed upon petitioner a penalty under sec_6673 of dollar_figure standifird v commissioner tcmemo_1995_348 petitioner however continues to advance the same type of frivolous and groundless arguments as in the previous cases --12 - petitioner we believe has instituted and maintained this proceeding primarily for delay his attention has been directed to our decision in davis v commissioner supra wherein the court imposed upon the taxpayer a dollar_figure penalty under sec_6673 for advancing frivolous and groundless claims pursuant to sec_6673 we require petitioner to pay to the united_states a penalty of dollar_figure we have considered all arguments made by the parties and have found those arguments not discussed herein as irrelevant and or without merit to reflect the foregoing an appropriate order and decision will be entered for respondent


t c summary opinion united_states tax_court harold e nicholas petitioner v commissioner of internal revenue respondent docket no 423-98s filed date lisa a alexander for petitioner bradford a johnson for respondent powell special_trial_judge this case was heard pursuant to the provisions of sec_7463' of the internal_revenue_code in effect at the time the petition was filed the decision to be entered is not reviewable by any other court and this opinion should not be cited as authority ' unless otherwise indicated subsequent section references are to the internal_revenue_code in effect for the years in issue - - respondent determined deficiencies in petitioner’s federal income taxes and penalties as follows penalty year deficiency sec_6662 a dollar_figure dollar_figure big_number the issues are whether petitioner qualifies as a statutory_employee under sec_3121 c and whether petitioner is liable for the negligence penalties under sec_6662 for the years in issue at the time the petition was filed petitioner resided in petersburg new york background the applicable facts may be summarized as follows during the years at issue petitioner’s occupation consisted of repairing and maintaining x-ray imaging equipment for medical establishments petitioner’s income during these years was received from two entities troy management associates inc troy and empire imaging technologies ltd empire at issue is the work arrangement between petitioner and empire empire was formed in as a joint_venture between a group of radiologists and several individuals including petitioner who serviced medical imaging equipment empire provided maintenance and sales services to various medical establishments and dealt with several types of medical imaging equipment including x-ray imaging equipment magnetic resonance imaging mri equipment and computerized axial tomography cat scan eguipment petitioner had a 12-percent stock interest in empire and was on empire’s board_of directors additionally petitioner held the position of technical director his duties as technical director were to be defined by the board the record however is barren as to the specific nature of the technical director’s duties in addition to his managerial and directorial positions with empire petitioner was the sole individual hired by empire to perform maintenance work on x-ray machines for empire’s customers the nature of petitioner’s work as empire’s x-ray specialist involved traveling to the customer’s location troubleshooting the customer’s x-ray equipment and performing any necessary maintenance if a malfunctioning part required repairs greater than those which petitioner could perform on the customer’s premises petitioner took the damaged part to his home-based workshop where he would perform the repairs if a part needed to be replaced petitioner would obtain the replacement and return on a subsequent visit for installation petitioner owned all of the tools and equipment he used to fulfill his maintenance duties including the vehicle used to make service calls petitioner also performed tasks related to his activities with empire from his home these tasks generally included making - - phone calls to dealerships and manufacturers for replacement parts and new equipment calling prospective customers with respect to sales and contacting customers regarding their maintenance needs this work was done from petitioner’s home because empire did not have adequate office space from which petitioner could work petitioner had no set hours no supervision and underwent no training during his time with empire the record contains an employment agreement agreement between petitioner and empire that was never formally executed the agreement however generally set forth the intentions of petitioner and empire as to the nature of petitioner’s work under the agreement petitioner was to receive a salary of dollar_figure per annum was to be reimbursed for all incidental business_expenses and was subject_to dismissal without cause upon a day written notice there was also a trade secrets clause and a covenant_not_to_compete the covenant would prevent petitioner from owning operating or otherwise working for a competitor of empire while providing services to empire and for a period of year after his separation_from_service with empire this covenant was limited to a six-county region of new york presumably the regions in which empire operated the covenant did not include the region petitioner maintained while providing services to troy - - petitioner and the other shareholders of empire executed a shareholder agreement the shareholder agreement provides that petitioner assign all preexisting contracts to empire agree to terminate his sole_proprietorship and transfer all preexisting accounts_receivable to empire in exchange for a 12-percent interest in empire and a payment of dollar_figure again petitioner’s services to troy were excluded from the shareholder agreement furthermore the shareholder agreement provided that all management services would be provided by an entity called physerv ltd an entity wholly owned by the radiologists with whom petitioner joined to form empire the management services were to include consultative services management of accounts_receivable and accounts_payable payroll services marketing and general administrative services it is unclear what services were in fact actually provided by physerv ltd the form_w-2 wage and tax statement originally issued by empire to petitioner for the years in issue did not have the box checked to indicate that petitioner was a statutory_employee after the audit had commenced petitioner requested that empire issue amended forms w-2 for the years in issue indicating a statutory_employee status during the years in issue troy required identical maintenance services from petitioner the sole difference was that troy’s only customer was st mary’s hospital located in -- - troy new york troy treated petitioner as a common_law_employee on the forms w-2 it issued to petitioner petitioner does not contest that classification while under the nonexecuted employment agreement petitioner was to be reimbursed for his expenses it is undisputed that petitioner incurred expenses for which he was not reimbursed on his income_tax returns petitioner claimed deductions for the expenses associated with his activities with empire on schedule c profit or loss from business the returns were prepared by petitioner’s accountant who had full knowledge of all of the facts respondent determined that these expenses should be properly reported on schedule a itemized_deductions as unreimbursed employee business_expenses discussion there is no dispute that petitioner incurred the expenses for the deductions he claimed rather the dispute focuses on whether petitioner should be considered a common_law_employee or a statutory_employee if petitioner is characterized as a common_law_employee the deductions for his expenses are not deductible in determining adjusted_gross_income see sec_62 are classified as miscellaneous_itemized_deductions sec_67 and are limited to the extent that they exceed percent of adjusted_gross_income sec_67 in addition miscellaneous_itemized_deductions are not deductible for - computation of the alternative_minimum_tax see sec_56 statutory employees are individuals in specified occupation groups who are not common_law employees see sec_7701 instead they are treated like common_law employees solely for purposes of applying the federal_insurance_contributions_act fica under sec_3121 as independent contractors under common_law principles statutory employees are not treated as employees under sec_62 or sec_67 also statutory employees are not subject_to the self-employment_tax on their earnings as statutory employees sec_3121 provides in pertinent part as follows sec_3121 employee ---for purposes of this chapter the term employee means--- any officer of a corporation or any individual who under the usual common_law rules applicable in determining the employer-employee relationship has the status of an employee or any individual other than an individual who is an employee under paragraph or who performs services for remuneration for any person-- c as a home worker performing work according to specifications furnished by the person for whom the services are performed on materials or goods furnished by such person which are required to be returned to such person or a person designated by him if the contract_of_service contemplates that substantially_all of such services are to be performed --- - personally by such individual except that an individual shall not be included in the term employee under the provisions of this paragraph if such individual has a substantial investment in facilities used in connection with the performance of such services other than in facilities for transportation or if the services are in the nature of a single transaction not part of a continuing relationship with the person for whom the services are performed a taxpayer cannot be a statutory_employee under sec_3121 c 1f he or she is a common_law_employee under sec_3121 or an officer of a corporation under sec_3121 therefore the initial question is whether petitioner was a common_law_employee or independent_contractor and then if he is an independent_contractor whether he gualifies as a home worker --- - whether an employer-employee relationship’ exists is a guestion of fact see air terminal cab inc v united_states a478 f 2d 8th cir 89_tc_225 affd 862_f2d_751 9th cir if an employer-employee relationship exists its characterization by the parties as some other relationship is of no consequence see sec_31_3121_d_-1 employment_tax regs this court looks to seven factors to determine the existence of an employer-employee relationship versus an independent sec_31_3401_c_-1 employment_tax regs defines an employer-employee relationship as follows b generally the relationship of employer and employee exists when the person for whom services are performed has the right to control and direct the individual who performs the services not only as to the result to be accomplished by the work but also as to the details and means by which that result is accomplished that is an employee is subject_to the will and control of the employer not only as to what shall be done but how it shall be done in this connection it 1s not necessary that the employer actually direct or control the manner in which the services are performed it is sufficient if he has the right to do so the right to discharge is also an important factor indicating that the person possessing that right 1s an employer other factors characteristic of an employer but not necessarily present in every case are the furnishing of tools and the furnishing of a place to work to the individual who performs the services in general if an individual is subject_to the control or direction of another merely as to the result to be accomplished by the work and not as to the means and methods for accomplishing the result he is not an employee contractor relationship those factors are the degree of control exercised by the principal over the details of the work which party invests in the facilities used in the work the opportunity of the individual for profit or loss whether the principal has the right to discharge the individual whether the work is an integral part of the principal’s regular business the permanency of the relationship and the relationship the parties believe they are creating weber v commissioner 103_tc_378 affd per curiam 60_f3d_1104 4th cir profl executive leasing inc v commissioner supra pincite 64_tc_974 see also 331_us_704 no single factor is dispositive and we must look at all the facts and circumstances in each case see profl executive leasing inc v commissioner supra pincite simpson v commissioner supra pincite eren v commissioner tcmemo_1995_555 affd 180_f3d_594 4th cir applying these criteria to the facts here we believe that petitioner was an employee of empire ’ it is clear that the employment agreement between petitioner and empire while perhaps unsigned by petitioner’s testimony represented the intent of the parties under that agreement the parties intended that due to our ultimate holding in this case it is unnecessary for us to consider what portion if any of petitioner’s income from empire was received due to his position as an officer petitioner would be an employee we recognize that empire’s supervision of the specifics of petitioner’s daily work was minimal this however results from the professional nature of petitioner’s work as we noted in 25_tc_1296 the methods by which professional men work are prescribed by the techniques and standards of their professions no layman should dictate to a lawyer how to try a case or toa doctor how to diagnose a disease therefore the control of an employer over the manner in which professional employees shall conduct the duties of their positions must necessarily be more tenuous and general than the control_over nonprofessional employees yet despite this absence of direct control_over the manner in which professional men shall conduct their professional activities it cannot be doubted that many professional men are employees we also recognize that petitioner’s daily work life under his association with empire may not have differed significantly from that when he was working as a sole_proprietor ona daily basis this may have been true but it ignores the fact that petitioner’s relationship with former customers was fundamentally altered albeit perhaps formally moreover by joining empire petitioner chose the benefits of working for a corporation and he cannot when that form seems disadvantageous disavow the corporate structure see 319_us_436 on balance considering the record and weighing all of the factors we conclude that petitioner was a common_law_employee and not an independent_contractor since petitioner was not an independent_contractor he therefore could not be a statutory_employee see sec_3121 lickiss v commissioner tcmemo_1994_103 respondent also determined penalties for negligence under sec_6662 for the years in issue sec_6662 provides that if the section applies there is imposed a penalty in an amount equal to percent of the portion of the underpayment the penalty applies inter alia to an underpayment due to negligence or disregard of the rules or regulations see sec_6662 b the term disregard includes any careless reckless or intentional disregard sec c negligence includes any failure to make a reasonable attempt to comply id we do not understand respondent’s argument that petitioner’s conduct falls within the disregard ambit of sec_6662 b we focus therefore on whether petitioner’s actions constituted negligence a good_faith reliance on advice from a qualified accountant can be a defense to the accuracy-related_penalty for negligence in certain circumstances see 111_tc_215 petitioner must establish that the adviser was qualified that he supplied all relevant information and that he relied on the advice in good_faith id these requirements are satisfied here reviewed and adopted as the report of the small_tax_case division to reflect the foregoing decision will be entered for respondent with respect to the deficiencies and for petitioner with respect to the penalties under sec_6662 a


g i department of the treasury internal_revenue_service washington d c tax_exempt_and_government_entities_division sep number release date uil t ep ra t4 legend taxpayer a company b company c company d amount e amount f individual g date h date date j plan x plan y dear this is in response to a ruling_request submitted by your authorized representative on date as supplemented by correspondence dated date and date in which you request a waiver of the 60-day rollover requirement contained in sec_402 of the internal_revenue_code the following facts and representations have been submitted in support of your request taxpayer a age_ represents that he received a distributio amount e and a distribution from plan y totaling amount f toxpayer a acsoris that his failure to accomplish a rollover of each distribution within the 60-day period prescribed by sec_402 was due to a mistake by individual g of company d which led to amounts e and f being placed in a non-ira account taxpayer a further represents that amounts e and f have not been used for any other purpose i on date h taxpayer a took a distribution of amount e from plan x and invested such amount in company d on date i taxpayer a took a distribution from plan y and invested such amount in company d these transactions were made in the form of wire transfers directly to individual g individual g is the managing member and majority owner of company d taxpayer a asserts that amounts e and f were intended to continue to be held for retirement purposes in company d taxpayer a was informed by individual g at the time of these transactions that individual g would have the bank that acted as prime broker for company d set up an ira for taxpayer a amounts e and f would then be invested in company d and maintained as qualified ira investments within such ira as a result of representations by individual g taxpayer a assumed that individual g would complete the necessary paperwork to establish such an ira for taxpayer a and that amounts e and f would be held by such ira and invested in company d documentation submitted by taxpayer a demonstrates that both taxpayer a and company d believed that amounts e and f were validly invested in an ira since the transfers of amounts e and f to company d were all done by wire transfer taxpayer a never had direct access to these amounts at the end of individual g informed taxpayer a for the first time that no ira account had in fact been formally established for taxpayer a and therefore amounts e and f that were transferred to and invested in company d were not maintained within an ira in an affidavit dated date j individual g acknowledged that he advised taxpayer a that he would assist in establishing an ira on behalf of taxpayer a that would enable taxpayer a to have his various retirement benefits invested in company d however an ira was never established to hold amounts e and f as investments in company d based on the above facts and representations you request that the service waive the 60-day rollover requirement contained in sec_402 of the code with respect to the distribution of amounts e and f respectively from plan x and plan y sec_402 of the internal_revenue_code provides that if any portion of the balance_to_the_credit of an employee in a qualified_trust is paid to the employee in an eligible_rollover_distribution and the distributee transfers any portion of the property received in such distribution to an eligible_retirement_plan and in the case of a distribution_of_property other than money the amount so transferred consists of the property distributed then such distribution to the extent transferred shall not be includible in gross_income for the taxable_year in which paid sec_402 states that such rollover must be accomplished within days following the day on which the distributee received the property an individual_retirement_account ira constitutes one form of eligible_retirement_plan sec_402 of the code provides in relevant part that the secretary may waive the 60-day requirement under sec_402 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_402 sec_401 of the code provides the rules for governing direct transfers of eligible rollover distributions revproc_2003_16 2003_4_irb_359 provides that in determining whether to grant a waiver of the 60-day rollover requirement pursuant to sec_402 the service will consider all relevant facts and circumstances including errors committed by a financial_institution inability to complete a rollover due to death disability hospitalization incarceration restrictions imposed by a foreign_country or postal error the use of the amount distributed for example in the case of payment by check whether the check was cashed and the time elapsed since the distribution occurred the information presented and documentation submitted by taxpayer a is consistent with his assertion that his failure to accomplish timely rollovers was caused by a mistake made by individual g of company d which led to amounts e and f being placed into a non-ira account the information presented by taxpayer a is consistent with his assertion that he attempted to rollover amounts e and f therefore pursuant to sec_402 of the code the service hereby waives the 60-day rollover requirement with respect to the distribution of amounts e and f respectively from plan x and plan y provided all other requirements of sec_402 of the code except the 60-day rollover requirement are met with respect to such contributions taxpayer a is hereby granted a period of 60-days in which to deposit amounts e and f into a rollover ira and amounts e and f will be considered rollover_contributions within the meaning of sec_402 of the code no opinion is expressed as to the tax treatment of the transaction described herein under the provisions of any other section of either the code or regulations that may be applicable hereto this ruling is directed solely to the taxpayer who requested it sec_6110 of the code provides that it may not be used or cited as precedent a copy of this letter has been sent to your authorized representative in accordance with a power_of_attorney on file in this office if you have any questions regarding this ruling you may contact id at sincerely yours dnzetbatsl employee_plans technical group manager enclosures notice of intention to disclose deleted copy of letter


department of the treasury internal_revenue_service washington d c date number info release date index number xxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxx dear xxxxxxxxxxxxxxxx i apologize for the delay in responding to your letter dated date on behalf of your constituent xxxxxxxxxxxxxx xxxxxxxx has requested an investigation into the political activities of the xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxx he maintains the xxxxx’s tax-exempt status should be revoked because it participated in political activities which are prohibited under sec_501 of the internal_revenue_code the code for charitable organizations to be recognized as exempt from federal_income_tax under sec_501 of the code an organization must be organized and operated exclusively for charitable purposes an organization is not operated exclusively for charitable purposes if it participates in political campaign activities which include making oral statements for or against any political_candidate for elective office for example in christian echoes national ministry inc v united_states the court revoked the organization’s tax-exempt status because it used its broadcasts to attack candidates and incumbents it considered too liberal an absolute prohibition exists against engaging in these activities we forwarded xxxxxxxxxx information to our exempt_organizations examination programs review office for appropriate action we appreciate xxxxxxxx advising us of a tax-exempt organization’s possible violation of the code the code includes taxpayer privacy provisions which were enacted by the congress to protect the privacy of tax returns and tax_return information of all taxpayers we cannot disclose what action if any the irs may take using the information xxxxxxxx provided i can tell you however we maintain an ongoing examination program to ensure tax- exempt_organizations meet the legal requirements for tax exemption and comply with the tax laws when an examination shows an organization is not complying with the tax laws we take appropriate action if xxxxxxxx has more information about this matter he can send it to eo examination programs review t eo e pr internal_revenue_service commerce street dallas tx i appreciate your bringing this matter to our attention if you have any questions please call xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx of this office at xxxxxxxxxxxxxx sincerely s by tom miller steven t miller director exempt_organizations


department of the treasury internal_revenue_service washington d c number release date date cc el gl br2 gl-606786-97 uilc memorandum for associate district_counsel south florida from joseph w clark senior technician reviewer branch general litigation subject this responds to your request for advice dated date this document is not to be cited as precedent legend taxpayer x taxpayer y gl-606786-97 this memorandum responds to your request that we reconsider our previous advice regarding the use of a nominee lien or levy therefore consistent with our prior advice it is proper for you to support the complaint to set_aside fraudulent transfers filed by the taxpayer background in a memorandum dated date you requested our advice on the use of a nominee lien and levy to reach assets transferred by taxpayer x to a joint revocable_trust for the benefit of himself and his wife taxpayer y the assets were first transferred from taxpayer x to himself and taxpayer y to be held as tenancies by the entireties and then to the joint revocable_trust both transfers took place pursuant to a prenuptial agreement entered into by the parties the day before they were married the agreement stated that the consideration for this agreement is the contemplated marriage of the parties and the releases waivers and other promises and covenants separately and mutually undertaken by the parties by entering into this agreement florida law does not allow a creditor to reach property held as a tenancy_by_the_entirety to satisfy the individual debts of one spouse in re wincorp inc 185_br_914 bankr s d fla for this reason you suggested that the service seek to set_aside the transfers as fraudulent under florida’s version of the uniform fraudulent transfer act ufta found in chapter of the florida statutes in our memorandum dated date we agreed with your previous assertion that the promise to marry and release_of_marital_rights may not qualify as value for the purposes of florida fraudulent transfer act although there was some adverse florida precedent those cases had been decided under the prior florida statute cases from other jurisdictions which have also adopted the ufta or the uniform fraudulent conveyance act suggest that because value is viewed from the point of view of the creditor ie is the property transferred of potential value to the creditor a promise to marry and release_of_marital_rights would not constitute value see 61_f3d_1054 2d cir 890_fsupp_259 s d n y 85_br_683 bankr e d n y relying on these cases a tenable claim can be made that the transfer of property in exchange for such promises should be set_aside as to those creditors who meet the other requirements for protection under the act gl-606786-97 discussion recently you indicated that the taxpayer has now sought to void the suspect transfers himself in his complaint to set_aside fraudulent transfers complaint the taxpayer avers that the elements of florida’s fraudulent transfer act have been satisfied see eg complaint paragraphs averring that transfers by taxpayer y were fraudulent under fla stat paragraphs averring that transfers by taxpayer were fraudulent under fla stat an admission by a party can be accepted by the adverse_party as fact without the necessity of supporting evidence see fernandez v fernandez so 2d fla carvell v kinsey so 2d fla given the allegations and admissions of the taxpayer we see no reason that you cannot proceed to support the motion to set_aside the transfers if such a motion would benefit the government’s case if you have any questions please contact the general litigation attorney assigned to this case at


internal_revenue_service department of the treasury significant index number washington oc contact person telephone number in reference to date op e ep t attn legend employer a state b plan x dear this is in response to a ruling_request dated date as supplemented by correspondence dated date concerning the pick up of certain employee contributions to plan x under sec_414 of the intemal revenue code the following facts and representations have been submitted employer a an agency of state a participates in plan x a defined_contribution_plan for the benefit of its employees the plan requires mandatory employee contributions and is qualified under code sec_401 pursuant to a resolution dated date employer a has agreed to pick up i assume and pay the mandatory employee contributions to plan x in tieu of employees paying such contributions eligible employees do not have the option to receive the picked up contributions in cash in lieu of having such contributions paid to plan x of lt based on the foregoing facts and representations you have requested the following ruling no part of the contributions to plan x picked up by employer a on behalf of eligible employees will constitute taxable_income to such employees in the year of the pick up code sec_414 provides that contributions otherwise designated as employee contributions shall be treated as employer contributions if such contributions are made to a plan described in code sec_401 established by a state goverment or a political_subdivision thereof or any agency_or_instrumentality of any one of the foregoing which is wholly owned thereby and are picked up by the employing unit the federal_income_tax treatment to be accorded contributions which are picked up in that revenue_ruling the employer school district by the employer within the meaning of code sec_414 is specified in revrul_77_462 1977_2_cb_358 agreed to assume and pay the amounts employees were required by state law to contribute to a state pension_plan revrul_77_462 concluded that the school district's picked up contributions to the plan are excluded from the employees’ gross_income until such time as they are distributed to the employees the revenue_ruling held further that under the provisions of code sec_3401 the school district's contributions to the plan are excluded from wages for purposes of the collection of income_tax at source on wages therefore no withholding is required from the employees’ salaries with respect to such picked up contributions the issue of whether contributions have been picked up by an employer within the meaning of code sec_414 is addressed in revrul_81_35 1981_1_cb_255 and revrul_81_36 1981_1_cb_255 these revenue rulings established that the following two criteria must be met the employer must specify that the contributions although designated as employee contributions are being paid_by the employer in lieu of contributions by the employee and the employee must not be given the option of choosing to receive the contributed amounts directly instead of having them paid_by the employer to the pension_plan furthermore it is immaterial for purposes of the applicability of code sec_414 whether an employer picks up contributions through a reduction in salary an offset against future salary increases or a combination of both in revrul_87_10 1987_1_cb_136 the intermal revenue service considered whether contributions designated as employee contributions to a governmental_plan are excludable from the gross_income of the employee the service concluded that to satisfy the criteria set forth in revenue rulings and with respect to particular contributions the required specification of designated employee contributions must be completed before the period to which such contributions relate a os employer a’s resolution satisfies the criteria set forth in revrul_81_35 and revrul_81_36 by providing that employer a will make contributions in lieu of contributions by eligible employees and that no employee will have the option of receiving the contribution instead of having it contributed to plan x accordingly we conclude that the resolution adopted by employer a satisfies the requirements of code sec_414 amounts picked up by employer a for employees shall be treated as employer contributions and will not be includable in employees’ gross_income for the taxable_year in which such amounts are contributed because we have determined that the picked up amounts are to be treated as employer contributions they are excepted from wages as defined in code sec_3401 for federal_income_tax withholding purposes therefore no withholding of federal_income_tax is required from employees’ salaries with respect to such picked up amounts the effective date for the commencement of any proposed pick up as specified in the final resolution cannot be any earlier than the date the final resolution is signed or put into effect for purposes of the application of code sec_414 it is immaterial whether an employer picks up contributions through a reduction in salary an offset against future salary increases or a combination of both this ruling is based on the assumption that plan x will be qualified under code sec_401 at the time of the proposed contributions no opinion is expressed as to whether the amounts in question are subject_to tax under the federal_insurance_contributions_act no opinion is expressed as the whether the amounts in question are paid pursuant to a salary reduction agreement within the meaning of code sec_3121 v v this ruling is directed only to the taxpayer who requested it code sec_6110 provides that it may not be used or cited by others as precedent sincerely yours john swieca chief employee_plans technical branch enclosures deleted copy of the ruling notice


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 b3 plr-129951-09 date november legend company ----------------------------------------------------------- -------------------------------- shareholders ------------------------------------------------------------- ---------------------- ------------------------------------------------------------- ---------------------- date state --------------------- ---------- dear -------------- this letter responds to your letter dated date submitted on behalf of company requesting a ruling under sec_1362 of the internal_revenue_code facts company was incorporated in state on date company’s shareholders intended for company to be an s_corporation effective date however company’s form_2553 election by a small_business_corporation was not timely filed company requests a ruling that it will be recognized as an s_corporation effective date plr-129951-09 law and analysis sec_1362 provides that a small_business_corporation may elect to be an s_corporation sec_1362 provides that an election under sec_1362 may be made by a small_business_corporation for any taxable_year at any time during the preceding_taxable_year or at any time during the taxable_year and on or before the 15th day of the third month of the taxable_year sec_1362 provides that if a small_business_corporation makes an election under sec_1362 for any taxable_year and the election is made after the 15th day of the third month of the taxable_year and on or before the 15th day of the third month of the following taxable_year then the election is treated as made for the following taxable_year sec_1362 provides that if an election under sec_1362 is made for any taxable_year determined without regard to sec_1362 after the date prescribed by sec_1362 for making the election for the taxable_year or no election is made for any taxable_year and the secretary determines that there was reasonable_cause for the failure to timely make the election then the secretary may treat the election as timely made for the taxable_year and sec_1362 shall not apply conclusion based solely on the facts submitted and the representations made we conclude that company has established reasonable_cause for failing to make an s_corporation_election in a timely manner thus we conclude that company is eligible for relief under sec_1362 accordingly if company makes an election to be an s_corporation effective date by filing a completed form_2553 with the appropriate service_center within days from the date of this letter then such election will be treated as timely made a copy of this letter should be attached to the form_2553 filed with the service_center a copy is enclosed for that purpose except as expressly provided herein we express or imply no opinion concerning the federal tax consequences of any aspect of any transaction or item discussed or referenced in this letter specifically we express or imply no opinion concerning whether company is otherwise eligible to be an s_corporation for federal tax purposes in accordance with a power_of_attorney on file with this office we are sending a copy of this letter to company’s authorized representative plr-129951-09 this ruling is directed only to the taxpayer requesting it sec_6110 provides that it may not be used or cited as precedent 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 s mary beth carchia senior technician reviewer branch office of associate chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes cc