t c memo united_states tax_court tiffany wei ding petitioner v commissioner of internal revenue respondent docket no 24662-13l filed date lawrence w luttrell for petitioner robert w mopsick for respondent memorandum opinion lauber judge in this collection_due_process cdp case petitioner timely sought review pursuant to sec_6330 of a notice_of_determination all statutory references are to the internal_revenue_code as in effect at all relevant times and all rule references are to the tax_court rules_of_practice and procedure we round all dollar amounts to the nearest dollar concerning collection action for tax years and on date we granted a motion by the internal_revenue_service irs or respondent to dismiss the case as moot with respect to tax years and because after she filed her petition petitioner fully paid her tax_liabilities for those years on date respondent filed a motion for summary_judgment with respect to tax years and petitioner filed a response on date we will deny respondent’s motion background we assume the following facts on the basis of the pleadings respondent’s motion for summary_judgment and the attached exhibits these facts are stated solely for the purpose of deciding this motion for summary_judgment and not as findings_of_fact in this case see fed r civ p a rule b 115_tc_15 aff’d 269_f3d_854 7th cir petitioner resided in new jersey when she filed her petition petitioner a real_estate_professional filed late her federal_income_tax re- turns for and on these returns she reported tax_liabilities of dollar_figure dollar_figure and dollar_figure respectively the irs examined those returns petitioner was absent from the united_states during much of the examination period caring for sick family members in china during this time she entrusted her affairs to robert klausner a certified_public_accountant c p a at patrizio zhao in parsippany new jersey the irs ultimately proposed for and tax deficiencies of dollar_figure dollar_figure and dollar_figure respectively as well as accuracy-related_penalties and additions to tax for late filing on date the irs sent petitioner a notice_of_deficiency setting forth these adjustments this notice was sent to petitioner at an address in highlands new jersey which evidently was her residence when petitioner did not petition this court within days the irs on date assessed the tax penalties and additions to tax for as well as interest accrued to that date in an effort to collect these assessed amounts the irs filed a notice_of_federal_tax_lien nftl and sent petitioner on date a notice_of_federal_tax_lien filing and your right to a hearing under sec_6320 this notice was addressed to petitioner at a post office box in navesink new jersey this post office box was apparently rented by petitioner’s sister who received the notice and forwarded it to mr klausner as petitioner’s representative mr klausner timely filed form request for a collection_due_process or equivalent_hearing requesting a cdp hearing he informed the irs that petitioner was out of the country caring for family members in china he also stated that the examination had been closed with adverse adjustments due to lack of information which occurred just after petitioner left the country he stated that the missing information would reduce the tax_liability for those years significantly and requested audit_reconsideration the case was assigned to irs settlement officer so wold to conduct a cdp hearing on date so wold noted in her case activity record that she could not find in the irs files any notice_of_deficiency issued for however she did find a letter issued date which afforded peti- tioner appeal rights concerning the proposed audit adjustments for so wold noted in her case activity record that she would inquire why the taxpayer did not appeal the proposed adjustments by exam when she had the opportunity on date so wold conducted a face-to-face cdp hearing with mr klausner and petitioner’s sister who had also filed a power_of_attorney dur- ing the hearing petitioner’s representatives sought to challenge her underlying tax_liabilities for they also requested a collection alternative so wold pointed out that if petitioner had neglected to pursue a prior op- portunity to dispute her tax_liabilities she could not challenge those liabilities at the cdp hearing so wold then produced a copy of the letter and asked why petitioner had not responded to this letter by filing a protest with irs appeals petitioner’s sister stated that petitioner had not received this letter so wold then informed petitioner’s representatives that because she could not find a copy of any notice_of_deficiency in the irs files and because petitioner had not received the letter petitioner’s representatives would be permitted to challenge her underlying tax_liabilities for during the cdp process on date so wold received a package of documents from petitioner’s representatives relating to the audit adjustments the case was then assigned to appeals officer ao kilanowski for audit_reconsideration ao kilanowski performed a thorough review of petitioner’s documentation and met with her representatives during the ensuing six months on date ao kilanowski prepared a report recommending sub- stantial adjustments in petitioner’s favor he stated that a notice_of_deficiency had been sent for but that the taxpayer defaulted due to being out of the united_states citing the documentation petitioner’s representatives had supplied concerning her cost_of_goods_sold business_expenses and other items ao kilan- owski recommended that her taxable_income for and as deter- mined by exam should be adjusted downward by dollar_figure dollar_figure and dollar_figure respectively these adjustments represented approximately of the adjustments to which petitioner’s representatives contended that she was entitled ao kilanowski recommended that the irs make no concession on the accuracy-related_penalties or the additions to tax for late filing the irs made the adjustments to petitioner’s accounts as recommended by ao kilanowski in date so wold informed mr klausner that after these adjustments were made petitioner’s total balance due for including accrued interest was dollar_figure so wold indicated that in order for her to consider collection alternatives petitioner would need to liquidate certain real_estate holdings or obtain a loan by borrowing against those assets in date mr klausner informed so wold that petitioner intended either to sell her real_estate holdings or to obtain a loan which she was attempting to negotiate from a source in china on date mr klausner called so wold to say that he had no new information to report at this point so wold concluded that the case should be closed on date the irs sent petitioner a notice_of_determination concerning collection action s under sec_6320 and or sustaining the nftl filing for this notice was addressed to petitioner at her sister’s post office box in navesink new jersey under the caption summary of determination the irs stated that it had made the following determinations concerning petitioner’s tax_liabilities for your account has been adjusted in accordance with your audit recon- sideration for the form_1040 returns for the tax years and your request for an installment_agreement could not be granted because your collection information statement showed that you have an inability to make monthly payments based on the information listed in your collection information statement we cannot deem your account as currently not collectible as it appears that you have equity in assets petitioner timely petitioned for review of this notice_of_determination her petition seeks to challenge in two respects her underlying tax_liabilities for she first contends that the irs incorrectly determined her self employment_taxes and or capital_gains taxes for she next contends that the irs improperly determined penalties and additions to tax for these years inasmuch as there does exist reasonable_cause for her late filings and omissions discussion the purpose of summary_judgment is to expedite litigation and avoid costly time-consuming and unnecessary trials fla peach corp v commissioner 90_tc_678 under rule b the court may grant summary_judgment when there is no genuine dispute as to any material fact and a decision may be rendered as a matter of law 98_tc_518 aff’d 17_f3d_965 7th cir in deciding whether to grant summary_judgment we construe factual materials and inferences drawn from them in the light most favorable to the nonmoving party ibid in seeking summary_judgment respondent contends that petitioner is pre- cluded from challenging her underlying tax_liabilities for because she received a notice_of_deficiency but neglected to petition this court in response respondent has attached to his pleadings a copy of the notice_of_deficiency dated date respondent has also attached to his pleadings a copy of a u s postal service form_3877 which indicates that an article with a tracking number corresponding to that on the notice_of_deficiency was mailed to petitioner on date at her highlands new jersey address thus although the so was initially unable to find the notice_of_deficiency it now appears that a notice was timely mailed because petitioner did not petition this court in response to that notice respondent contends that she cannot challenge her underlying tax_liabilities for respondent further contends that so wold did not abuse her discretion in declining to offer petitioner a collection alternative that there is no genuine dispute concerning any material fact and that the irs is entitled to judgment as a matter of law we conclude that summary_judgment must be denied as respondent properly recognizes for purposes of determining whether a taxpayer can raise liability under sec_6330 actual receipt of the statutory notice must be determined see 114_tc_604 tatum v commissioner tcmemo_2003_115 construing the facts of record and inferences drawn from them in the light most favorable to petitioner we conclude that there is a genuine dispute of material fact as to whether she actually received the notice_of_deficiency the record establishes that petitioner was absent from the united_states dur- ing much of the calendar_year for that reason she entrusted her affairs to her c p a whose firm was in parsippany new jersey and to her sister who received mail at a post office box in navesink new jersey all notices and other communications that the irs addressed to her sister’s post office box and to her c p a appear to have received prompt responses on the other hand petitioner’s sister informed so wold that petitioner never received the letter that letter like the notice_of_deficiency was presumably mailed to petitioner’s highlands new jersey address ao kilanowski stated in his report that a notice_of_deficiency had been sent to petitioner for but that the taxpayer defaulted due to being out of the united_states viewing inferences from these facts in the light most favorable to petitioner we conclude that there is a genuine dispute of fact as to whether the notice_of_deficiency if mailed to her last_known_address was actually received by her if petitioner did receive the notice_of_deficiency it would appear that she will be precluded from disputing her underlying tax_liabilities for even though so wold permitted her representatives to raise those liabilities and even though the irs actually adjusted them during the cdp process the regulations specifically address the situation where an appeals officer considers the merits of a taxpayer’s liability in a cdp hearing when the taxpayer had previously received a statutory_notice_of_deficiency sec_301_6320-1 q-e11 proced admin regs the regulations provide that in this situation any adjustment to the taxpayer’s underlying tax_liability will not be considered part of the notice_of_determination in the appeals officer’s sole discretion the appeals officer may consider the existence or amount of the underlying tax_liability or such other precluded issues at the same time as the cdp hearing any determination however made by the appeals officer with respect to such a precluded issue shall not be treated as part of the notice_of_determination issued by the appeals officer and will not be subject_to any judicial review because any decisions made by the appeals officer on such precluded issues are not properly a part of the cdp hearing such decisions are not required to appear in the notice of determination issued following the hearing even if a decision concerning such precluded issues is referred to in the notice_of_determination it is not reviewable by the tax_court because the precluded issue is not properly part of the cdp hearing id para e a-e11 we upheld the validity of this regulation in 118_tc_572 concluding that it presents a reasonable and ‘taxpayer-friendly’ approach to the collection review process reflecting ‘respondent’s good-faith ef- fort to provide a taxpayer with a final opportunity for administrative review’ of his or her tax_liability id pincite quoting 116_tc_255 we accordingly held in behling that respondent’s deci- sion to permit petitioner to offer information at the appeals_office hearing rele- vant to the existence or amount of his underlying tax_liability did not result in a waiver by respondent of the restriction set forth in sec_6330 t c pincite see also holland v commissioner tcmemo_2013_205 unless petitioner can advance persuasive factual distinctions between her situation and the situation set forth in the regulation and in behling the same result would seem to follow here but neither party has addressed this issue and we have no occasion to decide it now for these reasons we will deny respondent’s motion for summary_judgment filed date an appropriate order will be issued


department of the treasury internal_revenue_service washington d c date cc dom it a 3skassell cor-109412-00 uil-1221 number info release date dear this responds to your letter to the commissioner of internal revenue charles o rossotti dated date in which you ask for information about the tax reporting of day trades you indicate in your letter that many of your clients have been told to report the proceeds and cost_basis of their trades on the form_1040 schedule d and all other related expenses on the schedule c you express concern that this would allow for unlimited amounts of taxable loss while safeguarding any potential gain against self-employment_tax this letter is not a private_letter_ruling but will provide you with general information about reporting sales of securities to determine how to report the gain from the sale of securities it is necessary to determine whether the securities are capital assets in the hands of the taxpayer a capital_asset is defined in sec_1221 of the internal_revenue_code as property held by the taxpayer whether or not connected with his trade_or_business excluding among other things not relevant here stock_in_trade of the taxpayer or other_property of a kind which would properly be included in the inventory of the taxpayer if on hand at the close of the taxable_year it is well-established service position that shares of stock not held_for_sale to customers in the ordinary course of a business by a person who is not a dealer_in_securities are capital assets revrul_56_153 1956_1_cb_166 the distinction between a trader from a dealer has been made as follows a primary distinction for federal tax purposes between a trader and a dealer_in_securities or commodities is that a dealer does not hold cor-109412-00 securities or commodities as capital assets if held in connection with his trade_or_business whereas a trader holds securities or commodities as capital assets whether or not such assets are held in connection with his trade_or_business a dealer falls within an exception to capital_asset treatment because he deals in property_held_primarily_for_sale to customers in the ordinary_course_of_his_trade_or_business a trader on the other hand does not have customers and is therefore not considered to fall within an exception to capital_asset treatment footnote omitted 89_tc_445 acq 1988_2_cb_1 other case law similarly provides that securities held for an individual’s own investment or speculation are considered capital assets 876_f2d_657 8th cir van 152_f2d_654 2d cir per curiam securities could not be classified as stock_in_trade or property subject_to inventory unless they were held by the taxpayer primarily_for_sale_to_customers 247_fsupp_214 s d cal aff'd 374_f2d_14 9th cir securities bought and sold solely for taxpayer's account may not be considered business inventory see also of the income_tax regulations defining a dealer_in_securities as a merchant of securities whether an individual partnership or corporation with an established place of business regularly engaged in the purchase of securities and their resale to customers that is one who as a merchant buys securities and sells them to customers with a view to the gains and profits that may be derived therefrom taxpayers who engage in trades on the internet are no different from those who use a broker to execute their trades if the taxpayer is not a securities_dealer and thus holds securities as capital assets the sales of those securities are reported on the form_1040 schedule d where the trader reports the amount_realized and adjusted_basis of the securities sold purchase commissions are included in the adjusted_basis of the security and selling commissions reduce the amount_realized from the sale of the security investment fees and expenses_incurred to produce income are reported as miscellaneous_itemized_deductions on line of form_1040 schedule a but they are deductible only if they exceed of the taxpayer’s adjusted_gross_income the form_1040 schedule c is only used to report income or loss from a business operated as a sole_proprietor the net_profit_or_loss from such a business is treated as ordinary_income or loss such a taxpayer also is responsible for filing appropriate self- employment_taxes whether an individual who day trades is or is not a securities_dealer is a factual question to be determined in a given case probably most day traders are not dealers and thus must use the schedule d to report capital_gains_and_losses and the schedule a to report investment_expenses that exceed the limit it is clear moreover that the taxpayer cannot have it both ways he cannot report gains and losses as a trader on the schedule d and take a dealer’s unlimited deduction for other related expenses on cor-109412-00 the schedule c as an ordinary_loss such best of both worlds treatment is clearly not allowed under the code and regulations i hope that this information is helpful to you if you have any further questions please contact susan kassell of this office at sincerely michael d finley chief branch income_tax accounting


syr gds internal_revenue_service ee oe dear sir or madam this is in reference to your letter of date requesting advance approval of your grant-making procedures under sec_4945 g the internal_revenue_code of you are exempt under sec_501 of the code and have been classified as sec_509 fa a private_foundation within the meaning of your founder is public school teacher he observed that former students who had enrolled in institutions of hicher learning were unable to complete their studies for financial reasons you propose to institute a scholarship and fellowship an advanced degree who are enrolled at educational program which is designed to assist students pursuing a post- secondary or institutions described in sec_170 b a ii demonstrate financial need and either a record of academic achievement in the chosen field of study or desire for academic achievement in the chosen field of study you may make gifts or loans depending on your financial resources and the applicant's and on the ability of to repay a loan pe determined by the amount of directors to this program and by the applicants from time to time reciplent or the recipient's parents is status of a factor in the the amount of financial aid tc the employme and who funds allocated by your board_of the qualifications and needs of the applicant be provided wiil the potential and the not selection process you are ready to implement ected educational students may apply for witli th institutior be soles aic ol ote eal is program s that interested and you intend t tp and fellow npondiserimina rcripts of pyro t amp bears one or more of your board members may interview applicants you in order to assess a particular applicant's motivation character ability and potential recipients comprised of educators to assist in evaluating and selecting scholarship recipients from educational institutions as the board may appoint an advisory committee the board may also seek recommendations to possible candidates your board will select the number of individual grants which you intend to award will depend on the number of eligible_candidates the philanthropic priorities of your board the proposed individual grant programs because the program has not yet been implemented it impossible to estimate how many individual grants will in any particular year is and the funds allotted to you have stated that be awarded with regard to scholarship and fellowship grants to individuals there will be selection procedures based upon race religion national or ethnic origin or other illegally discriminatory criteria persons who select grant recipients will not be derive a private benefit directly or indirectly potential grantees are selected over others if certain no limitations or restrictions in the a position to the in each individual grantee will be required to sign a grant to return any funds not the funds only for the purpose of or she receives funds from you that the so expended and submit periodic scholarship and fellowship recipients will be the conclusion of each academic agreement agreeing to use grant reports to you required to provide reports at period during which he include a statement of courses the grantee has taken and a copy of academic transcripts verified by the educational_institution attended institution does not involve the taking of courses but only the preparation of research papers or projects such as the writing or completion of a doctoral thesis or project you will require the submission of project approved by university official at be submitted upon the grantee's completion of study the paper or a supervising faculty_member or appropriate a brief report on the progress of a grantee whose study at a final report must least once a year in the case of an educational you may choose not to require a report the following condit ions are met fellowship_grant subject_to grantee if scholarship o1 sec_11i7fa which will institution deseribed in scholarship oer fe llowshin be sec shire used for study pincite tb bytes the it ta ert trea an educational ait tbiyou pay the from an individual a aithe grant is the previsions of ot c the educational_institution signs an institution and agreement to use the funds to defray the recipient's expenses or pay funds to the recipient only if educational_institution and his or her standing at such institution is consistent with the purposes and conditions of the grant is enrolled at the he or she you will review the grantees' reports in order to monitor and evaluate the expenditure of funds and the progress made by each recipient this review will be conducted regularly in order to determine the progress made by the grantee toward achieving the purposes of the grant and to discover whether any matters should be investigated more closely will be promptly investigated as will any failure to provide required reports while the matter is being investigated you will withhold further payments to the extent possible until it has been determined that no part of the grant has been misused and until any missing reports have been submitted any apparent misuse of grant funds if you discover that funds have in fact been misused you will take all reasonable and appropriate steps to recover the diverted funds or and the dedication of other grant funds held by the grantee to the purposes being financed by the grant to insure the restoration of the diverted funds you will maintain adequate_records and case histories to show the purpose for which the aid was given the the name and address of each recipient of aid distributed to each manner in which the recipient was selected and the relationship if any between the recipient and members officers or trustees of contributor to the organization or either and substantial_contributor in order that any or all distributions made to individuals can be substantiated upon request by the internal_revenue_service a corporation controlled by a grantor or a grantor or substantial a member_of_the_family of the organization the amount sec_4945 of the code provides for the imposition of taxes on each taxable_expenditure of a private_foundation sec_4945 of the code provides that the term taxable_expenditure private_foundation as or other similar purposes by such individual unless such grant satisfies the requirements of sec_4948 q means any amount_paid or incurred by a an individual for travel study a grant to ok y sec_4945 of the code provides that section shall not apply to an individual grant awarded on an d objective and nondiscriminatory basis pursuant to approved in advance by the secretary if the satisfaction of scholarship or fellowship_grant which is subject_to the provisions of sec_117 educational_institution described in sec_170 the code is demonstrated to the secretary that the grant constitutes a to be used for study at a procedure and is a ii of an it sec_4945 of the code provides in part that the an objective and nondiscriminatory basis provisions of sec_4945 grant awarded on pursuant to grant is other similar product or improve or enhance a literary artistic musical scientific teaching or similar capacity skill the purpose of to achieve a specific objective produce a report or a procedure approved in advance if will not apply to or talent of the grantee an individual the sec_53_4945-4 of the foundation and similar excise_taxes regulations provides that in order to secure the advance approval required by sec_4945 a private_foundation must demonstrate to the satisfaction of grant procedures include an objective and non-discriminatory selection process result in performance by grantees of grants were intended to finance and obtain reports to determine whether the grantees have performed the activities that the grants are intended to finance single procedure or set of procedures is required the activities that the the commissioner that this procedure is reasonably calculated to the foundation plans to its no based upon the information submitted and assuming your program will be conducted as proposed with a view to previding objectivity and nondiscrimination in the awarding of scholarship grants we rule that your procedures for the awarding of scholarship and fellowship grants comply with the requirements of sec_4945 accordance with these procedures will expenditures within the meaning of sec_4945 d code provided for such grants are actually used for qualified tuit ian expenses within the meaning of section l1 b in of and as such are eligible for the exclusion from income that not constitute taxable the thus expenditures made in the code to the exrent in sec_117 the code ni related code of cf of moreover we rule thar your joans will he yoan objective and nondiseriminatory wedi proce days mmeckorrig lesan te aa requirements of sec_4945 expenditures described in sec_4945 and thus are not taxable no material changes in the facts upon which it this ruling is conditioned on the understanding that there is based is further conditioned on the premise that no grants will be will be it awarded to creators officers directors trustees or members of the selection committee or for a purpose inconsistent with the purposes described in sec_170 b of the code please note that this ruling is only applicable to grants awarded under your programs as outlined above into any other scholarship programs you should submit a request for advance approval of that program before you enter we are informing the ohio ep eo key district_office of this please keep a copy of this ruling with your permanent action records this ruling is directed only to the organization that sec_6110 of the code provides that it requested it may not be used or cited as precedent sincerely yours merveclat boeck gerald v chief exempt_organizations sack technical branch


tax_exempt_and_government_entities_division department of the treasury internal_revenue_service washington d c feb - terra g je uniform issue list legend taxpayer a ira x amount a financial_institution m financial_institution b dear this is in response to your request dated date and as supplemented by letter dated date submitted on your behalf by your authorized representative in which you request a waiver of the 60-day rollover requirement contained in sec_408 of the internal_revenue_code the code the following facts and representations have been submitted under penalty of perjury in support of the ruling requested received a distribution on date from ira x totaling taxpayer a age amount a taxpayer a’s failure to accomplish a rollover within the 60-day period prescribed by sec_408 was due to taxpayer a's medical and mental illnesses which impaired his ability to make financial decisions and to understand the consequences of his actions taxpayer a further represents that amount a has not been used for any other purpose page according to medical documentation submitted by taxpayer a taxpayer ais suffering from a neurological impairment that has adversely impacted his judgment and cognitive abilities such as verbal communication and memory on date taxpayer a contacted financial_institution m to discuss investments during the discussion with a representative of financial_institution m an argument erupted over the selling of a certain stock taxpayer a abruptly demanded that all his accounts held by financial_institution m be immediately liquidated and he demanded a check for all his accounts before he would leave the office taxpayer a received a check in amount a from ira x and then departed nothing on the check indicated that the funds were being withdrawn from an ira taxpayer a deposited amount a in a non-ira account at financial_institution b on date and did not advise his spouse of his action because of his mental and medical impairment taxpayer a did not realize that amount a was from an ira and that it should have been rolled over into another ira taxpayer a's authorized representative asserts that at the time of the withdrawal taxpayer a was receiving treatment for his condition and documentation submitted with this ruling_request attests to taxpayer a's condition based on the facts and representations you request a ruling that the internal_revenue_service waive the day rollover requirement contained in sec_408 of the code the code with respect to the distribution of amount a sec_408 of the code provides that except as otherwise provided in sec_408 any amount_paid or distributed out of an ira shall be included in gross_income by the payee or distributee as the case may be in the manner provided under sec_72 of the code sec_408 of the code defines and provides the rules applicable to ira_rollovers sec_408 of the code provides that the rollover provisions of sec_408 do not apply to any amount required to be distributed under sec_408 sec_408 of the code provides that sec_408 of the code does not apply to any amount_paid or distributed out of an ira to the individual for whose benefit the ira is maintained if page i the entire amount received including money and any other_property is paid into an ira for the benefit of such individual not later than the day after the day on which the individual receives the payment or distribution or ii the entire amount received including money and any other_property is paid into an eligible_retirement_plan other than an ira for the benefit of such individual not ater than the day after the date on which the payment or distribution is received except that the maximum amount which may be paid into such plan may not exceed the portion of the amount received which is includible in gross_income determined without regard to sec_408 section d b of the code provides that sec_408 does not apply to any amount described in sec_408 received by an individual from an ira if at any time during the 1-year period ending on the day of such receipt such individual received any other amount described in sec_408 from an ira which was not includible in gross_income because of the application of sec_408 sec_408 of the code provides a similar 60-day rollover period for partial rollovers sec_408 of the code provides that the rollover provisions of sec_408 do not apply to any amount required to be distributed under sec_408 sec_408 of the code provides that the secretary may waive the day requirement under sec_408 and sec_408 of the code where the failure to waive such requirement would be against equity or good conscience including casualty disaster or other events beyond the reasonable control of the individual subject_to such requirement only distributions that occurred after date are eligible for the waiver under sec_408 of the code revproc_2003_16 r b date provides that in determining whether to grant a waiver of the 60-day rollover requirement pursuant to sec_408 the service will consider all relevant facts and circumstances including errors committed by a financial_institution inability to complete a rollover due to death disability hospitalization incarceration restrictions imposed by a foreign_country or postal error the use of the amount distributed for example in the case of payment by check whether the check was cashed and the time elapsed since the distribution occurred page - the information presented and documentation submitted by taxpayer a is consistent with his assertion that a failure to accomplish a rollover within the day period prescribed by sec_408 was due to taxpayer a’s medical and mental illnesses which impaired his ability to make financial decisions and to understand the consequences of his actions documentation submitted establishes that at the time of the withdrawal taxpayer awas receiving treatment for his condition additionally the documentation submitted with this ruling_request shows that amount a remains in a non-ira account with financial_institution b and has not been used for any purpose therefore pursuant to sec_408 of the code the service hereby waives the 60-day rollover requirement with respect to the distribution to taxpayers a of amount a from ira x pursuant to this ruling letter taxpayer a granted a period of days as measured from the date of the issuance of this letter_ruling to make a rollover_contribution of an amount not to exceed amount a except as noted below to another ira or iras described in code section a provided all other requirements of code sec_408 except the 60-day requirement are met with respect to such ira contribution the contribution will be considered a rollover_contribution within the meaning of code sec_408 please note that pursuant to code sec_408 this ruling letter does not authorize the rollover of the code sec_401 minimum required distributions for calendar years and no opinion is expressed as to the tax treatment of the transaction described herein under the provisions of any other section of either the code or regulations which may be applicable thereto this letter is directed only to the taxpayer who requested it sec_6110 of the code provides that it may not be used or cited as precedent is a copy of this letter has been sent to your authorized representative in accordance with a power_of_attorney on file in this office page if you wish to inquir e about this ruling please contact please address all correspondence to se t-ep ra ts sincerely yours frances v employee plaris technical group manager sloaf enclosures deleted copy of letter_ruling notice of intention to disclose


department of the treasury internal_revenue_service washington d c jul commissioner tax exempt ano government entities division uniform issue list tep nats nae legend taxpayer a executrix m airline b ira x pian z plan y court b amount a amount b state p date date date a ee ayes e ate e mee ae kek date date dear eee eee this is in response to your ruling_request dated date as supplemented by correspondence dated date and date submitted by your authorized representative in which you as the court appointed executrix of taxpayer a request rulings under sec_125 of the worker retiree and employee recovery act of wrera the following facts and representations have been submitted under penalty of perjury in support of the rulings requested executrix m age is the surviving_spouse of taxpayer a and executrix of his estate executrix m represents that taxpayer a was formerly employed as a pilot for airline b and was a participant in both plan z a plan intended to be qualified under sec_401 a of the internal_revenue_code code and pian y a nonqualified_plan that airline b maintained for its pilots airline b entered into bankruptcy proceedings on date and filed for a distress termination of plan z which was ultimately approved by the pension_benefit_guaranty_corporation on date airline b terminated both plan z and plan y several years after the termination of plan z and plan y congress passed wrera taxpayer a died testate on date the last will and testament of taxpayer a designated executrix m as executrix of his estate executrix m asserts ihat on date she was granted letters of testamentary issued by court b located in state p during the period to airline b distributed a total of amount a from plan y to the estate of taxpayer a amount a was paid_by airline b pursuant to an order of a federal bankruptcy court in executrix m received form_8935 airline payments report from airline b which explains a qualified airline employee’s rights under sec_125 of wrera form_8935 also listed the total amount of airline pension distributions eligible to be rolled over into a roth individual_retirement_account roth ra under wrera as amount a on date wrera was signed into law and allows a qualified airline employee who receives an airline payment amount days or before date to transfer the airline payment to a roth_ira if the transfer is completed timely the contribution is to be treated as a qualified_rollover_contribution described in sec_408a of the code wee ke in accordance with the instructions on form_8935 on date executrix m established ra x a roth_ira in the name of taxpayer a into which she transferred amount b the difference between amount a and amount b represents losses between the time of receiving the distribution and the time the distribution was deposited into ira x amount b currently remains in ira x executrix m states that if she receives a favorable ruling she will roll over the funds in ira x into a roth_ira in her name based upon the foregoing facts and representations you request the following rulings that the distributions received by the estate after taxpayer a’s death were eligible to be transferred to a roth_ira under sec_125 of wrera that executrix m's actions in establishing the roth_ira and transferring these assets on behalf of the estate were an appropriate interpretation of sec_125 of wrera that executrix m as taxpayer a’s spouse and the sole beneficiary of his estate can treat ira x as her own and can roll over the proceeds from ira x into a roth_ira under her own name as per code sec_408a sec_125 of wrera provides that if a qualified airline employee receives any airline payment and transfers any portion of such amount to a roth_ira within days of receipt or if later within days of enactment of the act then such amount to the extent so transferred shall be treated as a qualified_rollover_contribution described in sec_408a of the code and the limitations described in sec_408a of the code shall not apply to any such transfer sec_125 b of wrera provides in relevant part that an airline payment amount is a payment of any money or other_property which is payable by a commercial passenger airline carrier to a qualified airline employee under the approval of an order of a federal bankruptcy court in a case filed after date and before date sec_125 of wrera provides that the term qualified airline employee means an employee or former employee of a commercial passenger airline carrier who was a participant in a defined_benefit_plan maintained by the carrier which -- a is a plan described in sec_401 of the code which includes a_trust exempt from tax under sec_501 a of the cade and b was terminated or became subject_to the restrictions contained in paragraphs and of sec_402 of the pension_protection_act of ke kk sec_408a of the code provides that a roth_ira shall be treated in the same manner as an individual_retirement_plan sec_408a of the code provides that no rollover_contribution may be made to a roth_ira unless it is a qualified_rollover_contribution sec_408a of the code provides in pertinent part that the term qualified_rollover_contribution includes a rollover from one roth_ira to another roth_ira sec_1_408-8 of the income_tax regulations regulations q a-5 provides that a surviving_spouse of an ira owner may elect to treat the spouse's entire_interest as a beneficiary in an individual's ira as the spouse's own ira in order to make this election the spouse must be the sole beneficiary of the ira and have an unlimited right to withdraw amounts from the ira if a_trust is named as beneficiary of the ira this requirement is not satisfied even if the spouse is the sole beneficiary of the trust the preamble to sec_1_408-8 of the regulations provides in relevant part that a surviving_spouse who receives a distribution from an ira is permitted to roll that distribution over into his her own ira even if the spouse is not the sole beneficiary of the deceased's ira as long as the rollover is accomplished within the requisite day period form_8935 is a report that is submitted to a recipient and to the internal_revenue_service by a commercial passenger airline carrier to report payment s made to recipients under an order of a federal bankruptcy court in a case filed after date and before date for interest in a bankruptcy claim against the carrier any note of the carrier or amount_paid in lieu of a note being issued or any other fixed obligation of the carrier to pay a lump sum amount a recipient may contribute the payment s reported on this form to a roth_ira within days of the date the payment was received or if later within days of the date of the enactment of wrera ie before date the faa modernization and reform act of faamra was signed into law on date and updated wrera to allow transfers to traditional individual_retirement_accounts iras and allow airline employees’ surviving spouses to make the transfer allowed under sec_125 of wrera if an airline payment was paid after an airline employee died the surviving_spouse can take all of the actions under wrera that the airline employee could have taken section d of faamra provides that if a qualified airline employee died after receiving an airline payment amount or if an airline payment amount was paid to the surviving_spouse of a qualified airline employee in respect of the qualified airline employee the surviving_spouse of the qualified airline employee kak kee may take all actions permitted under sec_125 of wrera or under this section to the same extent that the qualified airline employee could have done had the qualified airline employee survived section d of faamra is effective for transfers after the date of enactment of the act ie date with respect to airline payments amounts paid before on or after such date transfers of amounts pursuant to faamra must take place within days of receipt of the amount or within days of enactment of the act le date regarding ruling_request number one sec_125 of wrera provides that the term qualified airline employee means an employee or former employee of a commercial passenger airline carrier who was a participant in a defined_benefit_plan maintained by the carrier which a is a plan described in sec_401 of the code which includes a_trust exempt from tax under sec_401 of the code and b was terminated or became subject_to the restrictions contained in paragraphs and of sec_402 of the pension_protection_act of as a former employee of airline b and participant in plan z taxpayer a was a qualified airline employee sec_125 of wrera provides that an airline payment amount is a payment of money or other_property payable by a commercial passenger airline carrier to a qualified airline employee i under the approval of an order of a federal bankruptcy court in a case filed after date and before date and ii in respect of the qualified airline employee's interest in a bankruptcy claim against the carrier any note of the carrier or amount_paid in lieu of a note being issued or any other fixed obligation of the carrier to pay a jump sum amount the amounts paid to taxpayer a by airline b from plan y are amounts paid under the approval of an order of a federal bankruptcy court to satisfy airline b’s obligations to taxpayer a under plan y the bankruptcy case was filed on date which is after date and before date accordingly amount a is an airline payment amount sec_125 of wrera was enacted to provide some relief to airline employees who lost significant portions of their retirement pensions it applied to any amounts received by a participant under the approval of an order of a federal bankruptcy court in a case filed between date and date taxpayer a was a qualified airline employee within the meaning of sec_125 of wrera the estate of taxpayer a received amount a as an airline payment amount on behalf of taxpayer a and set up a roth_ira on behalf of taxpayer a you have represented that the estate under applicable state law is treated as standing in the shoes of the decedent and was thus eligible to create the roth_ira accordingly with respect to ruling_request number one we conclude that the lee ere distributions totaling amount a received by the estate after taxpayer a's death were eligible to be transferred to such roth_ira under sec_125 of wrera regarding ruling_request number sec_125 of wrera provides that airline payments amounts are treated as a qualified_rollover_contribution only if they are transferred to a roth_ira within the applicable time period provided under sec_125 of wrera it has been represented that in the present case within the applicable time period executrix m as executrix of taxpayer a’s estate had the power to establish a roth_ira in taxpayer a’s name and to transfer amount a to it on behalf of the estate ira x was established on date which was prior to date we find that executrix m’s actions in establishing ira x and transferring these assets on behalf of the estate were an appropriate interpretation of sec_125 of wrera with respect to request number three sec_1_408-8 of the regulations question and answer provides that a surviving_spouse of an ira owner may elect to treat the spouse's entire_interest as a beneficiary in an individual's ira as the spouse's own ira in order to make this election the spouse must be the sole beneficiary of the ira and have an unlimited right to withdraw amounts from the ira executrix m as taxpayer a’s surviving_spouse sole beneficiary of ira x and the sole beneficiary of taxpayer a's estate may elect to treat her interest as a beneficiary in ira x as her own ira accordingly executrix m can roll over the proceeds from ira x into a roth_ira set up and maintained in her own name as per sec_408a of the code no opinion is expressed as to the tax treatment of the transactions described herein under the provisions of any other section of either the code or regulations which may be applicable thereto please note that for purposes of applying the required_minimum_distribution rules any beneficiary of ira x named by executrix m will not be treated as a designated_beneficiary under sec_401 of the code sec_1 a - q a-4 of the regulations provides that a designated_beneficiary must be a beneficiary as of the date of death because ira x did not have a designated_beneficiary as of the date of taxpayer a’s death ira x does not have a designated_beneficiary for purposes of applying the rules under sec_401 a of the code in addition the scope of the powers of executrix m to take actions on behalf of the estate of taxpayer a is a matter of state law rather than a matter of federal tax law the service lacks the authority to determine the powers of executrix m our ruling therefore assumes that applicable state law permits executrix m to take the actions described le kek this ruling is directed only to the taxpayer that requested it sec_61 k of the code provides that it may not be used or cited by others as precedent a copy of this letter is being sent to your authorized representative pursuant to a power_of_attorney on file in this office if you have any questions regarding this letter please contact or by fax at by phone at sincerely yours laura warshawsky manager employee_plans technical group enclosures deleted copy of letter_ruling notice of intention to disclose cco kk ka


department of the treasury internal_revenue_service te_ge eo examination fulton street room brooklyn ny date tax_exempt_and_government_entities_division number release date legend org organization name xx date address address uil org address taxpayer_identification_number form_990 tax_year s ended person to contact id number contact numbers telephone fax certified mail - return receipt requested dear 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 it is determined that you have not established that you are observing the conditions required for the continuation of an exempt status we previously mailed you a report explaining our proposed revocation of your tax- exempt status within days from the date of the letter accompanying the report in that correspondence we requested that you respond to the report because we did not hear from you within that day period we will process your case on the basis of the recommendations shown in the report we have determined that you fail to qualify for exempt status under any other subsection of sec_501 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 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 if you have any questions please call the contact person at the telephone number shown in the heading of this letter thank you for your cooperation sincerely marsha a ramirez director eo examinations internal_revenue_service date date o rg address ‘ department of the treasury internal_revenue_service ms dal os commerce st dallas tx taxpayer_identification_number form_990 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 revocation 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 for your convenience an envelope is enclosed 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 rev 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 f a 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 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 revoking your exempt status if we do not hear from you within days from the date of this letter we 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 if you write please provide a telephone number and the most convenient time to call if we need to contact you thank you for your cooperation sincerely marsha a ramirez director eo examinations enclosures publication publication form_6018 report of examination envelope letter rev catalog number 34801v department of the treasury - internal_revenue_service explanation of items form 886a name of taxpayer org issue - organization not responding to document request by the irs schedule no or exhibit year petiod ended december 20xx legend org organization name xx date failing to respond to document requests issue whether org qualifies for exemption under sec_501 of the internal_revenue_code facts exhibit a provides copies of the internal_revenue_service correspondence requesting that exempt_organization make documents available for an examination of the return form_990 for the year ending december 20xx letters have been mailed out on february 20xx february 20xx and march by certified mail agent made several attempts over telephone to talk to the officers of the organization with no success exempt_organization failed to respond to the internal_revenue_service correspondence or telephone calls law sec_6001 provides that every person liable for any_tax imposed by the irc or for the collection thereof shall keep adequate_records as the secretary_of_the_treasury or_his_delegate may from time to time prescribe sec_6033 provides except as provided in sec_6033 every organization exempt from tax under sec_501 a shall file an annual return stating specifically the items of gross_income receipts and disbursements and such other information for the purposes of carrying out the internal revenue laws as the secretary may by forms or regulations prescribe and keep such records render under oath such statements make such other returns and comply with such rules and regulations as the secretary may from time to time prescribe sec_1_6001-1 in conjunction with sec_1_6001-1 provides that every organization exempt from tax under sec_501 and subject_to the tax imposed by sec_511 on its unrelated_business_income must keep such permanent books or accounts or records including inventories as are sufficient to establish the amount of gross_income deduction credits or other matters required to be shown by such person in any return of such tax such organization shall also keep such books_and_records as are required to substantiate the information required by sec_6033 form 886-a rev department of the treasury - internal_revenue_service page -1- department of the treasury - internal_revenue_service explanation of items form 886a name of taxpayer org issue - organization not responding to document request by the irs schedule no or exhibit year period ended december 20xx legend org organization name xx date sec_1_6001-1 states that the books_or_records required by this section shall be kept at all times available for inspection by authorized internal revenue officers or employees and shall be retained as long as the contents thereof may be material in the administration of any internal revenue law sec_1_6033-2 provides that every organization which has established its right to exemption from tax whether or not it is required to file an annual return of information shall submit such additional information as may be required by the district_director for the purpose of enabling him to inquire further into its exempt status and to administer the provisions of subchapter_f sec_501 and the following chapter of the code and sec_6033 revrul_59_95 1959_1_cb_627 concerns an exempt_organization that was requested to produce a financial statement and statement of its operations for a certain year however its records were so incomplete that the organization was unable to furnish such statements the service held that the failure or inability to file the required information_return or otherwise to comply with the provisions of sec_6033 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 exempt status in accordance with the above cited provisions of the code and regulations under sec_6001 and sec_6033 organizations recognized as exempt from federal_income_tax must meet certain reporting requirements these requirements relate to the filing of a complete and accurate annual information and other required federal tax forms and the retention of records sufficient to determine whether such entity is operated for the purposes for which it was granted tax-exempt status and to determine its liability for any unrelated_business_income_tax taxpayer’s position government’s position based on the above cited law it is the government’s position that the exempt_organization has failed to meet its reporting requirements as such the tax exempt status of the same should be withdrawn form 886-a rev department of the treasury - internal_revenue_service page -2- form_8 a department of the treasury - internal_revenue_service explanation of items name of taxpayer org issue - organization not responding to document request by the irs schedule no or exhibit year period ended december 20xx legend org organization name xx date conclusion it is the irs's position that the organization failed to meet the reporting requirements under sec_6001 and sec_6033 to be recognized as exempt from federal_income_tax under sec_501 accordingly the organization's exempt status is revoked effective january 20xx form_1120 returns should be filed for the tax periods ending on or after december 20xx form 886-a rev department of the treasury - internal_revenue_service page -3-


t c memo united_states tax_court nicholas m romer petitioner v commissioner of internal revenue respondent docket no filed date howard s kleyman for petitioner tracy a martinez and jonathan decatorsmith for respondent memorandum opinion dinan special_trial_judge this case was heard pursuant to the provisions of sec_7443a and rule sec_180 sec_181 and sec_182 unless otherwise indicated all section references are to the internal_revenue_code in effect for the taxable_year in issue all rule references are to the tax_court rules of continued respondent determined a deficiency in petitioner's federal_income_tax for in the amount of dollar_figure the issues for decision are whether petitioner is entitled to exclude from gross_income certain per_diem payments which he received during whether petitioner's horse selling and leasing activity was an activity_not_engaged_in_for_profit within the meaning of sec_183 whether certain expenses paid_by petitioner in connection with his aviation activity are deductible as ordinary and necessary business_expenses and whether petitioner is entitled to schedule a itemized_deductions which exceed his claimed standard_deduction some of the facts have been stipulated and are so found the stipulations of fact and attached exhibits are incorporated herein by this reference petitioner claimed he resided in antioch tennessee on the date the petition was filed in this case petitioner has been a certified_public_accountant since he founded an accounting firm in minneapolis minnesota in which sometime prior to was incorporated under the laws of minnesota as a professional_corporation called romer company p c romer during petitioner was an 8-percent shareholder and the president of romer derf bistodeau romer's vice president owned the remaining percent of romer's shares continued practice and procedure prior to petitioner resided pincite pillsbury avenue in minneapolis and worked as an accountant out of romer's office in minneapolis in date he began working as a pilot for american airlines inc in nashville tennessee he established his residence in antioch tennessee located near nashville shortly after he began working as a pilot he took steps to sell his former residence in minneapolis including the execution of a sales contract in date respondent's criminal_investigation_division cid initiated an investigation into romer's return preparation practice and seized all of romer's clients' files with the height of the tax season approaching and their files in cid's possession petitioner and mr bistodeau were not certain that romer would survive the year after considering the severity of the situation it was agreed that petitioner would begin to regularly travel to minneapolis from nashville to help romer represent itself in the investigation and to reassure its clients it was also agreed that petitioner would not be paid any salary for his services until after it was determined that romer would survive respondent's investigation it was arranged however for petitioner to be reimbursed for his traveling expenses_incurred in connection with working for romer in minneapolis at the federal standard per_diem rate for lodging meals and incidental_expenses of dollar_figure per day at that time petitioner also abandoned the sale of his former minneapolis residence he eventually sold the residence to a different buyer in as a result of the foregoing events petitioner divided his time during between nashville and minneapolis he reduced his pilot rank from captain to first officer co-pilot and took a reduction in salary which enabled him to travel more easily to minneapolis his regular flight schedule during involved a short flight from nashville to paducah kentucky in the evening staying overnight in paducah at the airline's expense and a short flight back to nashville the following morning he would repeat this round trip to and from paducah three evenings and three mornings in a row on the last morning of his weekly flight schedule petitioner would take a 3-hour flight to minneapolis where he would work for or days for romer during his spare time in tennessee petitioner spent a few hours per week training a horse he had played polo as a hobby for many years prior to his relocation to nashville and believed that several wealthy polo players in the nashville area would be willing to pay at least dollar_figure for a properly trained horse petitioner had a horse shipped to nashville from minnesota in date he did not attempt to train this horse but he did lease it to other individuals in date he purchased a second horse for dollar_figure which he attempted to train as a polo horse this horse did not prove to have the athletic ability required to present it for sale petitioner's records show that he abandoned the activity in date he has not leased or trained any horses since that time the first issue for decision is whether petitioner is entitled to exclude from his gross_income the per_diem payments that he received from romer during petitioner submitted three invoices to romer on which he claimed that he worked in minnesota for four days in mid-date and 2-l days per week for the following weeks for a total of days for the year romer issued three checks to him during in the total amount of dollar_figure petitioner did not report the dollar_figure on his return in the statutory_notice_of_deficiency respondent determined that the payments must be included in gross_income sec_61 includes in gross_income all income from whatever source derived 348_us_426 however sec_1_62-2 income_tax regs provides amounts treated as paid under an accountable_plan are excluded from the employee's gross_income are not reported as wages or other compensation on the employee's form_w-2 and are exempt from the withholding and payment of employment_taxes fica futa rrta rurt and income_tax sec_1_62-2 income_tax regs provides that in order for amounts paid under an arrangement to be treated as paid under an accountable_plan the arrangement must satisfy a business connection requirement a substantiation requirement and a return of excess requirement sec_1_62-2 d - f income_tax regs if an arrangement meets these three requirements all amounts paid under the arrangement are in general treated as paid under an accountable_plan and are excluded from the employee's gross_income respondent conceded on brief that petitioner was an employee of romer during respondent argues however that the arrangement does not satisfy the business connection and the substantiation requirements set out in sec_1_62-2 income_tax regs and sec_1_62-2 income_tax regs respectively business connection requirement sec_1_62-2 income_tax regs provides that an arrangement satisfies the business connection requirement if it provides advances allowances including per_diem allowances or reimbursements only for business_expenses that are allowable as deductions by part vi sec_161 and the following subchapter_b chapter of the code and that are paid_or_incurred by the employee in_connection_with_the_performance_of_services as an employee of the employer sec_162 allows a deduction for the ordinary and necessary expenses paid_or_incurred during the taxable_year in carrying_on_a_trade_or_business including the trade_or_business of being an employee 326_us_465 sec_162 allows a deduction for traveling expenses if the expenses are ordinary and necessary paid_or_incurred while away from home and paid_or_incurred in pursuit of a trade_or_business 67_tc_824 the purpose behind the deduction for expenses paid_or_incurred while a taxpayer is away from home is to ease the burden on the taxpayer who incurs additional and duplicate living_expenses 438_f2d_905 2d cir 55_tc_783 based on the record we find that the arrangement in issue meets the business connection requirement the arrangement provided a per_diem_allowance for petitioner's ordinary and necessary traveling expenses_incurred while away from his tennessee residence which are allowed as a deduction under sec_162 the amounts paid under the arrangement were directly connected to petitioner's trade_or_business as romer's employee because he received the per_diem_allowance only for the days on which he worked for romer in minneapolis substantiation requirement sec_1_62-2 income_tax regs provides that an arrangement satisfies the substantiation requirement if it requires each business_expense to be substantiated to the employer within a reasonable period of time in the case of business_expenses governed by sec_274 sec_1 e income_tax regs provides that an arrangement meets the substantiation requirement if information sufficient to satisfy the substantiation requirements of sec_274 and the regulations thereunder is submitted to the employer sec_274 provides that no deduction is allowable under sec_162 or sec_212 for any traveling expenses including meals_and_lodging while away from home unless the taxpayer complies with strict substantiation rules in particular the taxpayer must substantiate the amount time place and business_purpose of the expenses by adequate_records or by sufficient evidence corroborating his own statement sec_274 sec_1_274-5t c temporary income_tax regs fed reg date pursuant to his authority provided for in sec_1 d -1 income_tax regs the commissioner issued revproc_92_17 1992_1_cb_679 and revproc_93_21 1993_1_cb_529 which provide rules under which the amount of ordinary and necessary business_expenses of an employee for lodging meal and or incidental_expenses will be deemed substantiated when an employer provides a per_diem_allowance under a reimbursement or other expenses allowance arrangement to pay for such expenses section dollar_figure of each of the revenue procedures defines a per_diem_allowance as a payment under a reimbursement or other expense allowance arrangement that meets the requirements specified in sec_1_62-2 of the regulations and that is paid with respect to ordinary and necessary business_expenses incurred or which the employer reasonably anticipates will be incurred by an employee for lodging meal and or incidental_expenses for travel away from home in_connection_with_the_performance_of_services as an employee of the employer reasonably calculated not to exceed the amount of the expenses or the anticipated expenses and paid at the applicable federal per_diem rate a flat rate or stated schedule or in accordance with any other service- specified rate or schedule rev_proc c b pincite revproc_92_17 c b pincite we find that the arrangement in this case meets the definition of per_diem_allowance provided in the commissioner's revenue procedures it was reasonable for romer to anticipate that petitioner would incur lodging meal and incidental_expenses as its employee while he was away from his tennessee residence it was also reasonable for romer to estimate that the applicable federal per_diem rate for minneapolis would not exceed petitioner's anticipated expenses we find that the amount of petitioner's traveling expenses is deemed substantiated under the per_diem_allowance method with respect to the time place and business_purpose of traveling expenses sec_1_274-5t temporary income_tax regs fed reg date generally provides that a taxpayer must substantiate these elements of an expenditure by adequate_records or by sufficient evidence corroborating his own since the arrangement provides for a per_diem allowance it is treated as satisfying the sec_1_62-2 income_tax regs return of excess requirement for an accountable_plan see sec_1_62-2 income_tax regs statement in addition to petitioner's and mr bistodeau's testimony the record contains a handwritten log of petitioner's activities with respect to respondent's criminal investigation of romer and with respect to romer's clients in addition karen coon a certified_public_accountant who was associated with romer as an independent_contractor testified that petitioner generally worked in the minneapolis office or days each week during she also verified that he posted a monthly schedule in the minneapolis office which showed when he would be working in the office we find that this corroborative evidence is sufficient to establish the time place and business_purpose elements of petitioner's traveling expenses and conclude that the arrangement satisfies the sec_1_62-2 income_tax regs substantiation requirement we have also considered respondent's broad assertion that petitioner and mr bistodeau conspired to label petitioner's compensation from romer as reimbursements under the arrangement in order for petitioner to avoid income_tax_liability and for romer to avoid employment_tax liability on the amount_paid to him during based on our review of the record we find that a bona_fide arrangement existed between petitioner and romer during we reject respondent's conspiracy theory because he offered absolutely no evidence in support of the alleged tax_avoidance scheme we conclude that the amounts paid under the arrangement between petitioner and romer are properly treated as paid under an accountable_plan accordingly we hold that petitioner is entitled to exclude from his gross_income the dollar_figure in per_diem payments which he received from romer during the second issue for decision is whether petitioner's horse selling and leasing activity was an activity_not_engaged_in_for_profit within the meaning of sec_183 on a schedule c attached to his return petitioner reported gross_income from his horse selling and leasing activity in the amount of dollar_figure claimed expenses in the total amount of dollar_figure and claimed a net_loss in the amount of dollar_figure in the statutory_notice_of_deficiency respondent disallowed the net_loss on the ground that the activity was not engaged in for profit sec_183 disallows any deduction attributable to an activity_not_engaged_in_for_profit except as provided in sec_183 for purposes of sec_183 the term activity_not_engaged_in_for_profit means any activity other than one with respect to which deductions are allowable for the taxable_year under sec_162 or under paragraph or of sec_212 sec_183 sec_162 provides for the deduction of all ordinary and necessary expenses paid_or_incurred during the taxable_year in carrying on any trade_or_business where an activity does not constitute a trade_or_business sec_212 allows as a deduction all the ordinary and necessary expenses paid_or_incurred during the taxable_year for the production_or_collection_of_income or the management_conservation_or_maintenance_of_property_held_for_the_production_of_income sec_212 and whether a taxpayer engaged in an activity with the objective of making a profit is a question of fact 78_tc_642 affd without opinion 702_f2d_1205 d c cir sec_1_183-2 income_tax regs while a reasonable expectation of profit is not required the taxpayer's profit objective must be bona_fide 88_tc_464 in making this determination the court gives more weight to objective facts than to a taxpayer's mere statement of intent dreicer v commissioner supra pincite sec_1_183-2 income_tax regs sec_1_183-2 income_tax regs provides a nonexclusive list of factors to be considered in deciding whether an activity is engaged in for profit these factors include the manner in which the taxpayer carried on the activity the expertise of the taxpayer or his advisers the time and effort expended by the taxpayer in carrying on the activity the expectation that the assets used in the activity may appreciate in value the success of the taxpayer in carrying on other similar or dissimilar activities the taxpayer's history of income or losses with respect to the activity the amount of occasional profits if any which are earned the financial status of the taxpayer and whether elements of personal pleasure or recreation are involved after considering the above factors we find that petitioner has not proved that he was engaged in his horse selling and leasing activity with the requisite profit objective necessary to support deductions under sec_162 or sec_212 and we are not convinced that petitioner's experience in training horses ever involved more than his use of them for his own personal recreation he admits that he spent only a few hours each week on this activity and that part of this time was spent demonstrating his competence as a polo player to the members of the nashville polo club although he testified that his intention was to make a profit by selling horses we find that the objective facts in this case show that he never made the kind of commitment to the activity that would have given him a reasonable chance to make a profit we hold that petitioner is not entitled to a business loss deduction with respect to his horse selling and leasing activity respondent's determination on this issue is sustained the third issue for decision is whether expenses paid_by petitioner in connection with his aviation activity are deductible as ordinary and necessary business_expenses on a single schedule c attached to his return petitioner labeled his various aviation activities other than his piloting for american eagle as pilot flight instructor antique aircraft expert a c dealer he reported gross_receipts in the amount of dollar_figure and claimed the following expenses car truck expenses dollar_figure legal professional services big_number rent travel dues subscription sec_25 books total dollar_figure respondent concedes that petitioner has substantiated all of the claimed expenses but did not allow deductions for the car and truck expenses rent travel and dues and subscriptions respondent's position is that the disallowed expenses are nondeductible personal expenses which are not related to the gross_receipts reported on the schedule c petitioner admits that the dollar_figure which he reported on the schedule c was received by him for commercial flying services which he performed for a company called hills-gilbertson prior to he also admits that the disallowed expenses were not related to the services he provided to hills-gilbertson the disallowed expenses were related however to petitioner's involvement with an organization called confederate air force inc caf which is dedicated to the preservation of world war ii combat aircraft based on the record we find that his involvement with caf during did not constitute the type of activity that entitles him to deductions for his claimed expenses under sec_162 or sec_212 furthermore we reject his alternate argument that the disallowed expenses are deductible as charitable_contributions we are not convinced that his activity benefited caf in any way the record does not show that he participated in any of caf's air shows rather the record shows that during petitioner was paying caf for his use of its aircraft in order to learn how to fly world war ii planes we conclude that these expenses were personal in nature and are not deductible pursuant to sec_262 we sustain respondent's determination on this issue the fourth issue for decision is whether petitioner is entitled to schedule a itemized_deductions which exceed his claimed standard_deduction for petitioner prepared his own return for and claimed a standard_deduction in the amount of dollar_figure as an individual with a filing_status of single petitioner now contends that he is entitled to itemized_deductions in the total amount of dollar_figure after carefully reviewing the record we find that petitioner is entitled to the following itemized_deductions minnesota individual income taxes real_estate_taxes personal_property_taxes total taxes paid dollar_figure big_number dollar_figure computer donated to caf dollar_figure sponsorship of caf's miss mitchell total gifts to charity total itemized_deductions big_number dollar_figure although we also find that petitioner paid for certain deductible employee business_expenses in connection with his position at american airlines inc the total amount of such deductible expenses does not exceed percent of his adjusted_gross_income as determined in accordance with our holdings on the other issues in this case therefore petitioner is not entitled to a deduction for such expenses sec_67 accordingly we hold that petitioner is entitled to itemized_deductions for in the total amount of dollar_figure to reflect the foregoing decision will be entered under rule