significant index no department of thetreasury zuit8il2019 internal_revenue_service washington d c tax exempt and ee lee dec re change in actuarial assumptions taxpayer plan ein - pn the plan dear this letter constitutes notice that conditional 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 approval is conditioned on gains and losses being measured annually by decrement to assure the accuracy of each plan assumption this approval has been granted in accordance with sec_430 in granting this approval we have considered only the acceptability of the proposed assumptions and as necessary the methodology by which they were determined we are not expressing any opinion as to the accuracy or acceptability of any calculation or other material submitted with your request sec_430 of the code provides that subject_to certain limits no actuarial assumption other than interest rates and mortality assumptions used to determine the funding target may be changed without approval from the secretary according to information submitted with the request implementing the proposed changes in assumptions exceeds the limits provided in sec_430 of the code therefore the taxpayer is requesting approval before these proposed changes in assumptions are implemented the taxpayer represents that participants over the last several years are retiring later than expected consistent with trends observed in the broader u s workforce the taxpayer has also observed that many cash balance participants are electing to keep their money in the plan longer following termination of employment the taxpayer has proposed revised assumptions to better follow the actual experience of the plan the proposed revisions are based on an experience study period spanning a lump-sum window was offered in _ to terminated-vested through participants of the plan who had not yet commenced benefit receipt of their benefits and were otherwise ineligible to receive a lump-sum payment the taxpayer has represented that no participants in payment status were offered lump sums this approval applies to the following changes in assumptions n w s o o n rates of retirement - final average pay participants rates of retirement - cash balance participants rates of termination - final average pay participants rates of termination - cash balance participants benefit commencement age for final average pay - active participants who are not retirement eligible and may terminate in the future terminated vested participants’ benefit commencement age for cash_balance_plan active participants benefit commencement age for cash_balance_plan term vested participants termed in the last year benefit commencement age for cash_balance_plan term vested participants termed over year ago benefit form for final average pay participants other than retirement you verified in writing on march that each assumption contained in this ruling is the actual assumption of which you seek approval assumption revised rates of retirement final average pay participants age ao ho o this assumption applies to future terminated vested participants who decrement from active status as this assumption relates to when the lump sum is paid to cash balance participants ibid ibid well as current terminated vested participants as of the valuation_date assumption revised rates of retirement final average pay participants age revised rates of retirement cash balance participants assumption - age ' ‘h ho ce no ‘ ' - assumption revised rates of termination final average pay participants age ‘ ' o ' ' ' at assumption revised rates of termination final average pay participants age revised rates of termination cash balance participants o age q x ' ' ' ' x i ' ' q x q x ' q x i i ' ' ‘ 4a revised rates of termination cash balance participants m4 age q x q x o qix 2_gix o o ag x benefit commencement age for final average pay - active participants who are not retirement eligible and may terminate in the future and terminated vested participants revised electing pre-january post-january years_of_service post january years_of_service participants participants with or more assumption age age participants with less than age benefit commencement age for cash_balance_plan active participants who terminate and elect immediate lump sum upon termination lump sum at age and older revised assumption ' ' benefit commencement age for cash_balance_plan terminated vested participants terminated in the last year electing immediate lump sum lump sum at age lump sum at age proposed assumption benefit commencement age for cash_balance_plan terminated vested participants terminated over year ago electing lump sum at age lump sum at age proposed assumption benefit form for final average pay participants other than retirement proposed electing lump sum life_annuity joint_and_survivor_annuity assumption an amended schedule sb actuarial information of form_5500 must be filed for the plan_year beginning january assumptions as been made for the plan_year when filing the amended schedule sb 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 reflecting that a change in non-prescribed 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 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 representatives pursuant to a power_of_attorney form currently on file in this office the manager of ep compliance and the manager of ep classification if you have any questions regarding this matter please contact id yat - sincerely yours david m ziegler manager employee_plans actuarial group cc manager ep compliance manager ep classification


department of the treasury internal_revenue_service te_ge eo examination fulton street room brooklyn ny uil tax_exempt_and_government_entities_division legend org organization name xx date number release date date date org address dear taxpayer_identification_number person to contact identification_number contact telephone number last date for filing a pleading with the tax_court the claims_court or the united_states district_court for the district of columbia march 20xx this is a final_determination regarding your exempt status under sec_501 of the internal_revenue_code irc recognition of your exemption from federal_income_tax as an organization described in internal_revenue_code sec_501 is retroactively revoked to january 20xx because you have not established that you are operated exclusively for exempt purposes sec_501 exempts from taxation organizations which are organized and operated exclusively for religious charitable or educational_purposes no part of the net_earnings of which inure to the benefit of any private_shareholder_or_individual no substantial part of the activities of which is carrying on propaganda or otherwise attempting to influence legislation and which do not participate in or intervene in any political campaign on behalf of or in opposition to any candidate for public_office sec_1_6001-1 of the regulations requires that each person required to file a return maintain books_and_records to allow the service to establish whether the taxpayer is liable for any_tax liability in addition to the general recordkeeping rules organizations_exempt_from_taxation under sec_501 must also maintain the records required by sec_6033 of the code you failed to meet the requirements of sec_1_501_c_3_-1 in that you have failed to establish that you were operated exclusively for an exempt_purpose you have failed to file the required tax form form_990 for the year ended december 20xx and you failed to demonstrate that you are observing the conditions necessary for continuation of your exempt status we are revoking your exemption from federal_income_tax as an organization described in sec_501 of the internal_revenue_code effective january 20xx contributions to your organization are no longer deductible under sec_170 of the internal_revenue_code you are required to file federal_income_tax returns on form_1120 these returns should be filed with the appropriate service_center for all years beginning january 20xx processing of income_tax returns and assessment of any taxes due will not be delayed should a petition for declaratory_judgment be filed under sec_7428 of the internal_revenue_code if you decide to contest this determination in court you must file a pleading seeking a declaratory_judgment in the united_states tax_court the united_states court of federal claims or the united_states district_court for the district of columbia before the day after the date this final_determination was mailed to you please contact the clerk of the appropriate court for rules regarding filing pleadings for declaratory judgments and refer to the enclosed publication you may write to these courts at the following addresses you have the right to contact the office_of_the_taxpayer_advocate taxpayer_advocate assistance is not a substitute for established irs procedures such as the formal appeals process the taxpayer_advocate cannot reverse a legally correct_tax determination or extend the time fixed by law that you have to file a petition in a united_states court the taxpayer_advocate can however see that a tax matter that may not have been resolved through normal channels gets prompt and proper handling you may call too-free and ask for taxpayer_advocate assistance if you prefer you may contact your local taxpayer_advocate at internal_revenue_service we will notify the appropriate state officials of this action as required by sec_6104 of the internal_revenue_code if you have any questions please contact the person whose name and telephone number are shown in the heading of this letter sincerely yours marsha a ramirez director eo examinations enclosure publication coe rent an division org address department of the treasury internal_revenue_service commerce street m c dallas texas taxpayer_identification_number form tax_year s ended person to contact id number contact numbers telephone fax certified mail -- return receipt requested dear we have enclosed a copy of our report of examination explaining why we believe an adjustment of your organization's exempt status is necessary if you do not agree with our position you may appeal your case the enclosed publication the examination process explains how to appeal an internal_revenue_service irs decision publication also includes information on your rights as a taxpayer and the irs collection process if you request a conference we will forward your written_statement of protest to the appeals_office and they will contact you enclosed for your convenience an envelope is if you and appeals do not agree on some or all of the issues after your appeals_conference or if you do not request an appeals_conference you may file suit in united_states tax_court the united_states court of federal claims or united_states district_court after satisfying procedural and jurisdictional requirements as described in publication letter catalog number 34801v you may also request that we refer this matter for technical_advice as explained in publication exempt_organization appeal procedures for unagreed issues ifa determination_letter is issued to you based on technical_advice no further administrative appeal is available to you within the irs on the issue that was the subject of the technical_advice if we do not hear from you within days from the date of this letter we if you accept our findings please sign and return the enclosed form_6018 consent to proposed adverse action we will then send you a final letter modifying or revoking exempt status will process your case on the basis of the recommendations shown in the report of examination and this letter will become final in that event you will be required to file federal_income_tax returns for the tax period s shown above file these returns with the ogden service_center within days from the date of this letter unless a request for an extension of time is granted file returns for later tax years with the appropriate service_center indicated in the instructions for those returns you have the right to contact the office_of_the_taxpayer_advocate taxpayer_advocate assistance is not a substitute for established irs procedures such as the formal appeals process the taxpayer_advocate cannot reverse a legally correct_tax determination or extend the time fixed by law that you have to file a petition in a united_states court the taxpayer_advocate can however see that a tax matter that may not have been resolved through normal channels gets prompt and proper handling you may call toll-free and ask for taxpayer_advocate assistance if you prefer you may contact your local taxpayer_advocate at if you have any questions please call the contact person at the telephone number shown in the heading of this letter the most convenient time to call if we need to contact you if you write please provide a telephone number and letter catalog number 34801v thank you for your cooperation sincerely marsha a ramirez director e o examinations enclosures publication publication form_6018 report of examination envelope letter catalog number 34801v form 886-a explanation of items seti exhibit no year ended 20xx name of taxpayer org legend org organization name xx date xyz state president president issue should the tax exempt status under internal_revenue_service sec_501 of org be revoked facts org was recognized by the internal_revenue_service as a tax exempt_organization under c of the internal_revenue_code in february 19xx the organization’s owner president the only officer of the organization has been deceased since july 20xx and therefore no activities have been conducted since thin the agent also received a faxed copy of president's death certificate from a third party an examination was also conducted by the state of xyz department of justice but they were not able to find president due to his death a contact letter was sent to the organization at the last_known_address located on accurint the organization has never filed the form_990 law internal_revenue_code sec_501 provides for tax exemption to organizations organized and operated exclusively for charitable purposes and no part of the net earning which inures to the benefit of any individual regulation sec_1_501_c_3_-1 organizational and operational tests provides that in order to be exempt as an organization described in sec_501 an organization must be both organized and operated exclusively for one or more of the purposes specified in such section if an organization fails to meet either the organizational_test or the operational_test it is not exempt regulation sec_1_501_c_3_-1 provides that an organization will be regarded as operated exclusively for one or more exempt purposes only if it engages primarily in activities which accomplish one or more of such exempt purposes specified in sec_501 an organization will not be so regarded if more than an insubstantial part of its activities is not in furtherance of an exempt_purpose regulation sec_1_501_c_3_-1 provides an organization is not organized or operated exclusively for one or more exempt purposes unless it serves a public rather than a private interest thus to meet the requirement of this subdivision it is necessary for an department of the treasury - internal_revenue_service form 886-a form 886-a explanation of items peneduieicn exhibit no year ended 20xx name of taxpayer org legend org organization name xx date xyz state president president organization to establish that it is not organized or operated for the benefit of private interests such as the creator or his family shareholders of the organization or persons controlled directly or indirectly by such private interests sec_1_6033-2 of the income_tax regulations provides in part that every organization which is exempt from tax shall submit such additional information as may be required by the internal_revenue_service for the purposes of inquiring into its exempt status revrul_59_95 provides that a failure_to_file required information_return or comply with the provision of sec_6033 of the code and the regulations which implement it may result in the termination of the exempt status of an organization previously held exempt on the grounds that the organization has not established that it is observing the conditions required for the continuation of an exempt status government’s position president president the sole officer passed away in july 20xx no activities have been conducted since then therefore since the only principal is deceased there are no current activities and based on third party information revocation of the organization is proposed effective january 20xx taxpayer’s position not available conclusion the organization should be revoked effective january 20xx department of the treasury - internal_revenue_service form 886-a


t c memo united_states tax_court yuri g glotov petitioner v commissioner of internal revenue respondent docket no filed date yuri g glotov pro_se frederick mutter and carroll d lansdell for respondent memorandum findings_of_fact and opinion haines judge respondent determined a deficiency in petitioner’s federal_income_tax of dollar_figure as well as a penalty under sec_6662 of dollar_figure unless otherwise indicated all section references are to the internal_revenue_code as amended and all rule references are to the tax_court rules_of_practice and procedure amounts continued the issues to be decided are whether petitioner is entitled to business deductions incurred in connection with his software development activities in and whether petitioner is liable for the accuracy-related_penalty under sec_6662 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 petitioner resided in new york new york at the time the petition was filed during petitioner was employed by various companies as a computer programmer and or consultant in addition in date petitioner purportedly initiated the development of a computer_software business in which he was the sole_proprietor in this capacity he was interested in developing software for use by financial companies petitioner timely filed his form_1040 u s individual_income_tax_return for petitioner’s schedule c profit or loss from business for reported that his computer_software business had gross_receipts of dollar_figure incurred a car and truck expense of dollar_figure incurred a labor expense of dollar_figure and continued are rounded to the nearest dollar claimed a depreciation deduction of dollar_figure for the business use of hi sec_2001 ford taurus ses ford taurus petitioner did not elect to amortize these deductions as startup expenditures under sec_195 in date respondent initiated an audit of petitioner’s return as part of the audit respondent requested petitioner to provide documentation to substantiate the schedule c car and truck expense of dollar_figure the labor expense of dollar_figure and the depreciation deduction of dollar_figure business deductions at issue at a meeting on date between respondent’s and petitioner’s representatives petitioner’s representative3 did not provide any documentation to substantiate these deductions or to show petitioner was carrying on a computer_software business in on date petitioner provided respondent with documentation in an attempt to substantiate the schedule c car and truck expense and the depreciation deduction but provided no documentation to substantiate the labor expense or to show he was carrying on a computer_software business in the deprecation deduction of dollar_figure was determined using the percent declining balance method and half-year_convention see sec_168 d petitioner’s representative was not an enrolled return preparer did not sign as a preparer on petitioner’s return and was not admitted to practice before the tax_court respondent determined petitioner’s documentation did not substantiate the business deductions at issue and on date mailed petitioner a notice_of_deficiency disallowing these deductions petitioner timely filed his petition on date on date respondent’s counsel mailed petitioner a letter requesting a meeting to discuss the case and any documentation petitioner wanted considered in response on date petitioner mailed a letter stating that he would not meet with respondent’s counsel before trial that respondent had failed to comply with the paperwork reduction act and that respondent lacked the authority to assert income_tax deficiencies on date respondent’s counsel mailed another letter to petitioner requesting a meeting to discuss the case discuss any additional information petitioner wanted considered and prepare a stipulation of facts petitioner did not respond to the september letter or meet with respondent’s counsel before trial petitioner signed the stipulation of facts on the day of trial date opinion i whether petitioner was carrying on a business in petitioner contends the business deductions at issue were directly related to the operation of his computer_software business in and asserts he is entitled to deduct the car and truck expense of dollar_figure and the labor expense of dollar_figure under sec_162 and depreciation of dollar_figure for_the_use_of the ford taurus under sec_167 sec_162 allows a deduction for the ordinary and necessary expenses of carrying_on_a_trade_or_business for a taxpayer to deduct expenses under sec_162 the expenses must relate to a trade_or_business functioning at the time the expenses are incurred 93_tc_684 affd in part and remanded in part per order 10th cir date a taxpayer is not carrying_on_a_trade_or_business under sec_162 until the business is functioning as a going concern and performing the activities for which it was organized 345_f2d_901 4th cir vacated and remanded on other grounds 382_us_68 carrying_on_a_trade_or_business requires a showing of more than initial research into or investigation of business potential 56_tc_895 mckelvey v commissioner tcmemo_2002_63 affd 76_fedappx_806 9th cir business operations must have actually commenced mckelvey v commissioner supra petitioner has the burden of proving he began operating his software development business in see rule a the record clearly indicates petitioner did not carry on a computer_software business in petitioner did not produce documentation showing he operated a computer_software business in although on his schedule c he reported gross_receipts of dollar_figure from his business the dollar_figure was paid for work unrelated to the purported software business for the foregoing reasons this court finds petitioner did not carry on a trade_or_business as required under sec_162 therefore he is not entitled to deduct the car and truck expense of dollar_figure or the labor expense of dollar_figure see mckelvey v commissioner supra reems v commissioner tcmemo_1994_253 estate of miller v commissioner tcmemo_1991_515 affd without published opinion 983_f2d_232 5th cir petitioner also claimed a depreciation deduction under sec_167 of dollar_figure for_the_use_of his ford taurus in the computer_software business for a taxpayer to depreciate property under sec_167 the property must be used in a trade_or_business or held_for_the_production_of_income 86_tc_821 80_tc_914 the trade_or_business requirements under sec_167 are the same as those under sec_162 77_tc_1326 ndollar_figure miller v commissioner supra petitioner was not engaged in a trade_or_business for purposes of sec_162 in accordingly the property he depreciated in connection with the same activity does not satisfy the trade_or_business requirement of sec_167 therefore this court finds petitioner is not entitled to the depreciation deduction of dollar_figure the expenses petitioner purportedly incurred if substantiated were at best start-up_expenditures startup expenses are not deductible unless an election is made to amortize them under sec_195 over a period starting when an active trade_or_business begins see sec_195 petitioner did not make an election under sec_195 ii tax-protester arguments petitioner also argued that respondent had not complied with the paperwork reduction act and lacked the authority to assert income_tax deficiencies petitioner’s arguments have been rejected by this court and other courts and we perceive no need to refute these arguments with somber reasoning and copious citation of precedent to do so might suggest that these arguments have some colorable merit 737_f2d_1417 5th cir see eg 127_tc_200 n an allegation that the requirement to file a tax_return is in violation of the paperwork reduction act is contrary to well-established law nunn v commissioner tcmemo_2002_250 this court rejects petitioner’s tax-protester arguments as frivolous and without merit iii sec_6662 penalty respondent contends petitioner is liable for a sec_6662 penalty because the underpayment_of_tax was attributable to negligence or disregard of rules or regulations sec_6662 imposes a 20-percent accuracy-related_penalty on the portion of any underpayment attributable to negligence or disregard of rules or regulations sec_6662 the term negligence includes any failure to make a reasonable attempt to comply with the provisions of the internal_revenue_code including any failure by the taxpayer to keep adequate books_and_records or to properly substantiate items and the term disregard includes any careless reckless or intentional disregard sec_6662 sec_1_6662-3 income_tax regs sec_7491 provides that the commissioner bears the burden of production with respect to accuracy-related_penalties see 116_tc_438 although petitioner reported business costs incurred from the operation of a computer_software business in the evidence shows that he was not carrying on a computer_software business in he failed to keep adequate books_and_records and properly substantiate the reported expenses accordingly he was not entitled to the claimed business deductions therefore respondent has met the burden of production and petitioner having failed to show reasonable_cause or other basis for reducing the underpayment on which the penalty is imposed is liable for the sec_6662 penalty for negligence for see sec_1_6662-3 income_tax regs the court in reaching its holding has considered all arguments made and concludes that any arguments not mentioned above are moot irrelevant or without merit to reflect the foregoing decision will be entered for respondent


tcmemo_2010_8 united_states tax_court salvador and eloisa gonzalez petitioners v commissioner of internal revenue respondent docket no 21852-07l filed date brenda g bates for petitioners james h brunson iii for respondent memorandum opinion wells judge respondent sent a notice_of_determination concerning collection action s under sec_6320 and or notice_of_determination to petitioners with respect to a levy to collect unpaid federal_income_tax liabilities for their and tax years in response petitioners timely filed a petition pursuant to sec_6330 seeking review of respondent’s determination we must decide whether respondent’s appeals officer abused her discretion by sustaining the levy collection action against petitioners’ real_property for tax years and by not properly balancing the government’s need for the efficient collection_of_taxes with petitioners’ need for any collection to be no more intrusive then necessary as required pursuant to sec_6330 background some of the facts and certain exhibits have been stipulated by the parties the parties’ stipulations of fact are incorporated in this opinion by reference and are so found at the time they filed the petition petitioners resided in georgia petitioner salvador gonzalez is the pastor of a small church and engages in a small construction business petitioner eloisa gonzalez is unemployed for tax years and petitioners timely filed joint federal_income_tax returns on date respondent asserted against petitioners additional income_tax for taxable years and on the basis of examination of petitioners’ returns on date respondent asserted 1unless otherwise indicated all section references are to the internal_revenue_code as amended against petitioners additional federal_income_tax for taxable_year on the basis of examination of petitioners’ return the additional tax resulted from petitioner salvador gonzalez’ construction business for tax years and petitioners timely filed joint federal_income_tax returns respondent asserted against petitioners additional tax on the basis of insufficient withholding and estimated_tax payments a levy source was identified and respondent sent petitioners letter 1058a final notice--notice of intent to levy and notice of your right to a hearing dated date regarding petitioners’ liabilities for tax years and on date petitioners submitted form request for a collection_due_process or equivalent_hearing in their request petitioners claimed that the proposed levy action would create an undue_hardship on their family because of insufficient funds with which to enter into an installment_agreement a hearing was held with respect to petitioners’ levy notice respondent requested that petitioners prepare their federal_income_tax return for tax_year and form 433-a collection information statement for wage earners and self-employed individuals for submission at the appeals_office hearing on date petitioners submitted a signed copy of their return for tax_year return the return failed to include approximately dollar_figure of income on schedule c profit or loss from business that related to petitioner salvador gonzalez’ construction business on date petitioners’ attorney appeared at a face- to-face hearing with respondent’s appeals officer duvall ms duvall petitioners submitted their form 433-a at the hearing on form 433-a petitioners listed two properties--a home having a value of dollar_figure and a mortgage balance of dollar_figure and an unimproved lot having a value of dollar_figure the real properties form 433-a also showed that petitioners’ monthly expenses exceeded their monthly income the sole issue raised at the appeals_office hearing was a collection alternative at the hearing ms duvall informed petitioners’ attorney that if petitioners filed an amended_return that included the approximately dollar_figure of missing construction income petitioners’ collection alternative would be considered on the basis of hardship on date ms duvall examined petitioners’ financial statement and determined that petitioners had sufficient equity in their real properties to fully pay the 2petitioners have placed a for sale by owner sign in front of each property asking dollar_figure for the home and dollar_figure for the unimproved lot outstanding tax_liabilities in a letter dated date ms duvall sustained the proposed levy action citing the equity available in petitioners’ real properties after the appeals_office hearing petitioners filed an amended_return for taxable_year amended_return which included approximately dollar_figure in gross_income from petitioner salvador gonzalez’ construction business the amended_return resulted in a small refund to petitioners petitioners are currently in full compliance with the filing of their individual federal_income_tax returns discussion sec_6330 requires before any levy on any person’s taxpayer’s property or right to property that the commissioner give the taxpayer notice_of_intent_to_levy and notice of the right to a fair hearing before an impartial officer of the irs appeals_office sec_6330 and b d at the hearing a taxpayer may raise appropriate spousal defenses challenge the appropriateness of collection actions and offer collection alternatives sec_6330 additionally the taxpayer may challenge the existence or amount of the underlying tax_liability only if the taxpayer did not receive a notice_of_deficiency or did not otherwise have an opportunity to challenge the underlying liability sec_6330 at the hearing generally the appeals officer must consider the above-stated issues raised by the taxpayer verify that the requirements of applicable law and administrative procedure have been met and consider whether any proposed collection action balances the need for the efficient collection_of_taxes with the legitimate concern of the taxpayer that any collection action be no more intrusive than necessary sec_6330 where the validity of the underlying tax_liability is properly in issue the court will review the matter de novo where the validity of the underlying tax is not properly in issue however the court will review the commissioner’s determination for abuse_of_discretion 114_tc_604 114_tc_176 an abuse_of_discretion is any_action that is arbitrary capricious or without sound basis in law or fact 112_tc_19 in the instant case the underlying liabilities are not in issue accordingly we review the appeals officer’ sec_3petitioners made no argument regarding whether the assessment in the instant case was proper we have held that the requirement pursuant to sec_6330 to verify that all applicable laws have been met generally is satisfied if the appeals officer relied on a form_4340 certificate of assessments payments and other specified matters or a transcript containing similar information there is no requirement that the document be given to the taxpayer during the hearing 118_tc_162 the record in the instant case contains a form_4340 for each of the years in issue determination under the abuse_of_discretion standard see sego v commissioner supra goza v commissioner supra petitioners contend that respondent did not consider their amended_return for tax_year and that respondent was adequately protected by the liens in place on petitioners’ real_property petitioners contend that respondent by failing to consider those matters did not balance the government’s need for efficient collection_of_taxes with the concern of petitioners that any collection action be no more intrusive than necessary see sec_6330 petitioners contend that respondent’s failure to engage in such balancing was an abuse_of_discretion respondent contends that ms duvall’s determination under sec_6330 was not an abuse_of_discretion and petitioners have sufficient equity in their real properties to fully pay their tax_liabilities we first consider the issue of respondent’s failure to consider petitioners’ amended_return petitioners contend that it was an abuse_of_discretion to make a levy determination without considering the amended_return respondent contends that nothing on the amended_return whether or not considered by ms duvall in making her determination to proceed with the levy would entitle petitioners to a reversal of the levy determination as required under sec_6330 an appeals officer should consider among other things a taxpayer’s actions compliance history and financial circumstances when balancing the government’s needs with those of the taxpayer internal_revenue_manual pt date in the instant case the sole issue raised at the appeals_office hearing was a collection alternative ms duvall did not consider petitioners’ financial condition when she informed petitioners that if they amended their form_1040 u s individual_income_tax_return for taxable_year she would consider whether collection of their liabilities would cause them economic hardship petitioners submitted form 433-a which included information on petitioners’ sec_7122 provides that the secretary may compromise any civil case arising under the internal revenue laws whether to accept an offer-in-compromise is left to the secretary’s discretion 447_f3d_706 9th cir affg tcmemo_2004_13 the regulations pursuant to sec_7122 set forth three grounds for the compromise of a tax_liability doubt as to liability doubt as to collectability or promotion of effective tax_administration sec_301_7122-1 proced admin regs the commissioner may compromise on doubt as to collectability where the taxpayer’s assets and income are less than the full amount of the assessed liability id generally the commissioner will accept an offer-in-compromise only if it reflects the taxpayer’s reasonable collection potential revproc_2003_71 sec_4 2003_2_cb_517 however the commissioner may also compromise on the grounds of effective tax_administration when collection of the full liability would create economic hardship or exceptional circumstances exist such that collection of the full liability would undermine public confidence that the tax laws are being administered in a fair and equitable manner and compromise of the liability would not undermine compliance by taxpayers with the tax laws sec_301_7122-1 proced admin regs financial condition at the appeals_office hearing it was only after the hearing that ms duvall was able to consider the sec_6330 balancing because only at that point could she consider all the relevant factors only following that review was ms duvall able to determine that petitioners had sufficient equity to fully pay their liabilities and identify a levy source we also note that petitioners’ return omitted nearly dollar_figure of income the change in petitioners status was not a result of a failure to consider the amended_return but rather of ms duvall’s full consideration of all the relevant facts accordingly we conclude that ms duvall did not abuse her discretion by not considering the amended_return we next turn to the issue of respondent’s liens on petitioners’ real properties once an assessment has been made against a taxpayer sec_6303 directs the commissioner to give the taxpayer notice of the assessment and demand payment within days if a taxpayer fails to pay then the federal_tax_lien arises and attaches to all of the taxpayer’s property and rights to property sec_6321 the commissioner generally has years from the date of a properly assessed tax to collect the amount due sec_6502 the period of limitations on collections is suspended while a taxpayer’s case is pending in the tax_court and for days thereafter sec_6503 if the 10-year period of limitations on collections is allowed to expire a properly assessed tax may become uncollectible petitioners contend that respondent is fully protected by the federal_tax_lien while petitioners offered to sell their real properties to satisfy the lien petitioners did not offer to extend the period of limitations and respondent was not given any assurances that a sale would occur in a reasonable_time rather petitioners merely insist that the federal_tax_lien in place is sufficient security for the government’s interests while petitioners seek a buyer for the real properties respondent issued a notice_of_intent_to_levy on date approximately months before the period of limitations on collections would have expired for of the years in issue had respondent failed to proceed with collection of petitioners’ liabilities for an additional months the liabilities for tax years and might have become uncollectible on account of the expiration of the period of limitations we do 5taxes and penalties for the and tax years were assessed on date for and the period of limitations on collections if not extended would have expired on date assessment for the taxable_year was made on date for the period of limitations on collections if not extended would have expired on date the notice_of_intent_to_levy was sent on date approximately months short of the dates on which the 10-year periods of limitations on collections might otherwise have expired 6as of date the date of the notice of intent to continued not find respondent’s decision to proceed to be an abuse_of_discretion petitioners also contend that they could sell the real properties for more than respondent could in a foreclosure proceeding however it is not an abuse_of_discretion to require that taxpayers with sufficient assets to satisfy their liabilities pay them off more rapidly than would be accomplished through other methods castillo v commissioner tcmemo_2004_238 clawson v commissioner tcmemo_2004_106 we note that petitioners’ real properties have sufficient value for petitioners to pay off the tax_liabilities in full and that petitioners’ real properties are a home in which they are not living and a vacant lot petitioners offered little evidence to prove that they are actively proceeding to sell their real properties petitioners did not offer proof that the real properties were listed with a broker petitioners merely have placed a for sale by owner sign in front of each of the real properties moreover the only payments petitioners have made on their tax_liabilities over the preceding years have been by respondent’s application of refunds it is evident that petitioners have made little effort to satisfy their tax continued levy petitioners had outstanding liabilities of dollar_figure dollar_figure and dollar_figure for tax years and respectively the total liability for the years in issue was dollar_figure liabilities given that the periods of limitations on collections were close to expiration for several tax years we conclude that it was not an abuse_of_discretion for respondent to sustain the levy action against petitioners without relying solely on the liens that were in place on the basis of the foregoing we hold that ms duvall did not abuse her discretion on the issue of the balancing of the government’s need for the efficient collection_of_taxes with petitioners’ need for collection not to be any more intrusive than necessary accordingly we uphold respondent’s determination to proceed with the collection of petitioners’ tax_liabilities in issue the court has considered all other arguments made by the parties and to the extent we have not addressed them herein we consider them moot irrelevant or without merit to reflect the foregoing decision will be entered for respondent


t c memo united_states tax_court amend16robertwirengard petitioner v commissioner of internal revenue respondent docket no 18437-03x filed date r o wirengard an officer for petitioner helen f rogers for respondent memorandum opinion wells judge in a final adverse determination_letter respondent determined that petitioner did not qualify for exemption from federal income_taxation pursuant to sec_501 as an organization described in sec_501 having 1unless otherwise indicated all section references are to the internal_revenue_code as amended and all rule references continued exhausted its administrative remedies petitioner challenged respondent’s determination by timely filing a petition for a declaratory_judgment pursuant to sec_7428 the administrative record was submitted to the court by joint motion pursuant to rule sec_122 and sec_217 for purposes of the instant proceeding the facts and representations contained in the administrative record are accepted as true and are incorporated herein by reference the sole issue to be decided is whether petitioner qualifies for tax exemption as an organization described in sec_501 background on or about date petitioner filed a form_1023 application_for recognition of exemption under sec_501 of the internal_revenue_code form in its form_1023 petitioner reported that it was organized as an association and that it had an address in hillsborough county florida in the form_1023 petitioner reported that it was a school petitioner’s web site described petitioner as a free school whereby education is provided via the internet on how to obtain a microloan how to establish an ira how to obtain health care and how to think about reality or other religions an article on petitioner’s web site entitled article of an unincorporated continued are to the tax_court rules_of_practice and procedure non-profit individual organization stated that the purpose of the organization is to educate as many people as possible about the existing amendment of the constitution of the united_states of america its fundamental flaws that are contrary to the views of our founding fathers and ways to correct these along with its form_1023 petitioner submitted articles of association2 hereinafter referred to as the articles the articles provided article iii purposes amend16robertwirengard is not for profit and organized exclusively for educational welfare and charitable purposes including to provide education and advocacy principally of the economic and financial sciences provide for food shelter healthcare access transportation and environments study research and test welfare healthcare and environmental models identify socio-economic and sustainability problems and provide economic solutions assist and organize employees and unemployed and unpaid workers for their and children’s welfare 2the record shows that petitioner submitted to respondent drafts of its articles of association on three separate occasions each of the three drafts was dated date the first draft was signed only by robert wirengard and submitted as an attachment to petitioner’s form_1023 the second draft set forth above was identical to the first except that it was signed by all four directors and was submitted by petitioner as an attachment to a letter to respondent dated date the third draft was not identical to the first two drafts but was substantially_similar it was signed by robert wirengard and mauricio rosas and submitted by petitioner as an attachment to a letter to respondent dated date the signature of mauricio rosas was dated date study assist and organize economic welfare arrangements and alliances for and or with other community concerns including employee employer government faith based corporate other business and environmental entities publish economic mechanisms and applications based on nobel laureate types of economic and financial theories as well publish test conclusions of models built be they successful or failures and how they may be amended or corrected to build a sustainable universe article vi by-laws provisions for the regulations of the internal affairs of amend16robertwirengard are to be determined and set forth in the by-laws the board_of amend16robertwirengard shall adopt the original by- laws thereafter by-laws may be adopted amended or repealed by the board_of directors in accordance with the by-laws any decision before the board must be concluded with unanimous vote in favor or against article viii overseers the number of directors of amend16robertwirengard shall be three or more than three as fixed from time to time by the by-laws of amend16robertwirengard the number of directors constituting the initial board_of directors is four and the names and addresses of the persons who are to serve as directors or overseers until their successors are elected or otherwise appointed and shall qualify are robert wirengard falkenburg road north fair share fl note fair share is not within tampa city limits is in an unincorporated area of hillsborough county and our post office approving the name so long as the correct zip code is used delivers to our fair share address mauricio rosas p o box tampa fl john larsen de resine carre seffner fl tom hoyt de resine carre seffner fl in witness whereof i have executed these articles of amend16robertwirengard in duplicate thi sec_31st day of date and say that i know the contents thereof and am liable for the entity both economically and financially and to the letter and in the spirit of governing laws signed rowirengard robert wirengard founder principal and agent mauricio rosas board_of directors signed mauricio rosas thomas hoyt board_of directors signed thomas hoyt john larsen board_of directors signed john larsen petitioner subsequently submitted to respondent a document entitled agreement to amend hereinafter referred to as the agreement in which petitioner agreed to enact the following amendment to the articles a b the organization is organized exclusively for charitable religious educational and or scientific purposes under sec_501 of the internal_revenue_code no part of the net_earnings of the organization shall inure to the benefit of or be distributable to its members trustees officers or other private persons except that the organization shall be authorized and empowered to pay reasonable_compensation for services rendered and to make payments and distributions in furtherance of the purposes set forth in the purpose clause hereof no substantial part of the activities of the organization shall be the carrying on of propaganda or otherwise attempting to influence legislation and the organization shall not participate in or intervene in including the publishing or distribution of statements any political campaign on behalf of any candidate for public_office notwithstanding any other provision of this document the organization shall not carry on any other activities not permitted to be carried on a by an organization exempt from federal_income_tax under sec_501 of the internal_revenue_code or corresponding section of any future federal tax code or b by an organization contributions to which are deductible under sec_170 of the internal_revenue_code or corresponding section of any future federal tax code c the organization will not discriminate based on gender race religion disability or ethnic or national origin the agreement stated that the amendment would be adopted in accordance with petitioner’s internal rules of operation robert wirengard alone signed the agreement the agreement was not signed by all directors as required by article vi of the articles as an attachment to a letter dated date petitioner submitted to respondent a document entitled by-laws of amend16robertwirengard under review hereinafter referred to as the bylaws the bylaws provided article i name sec_1 the name of this organization shall be amend16robertwirengard with its divisions and wholeness through the circle of life ministry united health payers united arrangements united affiliations and united bank severally and jointly of amend16robertwirengard we are an integral part of our local community hillsborough county florida and the united_states of america and our greater community all territories nations our earth and our universe article ii purpose and policy sec_1 purpose to teach about apply and treat each as each would be treated article ix programs divisions sec_1 authorization the principles of treating each as each would be and freedom to choose without dictate threat or coercion adopted by us as a whole constitute the authorization for the adoption of programs sec_2 programs the programs shall consist of those issues chosen for concerted study and action sec_3 current agenda and continuing responsibilities these categories of programs are defined as follows a the current agenda focuses on universal market priced healthcare the absence of which in the united_states involves a million people in medical mishaps including losses of lives and a half million personal bankruptcies impoverishments annually involving healthcare debts the healthcare issue is eminent as a national issue and in local governmental issues limited to indigent care through a general_sales_tax b the continuing responsibilities shall consist of working with local_government staff in its objective to co-pilot universal market priced healthcare currently having established a health insurance study work group relative to this c the long term agenda of which healthcare represent close to a third is the elimination of poverty and war or put positively having world wide peace unfair activity violence and terrorism being preempted by treating each as each would be that each should have needs met and work and trade freely for more than what the needs of sustenance are article i sec_1 of the bylaws provides that petitioner is organized into five divisions circle of life ministry united health payers united arrangements united affiliations and united bank petitioner’s web site provided the following description of the five divisions for welfare purposes and what may be described as scientific and experimental models practical applications and or assistance programs divisions of amend16robertwirengard exist these similar to colleges within a university are united arrangements of amend16robertwirengard - educational practical and real welfare application purposes and assuring compliance with the multi employer welfare arrangement of the employee retirement income security act passed by the u s congress and under the u s department of labor this school may remain in perpetuity until the end of poverty and systematic impoverishment united health payers of amend16robertwirengard mary lasano nurse and consultant - experimental model for market-priced universal healthcare in a non-socialist society once the success that is envisioned is accomplished it is expected that this one-payer system will be bought out at future cost to become an efficient one-payer system established as a government sponsored_entity much as the u s federal reserve system currently is a gse united bank of amend16robertwirengard devara sims tampa police dept reach out consultant and trustee - a non-profit banking facility for people and businesses to learn about and apply banking products and services establish ira’s pooling of funds also for other financial services such as electronic payroll depositing for small firms including possibly for our no-profit united health payers deposits accruals and disbursements or employees being able to pull partial cash funds from payrolls of their employers for a day’s work as well as store year to date information on wages tax withholdings and benefit costs micro loans to persons and small businesses mainly for work or volunteer initiatives dollar_figure already has been donated for this endeavor circle of life ministry of amend16robertwirengard merry wiesenborn director volunteer trustee - provides food and shelter for needy transportation financial assistance for single mothers particularly those who have experienced violent physical abuse cash assistance for food shelter and education plus transportation needs exceeds dollar_figure plus dollar_figure in loaner vehicle assets are tied up potential center specifically for working with youth involving hate crime religious studies discussions and advocacy as regards religions of wiesenborn’s circle of life ministry and realism as opposed to or inclusive of faiths in a deity or deities possibly of the more modern government preferred religions such as of judeo-christianity or islam etc its doctrines are based on the natural earth and universe spirit of people big boom theory treating others as one wants to be treated amending where we are wrong repairing where we have hurt and civil and consensual activities as opposed to systematic corruption that can stem from the concentration of power in governments or from individual violent abuses often the physical power of a man over a woman rather than logic and reasonability or the difficult challenge of teaching children without expeditiously inflicting pain that causes long term and deep problems united alliances of amend16robertwirengard3 mauricio rosas independent citizen activist and trustee - advocacy and reach out program to join in common grounds with other businesses government schools and universities community concerned including those concerned with global healthcare environmental issues and community sustainability from local tomorrow matters league of women voters independent citizens aclu results amnesty international planned parenthood to the federal reserve bank of the u s and other central banks united nations international monetary fund and world bank and faith based organizations in a letter to respondent dated date petitioner described the organization as a university based on theory whereas the five divisions are subordinate colleges arranged to complete the fundamentals of a micro-society’ a laboratory’ and teaching facility the letter described the separate functions of the divisions as follows united bank deals with monetary aspects in our mirco-society and is about how to go about setting up providing and receiving microloans individuals learning and doing so some dollar_figure in cash and loan receivables having been donated by robert wirengard to united bank and one microloan having been established with arm’s distance controls - authorization by the director united arrangements is the legal avenue as a multi employer welfare arrangement under erisa allowing us to work independently of regulations that regulate private sector welfare agents such as healthcare insurance firms for example as a mewa we are not required to be licensed insurance representatives nor to have cash reserves committed for coverage it allows us people as individuals and private sector firms for example to work together to arrange for affordable health care something 3united alliances of amend16robertwirengard is presumably the same division designated in the bylaws as united affiliations considered to be a welfare arrangement for employees and their family our community united affiliations is the legal channel that will allow our actual reach- out to involve all community members - from both private and government sectors as well as all ranges of persons or associations within each - and for us to work together as individuals or groups for common goals for example or for affordable healthcare a learning and application process to the benefit of everyone and circle of life ministry about getting food shelter and healthcare for each other again to the community’s welfare and while dealing with the common notions of conscience or faith based charity the letter distinguished petitioner from founder and board member robert wirengard who petitioned and lobbied federal and state government officials and in december of presented a healthcare model to the health care advisory board_of hillsborough county in a letter dated date respondent issued a final adverse_ruling with respect to petitioner’s claim for exemption respondent based the ruling on his determination that petitioner failed to establish that petitioner was organized exclusively for exempt purposes petitioner was operated exclusively for exempt purposes petitioner’s net_earnings will not inure to the benefit of private individuals or serve private interests and petitioner was not an action_organization within the meaning of sec_1_501_c_3_-1 income_tax regs 4robert wirengard proposed that government pay the costs of healthcare services for individuals to the extent of the average costs for such services discussion sec_501 exempts from federal taxation organizations described in sec_501 to qualify as an organization described in sec_501 an organization must satisfy each of the following four requirements it must be organized and operated exclusively for certain specified exempt purposes no part of its net_earnings may inure to the benefit of a private_shareholder_or_individual no part of its activities may constitute intervention or participation in any political campaign on behalf of any candidate for public_office and no substantial part of its activities may consist of political or lobbying_activities see sec_501 fla hosp trust fund sec_501 exemption from taxation --an organization described in subsection c shall be exempt from taxation sec_501 list of exempt_organizations --the following organizations are referred to in subsection a corporations and any community chest fund or foundation organized and operated exclusively for religious charitable scientific testing for public safety literary or educational_purposes or to foster national or international amateur sports competition but only if no part of its activities involve the provision of athletic_facilities or equipment or for the prevention of cruelty to children or animals no part of the net_earnings of which inures to the benefit of any private_shareholder_or_individual no substantial part of the activities of which is carrying on propaganda or otherwise attempting to influence legislation except as otherwise provided in subsection h and which does not participate in or continued v commissioner 103_tc_140 affd 71_f3d_808 11th cir am campaign acad v commissioner 92_tc_1053 ihc health_plans inc v commissioner tcmemo_2001_246 affd 325_f3d_1188 10th cir sec_501 provides for the following exempt purposes religious charitable scientific testing for public safety literary educational and prevention of cruelty to children or animals sec_1_501_c_3_-1 income_tax regs it is well established that our inquiry focuses on the reasons given by the commissioner for denying an organization’s application_for exemption see 71_tc_202 thus in making our declaration we do not engage in a de novo review of the administrative record see am campaign acad v commissioner supra pincite 71_tc_102 69_tc_570 the first of the sec_501 requirements mandates that an organization be organized exclusively for one or more of the exempt purposes the exempt purposes requirement is met only if the organization satisfies the organizational as well as the continued intervene in including the publishing or distributing of statements any political campaign on behalf of or in opposition to any candidate for public_office operational_test see sec_1_501_c_3_-1 income_tax regs the organizational_test is set forth in sec_1 c - b i i an organization is organized exclusively for one or more exempt purposes only if its articles of organization as defined in subparagraph of this paragraph a limit the purposes of such organization to one or more exempt purposes and b do not expressly empower the organization to engage otherwise than as an insubstantial part of its activities in activities which in themselves are not in furtherance of one or more exempt purposes the term articles of organization includes an organization’s articles of association sec_1 c - b income_tax regs furthermore to satisfy the organizational_test an organization must serve a public rather than a private interest see sec_1_501_c_3_-1 income_tax regs 88_tc_1 affd without published opinion 838_f2d_465 4th cir 78_tc_280 69_tc_554 even if an organization’s articles of organization set forth purposes no broader than those specified in sec_501 the organization is not organized exclusively for exempt purposes if such articles expressly empower it to carry on other than as an insubstantial part of its activities activities not in furtherance of one or more exempt purposes sec_1 c - b iii income_tax regs in the instant case the enumerated activities set forth in article iii of the articles are broad in scope and vague in description for instance the articles empower petitioner to provide economic solutions to identified socioeconomic problems such activities do not necessarily further an educational or charitable purpose regardless of the fact that the articles state that petitioner is organized exclusively for educational welfare and charitable purposes see id this court has held however that the mere existence of power to engage in activities other than those set out in sec_501 does not in itself prevent an organization from meeting the organizational_test 72_tc_42 a determination of whether an organization is organized exclusively for exempt purposes is based on an examination not only of the articles of organization but also of other evidence in the administrative record see peoples translation ser newsfront intl v commissioner supra gen 7the enumerated activities include providing education and advocacy principally of the economic and financial sciences providing healthcare and transportation testing welfare healthcare and environmental models providing economic solutions to identified socio-economic and sustainability problems assisting and organizing employees and organizing economic welfare arrangements conference of the free church of am v commissioner 71_tc_920 69_tc_615 consequently an examination of the administrative record in the instant case for evidence that the enumerated activities of the articles will further an exempt_purpose is appropriate we understand petitioner’s contention to be that it is a school organized to disseminate theory to the public at-large via petitioner’s web site and to engage in the practical application of such theory through its five divisions petitioner includes banking activities among such practical applications as noted above the articles expressly empower petitioner to identify socioeconomic problems and provide economic solutions article i of the bylaws establishes united bank as one of petitioner’s five organizational divisions but does not further describe the organization or operations of united bank petitioner’s web site stated that united bank of amend16robertwirengard would provide banking products and services to individuals and businesses according to the web site such services include establishing iras pooling funds electronic payroll deposits for small firms and possibly for united health payers accruals disbursements and providing micro loans in its letter of date petitioner stated that united bank is primarily distinguished from commercial banks in that united bank is neither incorporated nor a member of the fdic rather robert wirengard assumes all liability related to united bank petitioner stated that loans were to be of micro- level small nature to help small’ people economically to get on their feet petitioner provided respondent with a sample microloan note which imposed a 6-percent interest charge according to petitioner as of date united bank had made a single loan which resulted in default respondent contends that united bank does not further any exempt_purpose petitioner contends that united bank would help the poor by extending microloans and contends generally that petitioner lacks a profit_motive based upon our review of the record we conclude that through united bank of amend16robertwirengard petitioner is empowered to engage in activities not in furtherance of an exempt_purpose the record reveals that united bank would carry on the activities of a commercial bank such as extending personal and commercial loans for a stated_interest petitioner’s stated purpose of extending loans to low-income individuals and small businesses petitioner’s lack of profit-motive and united bank’s lack of fdic insurance do not establish that the commercial banking activities of united bank would further an exempt_purpose the activities of united bank would constitute a substantial part of the activities of amend16robertwirengard based on the foregoing petitioner does not satisfy the organizational_test of sec_1_501_c_3_-1 income_tax regs and is not organized exclusively for one or more exempt purposes as required by sec_501 consequently petitioner is not entitled to the declaratory_judgment it seeks we need not address respondent’s contentions that petitioner was not operated exclusively for exempt purposes that petitioner’s net_earnings will inure to the benefit of private individuals or serve private interests and that petitioner is an action_organization within the meaning of sec_1_501_c_3_-1 income_tax regs to reflect the foregoing decision will be entered for respondent


internal_revenue_service number release date index number -------------------------- ------------------- ---------------------------------- --------------------------------- in re ----------------------- -------------------------------- -------------------------- ------------------------------- department of the treasury washington dc third party communication date of communication month dd yyyy person to contact ----------------------- id no ------------- telephone number --------------------- refer reply to cc intl plr-152474-03 date date taxpayer ------------------------------------------------------------------------------------------------- legend legend ----------------------- ----------------------- ------------------------ ------------------------- ---------------------------------- entity a entity b date a cpa firm dear ------------------ this replies to a letter dated date forwarding taxpayer’s request for an extension of time under sec_301_9100-3 to file the documents described in sec_1_1503-2 to rebut the presumption that the disposition of the assets of entities a and b in the fiscal_year ended on date a did not constitute triggering events under sec_1_1503-2 additional information was submitted in letters dated date and date the information submitted for consideration is substantially as set forth below the ruling contained in this letter is predicated upon facts 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 a ruling verification of the factual information representations and other data may be required as a part of the audit process plr-152474-03 the facts state that in the fiscal_year ended on date a the operating_assets of entities a and b were sold in a taxable arm’s length transaction to a third party that was a non- u s entity with no nexus to the u s it is also stated that none of the losses expenses or deductions of entities a or b carried over to the third party purchaser under applicable foreign law taxpayer engaged cpa firm to provide tax assistance with respect to the sale of these assets after the tax_return was filed for the fiscal_year ended on date a it was discovered that taxpayer should have filed the documents required by sec_1 g iii b however taxpayer was not aware of this requirement and was not informed of it by cpa firm sec_301 -1 b provides that an election includes an application_for relief in respect of tax and defines a regulatory election as an election whose due_date is prescribed by a regulation a revenue_ruling revenue_procedure notice or announcement sec_301_9100-1 provides that the commissioner has discretion to grant a taxpayer a reasonable extension of time under the rules set forth in sec_301_9100-3 to make a regulatory election under all subtitles of the internal_revenue_code except subtitles e g h and i sec_301_9100-3 provides that requests for relief subject_to this section will be granted when the taxpayer provides evidence including affidavits described in sec_301_9100-3 to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith within the meaning of sec_301_9100-3 subject_to the conditions set forth in sec_301_9100-3 and the grant of relief will not prejudice the interests of the government within the meaning of sec_301_9100-3 in the present situation the documents described in sec_1_1503-2 are a regulatory election as defined in sec_301_9100-1 therefore the commissioner has discretionary authority under sec_301_9100-1 to grant taxpayer an extension of time provided that taxpayer satisfies the standards for relief as set forth in sec_301_9100-3 based on the facts and information submitted we conclude that taxpayer satisfies sec_301_9100-3 accordingly taxpayer is granted an extension of time until days from the date of this ruling letter to file the documents described in sec_1 g iii b to rebut the presumption that the disposition of the assets of entities a and b in the fiscal_year ended on date a did not constitute triggering events under sec_1 g iii a plr-152474-03 the granting of an extension of time is not a determination that taxpayer is otherwise eligible to file the documents with its tax_return for the fiscal_year ended on date a sec_301_9100-1 specifically this ruling letter is not a determination as to whether taxpayer has rebutted the presumption of a triggering event on the disposition of the assets of entities a and b in the fiscal_year ended on date a this determination will be made by the office of the industry director having examination jurisdiction over the tax_return for the tax_year at issue a copy of this ruling letter should be associated with the documents this ruling is directed only to the taxpayer who requested it sec_6110 provides that it may not be used or cited as precedent no ruling has been requested and none is expressed as to the application of any other section of the code or regulations to the facts presented pursuant to a power_of_attorney on file in this office a copy of this ruling letter is being furnished to taxpayer and the other authorized representative sincerely associate chief_counsel international by s meryl silver meryl silver reviewer enclosure copy for purposes cc-


internal_revenue_service number release date index number --- ----------------------------------------------- -------------- --------------------------------------------- ----------------------- - department of the treasury washington dc person to contact ------------------- id no ------------- telephone number --------------------- refer reply to cc psi - plr-113502-06 date date legend -------------------------------------------------------------------------------------------------------------------- ------------------------------------------- --------------------------------------------------------------- ----------------------- ----------------------------------------- ------------------------- -------------------------- ------------------------------------- ---------------------------------- --------------------------------------------------------------------------------------------------------------------- ------- dear ---------------- this letter responds to a letter dated date and subsequent correspondence submitted by x's authorized representative on behalf of x requesting inadvertent termination relief under sec_1362 of the internal_revenue_code facts the information submitted states that x was incorporated under the laws of state on d1 and elected to be an s_corporation effective d2 on d3 x converted to a state limited_partnership x believed that the conversion would be treated for federal_income_tax purposes as a reorganization under sec_368 and therefore no new form_2553 election by a small_business_corporation was filed this conversion may have created a second class of stock additionally x intended that the limited_partnership would be classified as an association_taxable_as_a_corporation however due to inadvertence no form_8832 entity classification election was filed plr-113502-06 also on d3 x's s_corporation_election was terminated when a an ineligible shareholder became the general_partner of the limited_partnership the following two remedial actions were taken on d4 x filed articles of correction naming b an individual as the general_partner of the limited_partnership and on d5 x was converted back to a state corporation x represents that it was unaware that the conversion to a limited_partnership and the admission of a as a general_partner could cause its s_corporation_election to terminate x represents that it did not intend to terminate its s_corporation_election and that it has consistently filed its tax returns consistent with its treatment as an s_corporation x and its shareholders have agreed to make such adjustments consistent with the treatment of x as an s_corporation as may be required by the secretary law and analysis sec_1361 defines an s_corporation as a small_business_corporation for which an election under sec_1362 is in effect for such year sec_1361 provides that a small_business_corporation cannot have as a shareholder a person other than an estate and other than a_trust described in sec_1361 or an organization described in sec_1361 who is not an individual sec_1361 provides that for purposes of subchapter_s the term small_business_corporation means a domestic_corporation that is not an ineligible_corporation and that does not among other things have more than one class of stock sec_1362 provides that an election under sec_1362 shall be terminated whenever at any time on or after the first day of the taxable_year for which a corporation is an s_corporation such corporation ceases to be a small_business_corporation a termination of an s_corporation_election under sec_1362 is effective on and after the date of cessation sec_1362 provides that if an election under sec_1362 by any corporation was terminated under paragraph or of sec_1362 the secretary determines that the circumstances resulting in such termination were inadvertent no later than a reasonable period of time after discovery of the circumstances resulting in such termination steps were taken so that the corporation is a small_business_corporation and the corporation and each person who was a shareholder of the corporation at any time during the period specified pursuant to sec_1362 agrees to make such adjustments consistent with the treatment of the corporation as an s_corporation as may be required by the secretary with respect to such period then notwithstanding the circumstances resulting in such termination the corporation shall be treated as an s_corporation during the period specified by the secretary plr-113502-06 conclusions based solely on the facts represented we conclude that x's s_corporation_election was terminated on d3 when a an ineligible shareholder acquired x stock we also conclude that this termination was inadvertent within the meaning of sec_1362 in addition if x's conversion from a state corporation to a state limited_partnership did create a second class of stock the consequent termination of x's s_corporation_election was inadvertent within the meaning of sec_1362 therefore we conclude that x will continue to be treated as an s_corporation for the period from d3 and thereafter provided that x’s s_corporation_election was valid and provided that the election was not otherwise terminated under sec_1362 during the period from d3 and thereafter b will be treated as the owner of the x stock acquired by a the shareholders of x must include their pro_rata share of the separately_stated and nonseparately computed items of x as provided in sec_1366 make any adjustments to basis as provided in sec_1367 and take into account any distributions made by x as provided in sec_1368 if x or its shareholders fail to treat x as described above this letter_ruling will be null and void except as specifically ruled above we express no opinion concerning the federal_income_tax consequences of the facts of this case under any other provision of the code specifically no opinion is expressed regarding x's eligibility to be an s_corporation or the validity of its s_corporation_election in accordance with the power_of_attorney on file with this office we are sending a copy of this letter to your authorized representative 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 sincerely bradford r poston senior counsel branch office of the associate chief_counsel passthroughs special industries


t c no united_states tax_court cinema ‘84 richard m greenberg tax_matters_partner petitioner v commissioner of internal revenue respondent docket no filed date in this tefra partnership proceeding the court entered an order of dismissal and decision and that decision was appealed to the court_of_appeals for the second circuit the court_of_appeals affirmed in part and reversed in part the decision of this court and in accord with the mandate this court issued an order dismissing this case for lack of jurisdiction as to a participating partner the court’s order of dismissal and decision is otherwise final under sec_7481 i r c m a partner of the partnership who had not previously participated in this proceeding filed a motion for leave to file notice of election to participate out of time and lodged with the court a motion to vacate order of dismissal and decision and a motion to be appointed tax_matters_partner held the motion to vacate was properly submitted to this court without leave of the court_of_appeals under 429_us_17 and 56_tc_128 is overruled and will no longer be followed because of the supreme court decision held further m has not alleged proper grounds for vacating a final_decision of this court held further the same standards apply for vacating a final_decision in a tefra proceeding as in a deficiency case thomas e redding for movant garlon j riegler bradford a johnson for respondent opinion dawson judge this case was assigned to special_trial_judge carleton d powell pursuant to the provisions of sec_7443a and rule sec_180 sec_181 and sec_183 the court agrees with and adopts the opinion of the special_trial_judge set forth below opinion of the special_trial_judge powell special_trial_judge this case is before the court on a motion for leave to file notice of election to participate out of time filed on behalf of garlon j riegler movant on unless otherwise indicated section references are to the internal_revenue_code in effect at relevant times rule references are to the tax_court rules_of_practice and procedure date together with that motion he lodged with the court a motion to vacate order of dismissal and decision and a motion to be appointed tax_matters_partner this case is a so-called tefra partnership proceeding under sections and involves disallowed deductions claimed with respect to a motion picture promotion the court held pre- trial conferences on september and on date at those conferences none of the partners who appeared indicated a desire to prosecute this case or other similar cases furthermore there is no active tax_matters_partner in this case on date respondent filed a motion to dismiss for failure to properly prosecute that motion was held in abeyance while the court disposed of potentially dispositive motions concerning certain partners who had elected to participate the court disposed of those motions see 111_tc_198 affd in part and revd in part sub nom 294_f3d_432 2d cir this case was calendared for hearing on respondent's motion to dismiss for failure to properly prosecute at the special session of the court held on date the order provided that if there is no appearance by or on behalf of a partner who will prosecute this matter the court will dismiss this case for failure to properly prosecute and enter a decision sustaining respondent's determination in full the order was served on all the partners who were still linked to the partnership proceeding at the hearing the only appearance was made by counsel for some of the participating partners who asked the court to delay the dismissal for days to determine whether there was any partner who wished to proceed with the litigation and would become the tax_matters_partner that time was subsequently extended to date there was no appearance by any partner who desired to prosecute this case on date respondent filed a notice of consistent agreement by an order of dismissal and decision entered on date respondent’s motion to dismiss for failure to properly prosecute filed date was granted and respondent’s determinations of partnership adjustments for the taxable years and were sustained the order of dismissal and decision was appealed with respect to the court’s holding that certain partners were not entitled to a consistent settlement and whether one partner karin m locke was still properly before the court the court_of_appeals for the second circuit affirmed as to the first issue and reversed as to the second cinema ‘84 v commissioner supra the mandate of the court_of_appeals for the second circuit was filed date and no petition for a writ of certiorari was filed on date the court issued an order dismissing karin m locke for lack of jurisdiction in conformity with the mandate of the court_of_appeals for the second circuit the decision of this court became final on date see sec_7481 on date a motion for leave to file notice of election to participate out of time motion for leave was filed on behalf of movant the motion alleges that movant is a partner in the cinema ‘84 partnership and requests that he be appointed the tax_matters_partner for the partnership with the motion movant lodged with the court a motion to vacate order of dismissal and decision and a motion to be appointed tax_matters_partner the raison d’être of movant’s motion for leave is to have the court vacate its decision entered date that sustained respondent’s determinations with regard to the taxable years and of cinema ‘84 in resolving the question whether leave should be granted we must first decide whether the court’s decision should be vacated that decision was entered date and modified on date pursuant to the mandate of the court_of_appeals for the second circuit with respect to all the partners who had not previously settled with the exception of karin m locke the court’s decision was affirmed by the court_of_appeals for the second circuit and is final authority of the tax_court to vacate a decision while not raised in the motion to vacate lodged with the court the initial question is whether this court has the authority to reopen a case where the decision of this court has been affirmed modified or reversed by the court_of_appeals in 56_tc_128 the court was faced with a motion for leave to file a petition to reopen proofs sic filed after the decision of this court had been affirmed by the court_of_appeals the gravamen of the motion was that the decision of this court was based on perjured testimony we assumed that the allegation was correct nonetheless we found that the motion was analogous to one filed in a federal district_court under rule b of the federal rules of civil procedure id pincite and we applied the then majority view that since the decided cases reveal that rule b does not change the usual requirement of leave of the appellate court a fortiori such leave is required where as is the case herein the federal rules of civil procedure are not technically applicable to this court id pincite in transp manufacturing equip co v commissioner tcmemo_1971_178 a decision of this court had been appealed to the see lydon v commissioner tcmemo_1964_27 affd 351_f2d_539 7th cir court_of_appeals for the eighth circuit but taxpayer had not raised a specific issue on appeal the case was remanded to this court on other grounds and taxpayer sought to have our original decision vacated as to the issue that had not been appealed this court in rejecting taxpayer’s argument noted decisions of this court may be reviewed by the courts of appeals and by those courts alone in turn judgments of the courts of appeals with respect to decisions of this court may be reviewed by the supreme court and by that court alone our assumption of jurisdiction to amend a judgment of the eighth circuit in this case would be in effect a review of that court’s judgment and hence a transgression not only of the traditional jurisdictional limits described in william d lydon supra but also of the statutory jurisdictional limits established by sec_7482 the final word on a trial court’s authority to reopen a decision or judgment after it has been affirmed modified or reversed by a court_of_appeals however had not been spoken in 429_us_17 the supreme court affirmed the judgment of a lower court subsequently after the mandate of the supreme court was issued the corporation moved to recall the mandate and have the lower court’s judgment set_aside under rule b of the federal rules of civil procedure the supreme court recognized that in the past both this court and many courts of appeals have required appellate leave before the district_court could reopen a case which had been see transp manufacturing equip co v commissioner tcmemo_1968_189 affd in part and vacated in part 434_f2d_373 8th cir reviewed on appeal the requirement derived from a belief that an appellate court’s mandate bars the trial_court from later disturbing the judgment entered in accordance with the mandate it has also been argued that the appellate-leave requirement protects the finality of the judgment and allows the appellate court to screen out frivolous rule b motions id pincite fn ref and citations omitted the supreme court however held in our view the arguments in favor of requiring appellate leave are unpersuasive like the original district_court judgment the appellate mandate relates to the record and issues then before the court and does not purport to deal with possible later events hence the district judge is not flouting the mandate by acting on the motion furthermore the interest in finality is no more impaired in this situation than in any rule b proceeding finally we have confidence in the ability of the district courts to recognize frivolous rule b motions indeed the trial_court is in a much better position to pass upon the issues presented in a motion pursuant to rule b the appellate-leave requirement adds to the delay and expense of litigation and also burdens the increasingly scarce time of the federal appellate courts we see no reason to continue the existence of this unnecessary and undesirable clog on the proceedings id pincite citations omitted in light of standard oil co of cal we conclude that lydon v commissioner supra and its progeny are no longer viable in lydon we analogized the situation to that of a district_court under rule b of the federal rules of civil procedure and relied on inter alia 322_us_238 279_f2d_424 4th cir and 112_f2d_387 6th cir the reasoning in those cases was specifically rejected by the supreme court in standard oil co of cal v united_states supra it may be argued that our opinion in transp manufacturing equip co v commissioner supra also rests on the language of sec_7482 and is not governed by the same principles as cases under rule b of the federal rules of civil procedure notwithstanding the analogy drawn in lydon sec_7482 however provides that the review of tax_court decisions shall be in the same manner and to the same extent as decisions of the district courts in civil actions tried without a jury if a district_court could not entertain a motion to vacate without the intervention of the court_of_appeals it would follow that the tax_court also cannot and this was the holding of lydon and its progeny on the other hand the converse is that if the district courts can entertain motions to vacate the tax_court can do likewise accordingly because of the supreme court’s holding in standard oil co of cal we will no longer follow the lydon case or its progeny we hold that the tax_court has the authority to act on a motion to vacate a decision that has been affirmed reversed or modified by the court_of_appeals standards for vacating a final_decision notwithstanding the authority to act on such a motion the authority of the tax_court to vacate a decision that has become final is limited in 64_tc_741 affd without published opinion 538_f2d_314 2d cir the taxpayer in a deficiency case sought to vacate a decision that had become final we noted that as a general_rule the finality of a decision is absolute id pincite see also 235_f2d_97 9th cir affd per curiam 352_us_1027 86_tc_1319 affd 859_f2d_115 9th cir we also noted that we have jurisdiction to set_aside a decision which would otherwise be final where there is ‘fraud on the court ’ taub v commissioner t c pincite citing 441_f2d_930 9th cir 387_f2d_689 7th cir see also 113_f3d_670 7th cir affg tcmemo_1995_209 511_f2d_929 2d cir in 90_tc_103 this court held that it had the authority to vacate an otherwise final_decision in a situation where the court never acquired jurisdiction over the petitioner accord 868_f2d_1081 9th cir 69_tc_999 this court has also vacated a final_decision in the situation where there was a clerical_error in the decision document that was not discovered until after the decision had become final see 144_f3d_495 7th cir affg tcmemo_1995_294 the court_of_appeals for the sixth circuit held that a final_decision of the tax_court could be vacated in situations involving a mutual mistake 219_f2d_610 6th cir however in a more recent case 51_f3d_618 6th cir the court_of_appeals for the sixth circuit held that reo motors inc was overruled by the supreme court in 352_us_1027 and that the court_of_appeals for the sixth circuit would no longer follow the rationale of reo motors inc movant’s grounds for vacating the decision irrespective of which standard of the cases discussed above is used movant’s allegations fall far short for purposes of vacating our decision in this case he alleges that the named the court_of_appeals for the eighth circuit has held that the tax_court lacks jurisdiction to vacate a final_decision in the absence of extraordinary circumstances see 114_f3d_795 8th cir tax_matters_partner tmp richard m greenberg was in bankruptcy and was disqualified as the tmp this is correct movant then asserts that either the tax_court or respondent should have appointed a new tmp this ignores the fact that since the court attempted in vain to find a limited_partner who would be willing to serve as the tmp finally movant alleges that the court’s affirmance of respondent’s determinations created a whipsaw that is patently unreasonable unfair unjust and inequitable we are willing to assume that this is also correct but the fact is that none of these allegations standing alone or together constitute a fraud on the court or other valid reason for vacating a final_decision of this court in concluding we note that the decided cases regarding vacating a final_decision of the court involve so-called deficiency cases rather than tefra partnership cases the current sec_7481 is derived from section a of the revenue act of ch tit x 44_stat_10 the legislative_history states inasmuch as the statute_of_limitations upon assessments and suits for collection both of which are suspended during review of the commissioner’s determination commences to run upon the day upon which the board’ sec_5 indeed we note that putting aside the problem with the finality of the decision the movant offers no explanation as to the reason for his failure to timely move to participate in this proceeding of tax_appeals decision becomes final it is of utmost importance that this time be specified as accurately as possible in some instances in order to achieve this result the usual rules of law applicable in court procedure must be changed s rept 69th cong 1st sess c b part the legislative_history of the tefra proceeding specifies that the principles of sec_7481 shall govern in determining the date on which a court decision becomes final h conf rept pincite 1982_2_cb_600 as the court_of_appeals for the ninth circuit observed congress in enacting sec_7481 was conscious of the need that ‘finality’ be clearly defined so that the process of collection can proceed unimpeded toscano v commissioner supra pincite while this concern is apparent in deficiency cases its force is at least as great in tefra partnership cases the liability of not just one taxpayer is at stake rather it is the liabilities of potentially all of the partners in the partnership thus if we were to vacate a final_decision in a tefra case the result clearly would impede the collection process we believe therefore that the reasoning underlying the cases restricting the vacating of final decisions of this court applies perhaps even more strongly to partnership cases there are no viable grounds for vacating the final_decision in this case accordingly granting movant’s motion for leave would be nothing more than an act of futility and the motion will be denied an order denying the motion for leave to file notice of election to participate out of time will be issued