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 b01 - plr-121599-05 date january --------------------- -------------------------- ------------------------------------------------- legend x ------------------------------------------------------------ country date ------------------ dear --------------- this letter responds to the letter dated date and related correspondence written on behalf of x requesting a ruling that it be granted an extension of time pursuant to sec_301_9100-3 of the procedure and administration regulations in which to elect to be treated as a partnership for federal tax purposes under sec_301_7701-3 facts according to the information submitted x was validly formed under country law on date x represents that as of date x was eligible to make an election under sec_301_7701-3 to be a partnership for federal income purposes however the form_8832 entity classification election inadvertently was not timely filed law and analysis sec_301_7701-3 provides that a business_entity not classified as a corporation under sec_301_7701-2 or an eligible_entity can elect its classification for federal tax purposes sec_301_7701-3 provides that plr-121599-05 except as provided in sec_301_7701-3 unless the entity elects otherwise a foreign eligible_entity is classified as a partnership if it has two or more members and at least one member does not have limited_liability an association if all members have limited_liability or disregarded as an entity separate from its owner if it has a single owner that does not have limited_liability sec_301_7701-3 provides that an eligible_entity may elect to be classified other than as provided under sec_301 b by filing form_8832 entity classification election with the appropriate service_center under sec_301_7701-3 this election will be effective on the date specified by the entity on form_8832 or on the date filed if no such date is specified the date specified on form_8832 cannot be more than days prior to the date on which the election is filed under sec_301_9100-1 the commissioner may grant a reasonable extension of time to make a regulatory election or a statutory election but no more than six months except in the case of a taxpayer who is abroad under all subtitles of the code except subtitles e g h and i sec_301_9100-1 through provide the standards the commissioner will use to determine whether to grant an extension of time to make an election sec_301_9100-2 provides automatic_extension of time for making certain elections sec_301_9100-3 provides extensions of time for making elections that do not meet the requirements of sec_301_9100-2 requests for relief under sec_301_9100-3 will be granted when the taxpayer provides evidence to establish that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government conclusion based solely on the facts submitted and the representations made we conclude that x has satisfied the requirements of sec_301_9100-3 as a result x is granted an extension of time of sixty days from the date of this letter to file a properly executed form_8832 with the appropriate service_center to elect to be treated as a partnership for federal tax purposes effective date a copy of this letter should be attached to the election a copies is enclosed for that purpose except as specifically set forth above we express no opinion concerning the federal tax consequences of the above described facts under any other provision of the code this ruling is directed only to the taxpayer who requested it sec_6110 provides that it may not be used or cited as precedent plr-121599-05 pursuant to a power_of_attorney on file with this office a copy of this letter is being forwarded to the taxpayer’s authorized representative heather maloy sincerely heather maloy associate chief_counsel passthroughs and special industries enclosures cc copy of this letter copy for sec_6110 purposes


internal_revenue_service number release date index number - ------------------------------------------------- --------------------------- ------------------------------------------ ---------------------- ------------------------------- - department of the treasury washington dc third party communication none date of communication not applicable_person to contact ----------------------- id no ------------- telephone number --------------------- refer reply to cc tege eoeg teb presp-148289-06 date date dear ------------- this letter is in response to your application_for an allocation of authority to issue dollar_figure------- ----------------- in clean renewable energy bonds crebs under sec_54 of the internal_revenue_code the code pursuant to sec_54 of the internal_revenue_code the code and notice_2005_98 2005_52_irb_1211 and after review of your application submitted on date including supplements thereto we have determined that the projects described in appendix a attached hereto are qualified for purposes of sec_54 and will be owned by one or more qualified borrowers we allocate authority to ----------------------------------- ------------------- the issuer a qualified issuer under sec_54 to issue up to dollar_figure------------ ----------------- of clean renewable energy bonds crebs bonds issued pursuant to this allocation must be designated by the issuer as bonds for purposes of sec_54 for the projects described in appendix a up to the amount allocated for each project described in appendix a bonds so designated must be issued on or before date please be aware that in order for bonds to be crebs the applicable_requirements of the code including without limitation sec_54 notice_2005_98 and notice_2006_7 2006_10_irb_559 must be met please note that creb proceeds may be used to reimburse capital expenditures paid_by qualified borrowers for qualified projects only if the provisions of sec_54 are met sec_54 of the code imposes a limitation of dollar_figure on the amount of crebs which may be issued to finance qualified projects the limitation sec_54 provides that the limitation is to be allocated by the secretary of treasury in such manner as the secretary deems appropriate except that no more than presp-148289-06 dollar_figure of the limitation may be allocated to finance qualified projects of qualified borrowers which are governmental bodies section of notice_2005_98 2005_52_irb_1211 provides that the limitation will be allocated among qualified projects for which a share of such limitation has been requested beginning with the project s requesting the smallest share in dollar amount and continuing with the project s requesting the next-smallest share until the total limitation has been exhausted however in the event that dollar_figure has been allocated to qualified projects of qualified borrowers that are governmental bodies the remaining shares of the limitation will be allocated under the methodology described in the previous sentence only to qualified projects of qualified borrowers that are not governmental bodies for purposes of allocating the limitation among projects all qualified projects located at the same site and owned by the same qualified_borrower are treated as a single project and each project is treated as requesting a single allocation an allocation of shares of the limitation cannot be made with respect to the project owned by the borrower listed in appendix b because such borrower is a governmental body and dollar_figure has already been allocated to applications requesting a smaller share of the limitation to finance qualified projects owned by qualified borrowers that are governmental bodies we appreciate your submission of the application_for our consideration and encourage you to continue to pursue your plans for constructing clean renewable energy projects if you have any questions with respect to this allocation please contact --------------------- ------------------------------------------------------------------------------------------------------------------- - -------- or -----------------------------of the office of division counsel associate chief_counsel tax-exempt and government entities on --------------------- not a toll-free call except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter for purposes of the renewable_electricity_production_credit under sec_45 of the code no inference may be drawn from this allocation that any project listed in the appendices attached hereto is a qualified_facility or that electricity to be produced at such project s is electricity from a qualified_energy resource at a qualified_facility within the meaning of sec_45 this determination is directed only to the applicant named above sec_6110 of the code provides that it may not be used or cited as precedent a copy of this letter must be attached to any form 8038-g information_return for tax- exempt governmental obligations filed for bonds issued pursuant to this allocation presp-148289-06 the allocation contained in this letter is based upon information and representations submitted by the applicant for the creb allocation and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in support of the application_for an allocation it is subject_to verification on examination sincerely assistant chief_counsel exempt_organizations employment_tax government entities tax exempt government entities by timothy l jones senior counsel tax-exempt_bonds branch presp-148289-06 appendix a borrower name project type project location -------------------------------- -------------------------------- - -------------------------------- -------------------------------- - -------------------------------- -------------------------------- - -------------------------------- -------------------------------- - -------------------------------- -------------------------------- - -------------------------------- -------------------------------- - -------------------------------- -------------------------------- - -------------------------------- -------------------------------- - -------------------------------- -------------------------------- - -------------------------------- -------------------------------- - total solar_energy_facility solar_energy_facility solar_energy_facility solar_energy_facility solar_energy_facility solar_energy_facility solar_energy_facility solar_energy_facility solar_energy_facility solar_energy_facility -------------------------------- ---------- -------------------------------- -------------------- -------------------------------- ------- -------------------------------- ------- -------------------------------- -------------------- -------------------------------- ------------------ -------------------------------- ---------- -------------------------------- -------------- -------------------------------- -------------------- -------------------------------- ---------- amount allocated ------------- ------------- ------------- ------------- ------------- --------------- --------------- --------------- --------------- --------------- ----------------- presp-148289-06 borrower name appendix b project type project location ------------------------------- -------------------- solar_energy_facility -------------------------------- -------------------------------- ----------------- ---------------------------------- amount requested --------------- ------------------------------------------------ ------------------------------------------------- -------------------------- -------------------------------------------- ---------------------------


third party communication none date of communication not applicable office_of_chief_counsel internal_revenue_service memorandum number release date cc corp b06 grjohnson postu-102445-15 uilc date date to associate area_counsel miami large business international attn timothy l smith from george r johnson general attorney branch corporate subject treatment of series of transfers this chief_counsel_advice responds to your request for assistance dated date this advice may not be used or cited as precedent this is in response to your request for advice regarding whether a series of transfers of funds by multiple related entities should be respected for federal_income_tax purposes this advice may not be used or cited as precedent in one series of transfers in form i a foreign_corporation fc1 wholly-owned by a u s_corporation parent loaned funds to another foreign_corporation fc2 which in turn was wholly-owned by a u s subsidiary of parent ussub ii fc2 distributed those funds to ussub and iii ussub distributed those funds to parent no reference is made to any disregarded entities based on the facts the series of transfers may be treated as a transfer of the funds by fc1 to parent based on substance-over-form principles we do not have any other recommendations or arguments at this time this writing may contain privileged information any unauthorized disclosure of this writing may undermine our ability to protect the privileged information if disclosure is determined to be necessary please contact this office for our views postu-102445-15 please call ----------------------- at --------------------- if you have any further questions _____________________________ thomas i russell branch chief branch corporate


internal_revenue_service number release date index number ------------------------------------------------ --------------------------------------------- ---------------------------------------------------- ---------------------- -------------------------------- -------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ------------------- id no ------------- telephone number --------------------- refer reply to cc psi plr-121884-09 date date --------------------------------------------- x -------------------------------------------------- country --------------------- -------------------------- date dear ------------------ this responds to a letter dated date submitted on behalf of x requesting that the service grant x an extension of time under sec_301_9100-3 of the procedure and administration regulations to make an entity classification election the information submitted states that x was formed under the laws of country x represents that x is a foreign_entity eligible to be treated as a disregarded_entity but that it failed to timely file form_8832 entity classification election sec_301_7701-3 provides that a business_entity that is not classified as a corporation under sec_301_7701-2 or an eligible_entity can elect its classification for federal tax purposes a business_entity is any entity recognized for federal tax purposes that is not properly classified as a_trust under sec_301_7701-4 or otherwise subject_to special treatment under the internal_revenue_code sec_301_7701-3 provides guidance on the classification of a foreign_entity for federal_income_tax purposes generally a foreign eligible_entity is treated as an association_taxable_as_a_corporation if all members have limited_liability unless the entity makes an election to be treated otherwise if the foreign eligible_entity has only one owner it may elect to be treated as a disregarded_entity pursuant to the rules in sec_301_7701-3 plr-121884-09 sec_301_7701-3 provides that to elect to be classified other than as provided in sec_301_7701-3 an eligible_entity must file form_8832 with the designated service_center and that an entity classification election must be filed on form_8832 and can be effective up to seventy-five days prior to the date the form is filed or up to twelve months after the date on which the form is filed sec_301_9100-1 provides that the commissioner may grant a reasonable extension of time to make a regulatory election or a statutory election but no more than months except in the case of a taxpayer who is abroad under all subtitles of the internal_revenue_code except subtitles e g h and i sec_301_9100-1 defines the term regulatory election as an election whose due_date is prescribed by a regulation published in the federal_register or a revenue_ruling revenue_procedure notice or announcement published in the internal_revenue_bulletin sec_301_9100-1 through provide the standards the commissioner will use to determine whether to grant an extension of time to make the election sec_301_9100-2 provides the rules governing automatic extensions of time for making certain elections sec_301_9100-3 provides the standards the commissioner will use to determine whether to grant an extension of time for regulatory elections that do not meet the requirements of sec_301_9100-2 under sec_301_9100-3 a request for relief will be granted when the taxpayer provides evidence to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and granting relief will not prejudice the interests of the government based solely on the information submitted and representations made we conclude that the requirements of sec_301_9100-3 have been satisfied as a result x is granted an extension of time of days from the date of this letter to file a form_8832 with the appropriate service_center and elect to be treated as a disregarded_entity effective date a copy of this letter should be attached to the form_8832 a copy is enclosed for that purpose except as expressly provided herein we express or imply no opinion concerning the federal tax consequences of any aspect of any transaction or item discussed or referenced in this letter 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 plr-121884-09 in accordance with a power_of_attorney on file with this office a copy of this letter is being sent to x’s authorized representative sincerely curt g wilson associate chief_counsel office_of_chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes cc


t c memo united_states tax_court larry charles miller petitioner v commissioner of internal revenue respondent docket nos filed date larry charles miller pro_se michael d baker for respondent memorandum opinion ruwe judge in these consolidated cases respondent determined deficiencies in petitioner's federal income taxes and accuracy-related_penalties as follows accuracy--related penalty docket no year deficiency sec_6662 a dollar_figure dollar_figure big_number big_number after concessions ’ the issues for decision are whether petitioner is entitled to various deductions claimed on schedule c in and whether petitioner is entitled to claim a schedule a deduction of dollar_figure in and whether petitioner is liable for the accuracy-related_penalty under sec_6662 for the taxable years and some of the facts have been stipulated and are so found the stipulation of facts and attached exhibits are incorporated herein by this reference petitioner resided in philadelphia pennsylvania at the time he filed his petition ‘initially respondent disallowed dollar_figure and dollar_figure in schedule c deductions due to lack of substantiation for the tax years and respectively see appendix a the parties have agreed on the amount of certain of these deductions in their stipulation respondent now agrees that petitioner substantiated dollar_figure and dollar_figure of the schedule c deductions for and respectively see appendix b petitioner concedes that he received interest_income of dollar_figure from minnesota mutual life_insurance co in none of which was reported on his tax_return additionally the parties agree that petitioner can deduct dollar_figure under schedule a for charitable donations made in not dollar_figure under schedule c as initially claimed and disallowed finally the parties agree that petitioner is entitled to claim the following schedule a itemized_deductions dollar_figure for state taxes and dollar_figure for charitable_contributions unless otherwise indicated all section references are to the internal_revenue_code in effect for the years at issue and all rule references are to the tax_court rules_of_practice and procedure stipulation no incorrectly indicates that exhibits 43-j through 68-j which are copies of of petitioner's checks totaled dollar_figure the total amount is dollar_figure background during and petitioner was engaged in the practice of law petitioner operated two law offices that were located pincite spruce street philadelphia pennsylvania and westfield avenue pennsauken new jersey petitioner reported and gross_receipts and expenses associated with his law practice on schedules c on his schedule c petitioner reported gross_receipts of dollar_figure and deductions of dollar_figure on his schedule c petitioner reported gross_receipts of dollar_figure and expenses of dollar_figure in august of petitioner was notified that these cases were set for the trial session starting on date the notice contained the standing pre-trial order requiring petitioner to exchange documents expected to be utilized at trial with respondent at least days prior to the first day of the trial session notwithstanding those explicit instructions petitioner neglected to timely present all such documents as a result we excluded certain documents from evidence for convenience we will combine the facts regarding each issue with our opinion discussion deductions are a matter of legislative grace and the burden of showing the right to deductions is on the taxpayer see rule a 503_us_79 a schedule c deductions the schedule c deductions that remain in issue fall into four broad categories office expenses meals and entertainment repairs and maintenance and parking tolls office expenses total office expense deductions at issue are dollar_figure for and dollar_figure for and fall into two broad categories a office expense deductions allegedly taken to offset improperly reported income items and b other office expenses a office expense deductions allegedly taken to offset improperly reported income items the first issue is whether petitioner can deduct dollar_figure and dollar_figure in office expense deductions allegedly taken to offset improperly reported income items in and respectively petitioner argues that he included nontaxable items in gross_receipts and then deducted the same amount on schedule c as an office expense because the items included in income were nontaxable from this we conclude that petitioner acknowledges that he did not really have dollar_figure and dollar_figure in office expenditures as he claimed on his returns and that his claimed office expense deductions were false according to petitioner the sources of nontaxable items that he included in his gross_receipts are dollar_figure in life_insurance_proceeds from cigna dollar_figure in life_insurance_proceeds from minnesota life_insurance and dollar_figure in loan proceeds from sinh hang additionally petitioner asserts that the sources of nontaxable items that he included in his gross_receipts are petitioner produced a copy of a death certificate for ms aretha payne and a life_insurance certificate schedule issued by the life_insurance co of north america reflecting a policy limit of dollar_figure on the life of aretha payne petitioner testified that upon the death of his mother he and his three siblings shared the proceeds from the dollar_figure policy equally however the life_insurance certificate does not indicate who benefits under the policy petitioner testified that he received dollar_figure from minnesota life_insurance ‘petitioner produced a copy of a loan agreement for dollar_figure dated date the loan agreement consists of a one-page unnotarized document between petitioner and one of his clients sinh hang while the agreement does indicate a willingness on the part of mr hang to lend petitioner dollar_figure in it does not demonstrate that petitioner received dollar_figure in loan proceeds petitioner did not provide a deposit slip or bank statement nor did he provide a cash receipts journal entry reflecting that the loan if received was included in gross_receipts dollar_figure in auto insurance proceeds from state farm insurance’ and dollar_figure in loan repayment proceeds from his sister petitioner has not convinced us that he reported nontaxable items in gross_receipts petitioner testified that he kept a cash receipts journal and bank statements to determine his gross_receipts petitioner did not provide a copy of his cash receipts journal or any bank statements to show that nontaxable items were in fact included in his gross_receipts furthermore petitioner is a tax lawyer’ who testified that he knows that some items particularly repayment of loans are not includable in gross_income in light of petitioner's knowledge of the tax laws and his experience in preparing tax returns we do not find his explanation credible therefore on the basis of this record we ‘petitioner produced a check drawn on his account payable to lumpkins in the amount of dollar_figure the check contained a notation indicating that it was for car repair state farm petitioner testified that he received dollar_figure from state farm insurance and then paid lumpkins an auto repair shop the exact same amount however petitioner did not provide a copy of the draft from state farm insurance ‘petitioner provided a check payable to larry miller attorney--at--law for dollar_figure with the notation that in part indicated that it was for repayment of loan the check was drawn on the high fashions' account in memphis tennessee petitioner testified that his sister issued the check petitioner testified that he has been practicing law since and as part of his practice he prepares tax returns including form sec_1040 with schedules c - find that petitioner has not proven that he is entitled to the dollar_figure and dollar_figure in office expense deductions b other office expenses other office expenses consist of deductions taken for lt storage_facility expenses ii the purchase of oriental rugs and art and iii language lessons i storage facilities petitioner claimed storage_facility expenses of dollar_figure in and dollar_figure in petitioner testified that in he closed an office at ventnor new jersey and then stored the office furniture at access storage ’ to substantiate his deductions petitioner provided copies of checks totaling dollar_figure ' in and dollar_figure' in the checks were drawn on the checking account that petitioner maintains for his law practice larry charles miller attorney at law however petitioner also testified that in the middle of he moved to a new house and that he also paid household expenses and personal expenses such as credit card debts and automobile expenses from the same the deductions in and allegedly relate to the same office closing ‘this amount consists of one check payable to access black horse for dollar_figure and two additional checks payable to black horse self storage for dollar_figure and dollar_figure this amount consists of checks payable to black horse storage and black horse pike storage for dollar_figure and dollar_figure respectively --- - checking account in fact other than an escrow account petitioner did not maintain any other checking account assuming that all the checks in fact relate to storage expenses we have only petitioner’s uncorroborated testimony that the expenses were incurred in carrying_on_a_trade_or_business as opposed to personal expenses_incurred in anticipation of and during his change_of personal_residence petitioner testified that he was requested to provide respondent with information that would serve to substantiate his claimed office expenses however petitioner also testified that he did not attempt to contact black horse self storage to secure any documentation even though he signed a lease agreement with the storage_facility company based on this record petitioner has not met his burden and established his entitlement to these claimed deductions ii oriental rugs and art the third office expense at issue relates to items allegedly purchased by petitioner in petitioner testified that he purchased three used oriental rugs for dollar_figure and art for dollar_figure and then placed these items in his pennsauken new jersey and philadelphia pennsylvania offices petitioner produced copies of two checks one payable to togar inc for dollar_figure and one payable to lucien crup for dollar_figure neither check contained a notation regarding its intended purpose --- - petitioner has not proven that these items were purchased and used in his place of business as opposed to the new home that he purchased in the same year petitioner did not provide any invoices which might have confirmed that togar inc sells oriental rugs and that lucien crup sells artwork and shown a delivery address or the address of petitioner’s offices given petitioner’s experience as a tax attorney and the amount of the deduction at issue we would have expected petitioner to have such evidence petitioner has not proven that he is entitled to the claimed deduction ’ iii language lessons the final office expense at issue is a claimed deduction of dollar_figure in for language lessons petitioner testified that more than percent of his clients are asian and as a result he took lessons on chinese specifically cantonese and mandarin to substantiate petitioner's claim he provided copies of three checks issued to fang huang petitioner’s creditablity is suspect in light of the other explanations he has provided petitioner has not proven that he is entitled to this deduction swe note that even if the expenses were substantiated they appear to be capital in nature -- - meals and entertainment the next issue is whether petitioner can deduct meals and entertainment_expenses of dollar_figure in and dollar_figure in petitioner argues on brief that he failed to produce adequate_records to substantiate his expenses because the records were lost in the process of closing an office and moving to another one ’ sec_162 allows a deduction for all ordinary and necessary expenses paid_or_incurred in carrying_on_a_trade_or_business however no deduction is allowed under sec_162 with respect to any traveling expense including meals while away from home or for any entertainment_expenses unless the taxpayer meets strict substantiation regquirements see sec_274 sec_1_274-5t and c temporary income_tax regs fed reg date sec_274 provides that no deduction will be allowed for any traveling expense or for any activity which is generally considered to constitute mpetitioner deducted dollar_figure in and dollar_figure in and respondent disallowed both deductions in order to substantiate his deductions petitioner submitted checks drawn in and totaling dollar_figure and dollar_figure respectively ‘petitioner testified that he was unable to provide receipts for the expenses because they were lost in the process of closing an office and moving to another office petitioner testified that he moved his office in l6see sec_274 entertainment ’ unless the taxpayer maintained records sufficient to establish the amount of each expense the time and place of the activity the business_purpose of the activity and the business relationship of the person entertained to the taxpayer where the taxpayer establishes that the failure to produce adequate_records is due to the loss of such records through circumstances beyond the taxpayer's control such as destruction by fire flood earthquake or other_casualty the taxpayer shall have the right to substantiate a deduction by reasonable reconstruction of his expenditures see sec_1_274-5 income_tax regs the loss of records in connection with a move is not a casualty beyond the taxpayer's control see 65_tc_342 see also olivares v commissioner tcmemo_1983_649 even if the court were to view the loss of petitioner's records as a casualty petitioner has failed to fulfill the additional requirement of reasonably reconstructing records in an effort to reconstruct his records petitioner provided copies of several checks payable to diners club citibank mbna american express and one check payable to claire bixby most see sec_274 but not all of the checks contained a notation indicating that they were for either travel entertainment or travel and entertainment however petitioner did not provide any information regarding the amount of each expense the time and place of each activity the business_purpose of the activity or petitioner’s business relationship to the person entertained petitioner did not produce copies of the receipts and or monthly account statements from diners club citibank mbna or american express rather petitioner simply asserts that it would have been impossible to reconstruct his meals and entertainment_expenses without receipts we sustain respondent's disallowance of these deductions repairs and maintenance petitioner claims repair and maintenance_expenses of dollar_figure in and dollar_figure in petitioner testified that his office incurred water damage and in order to minimize the cost '8the checks in totaled dollar_figure while petitioner reported total travel meals and entertainment_expenses of dollar_figure before application of the limit on meals and entertainment_expenses under sec_274 additionally the checks in totaled dollar_figure while petitioner reported total travel meals and entertainment_expenses of dollar_figure before application of the limit on meals and entertainment_expenses under sec_274 petitioner offered no explanation for the difference in the amounts reported and the checks provided to substantiate his expenses - - of repairs he purchased the materials himself and hired individuals to provide the labor to substantiate the deduction for petitioner provided copies of two checks one check was for dollar_figure and payable to an individual while the other check was for dollar_figure and payable to a building and supply store to substantiate his deductions for petitioner provided copies of checks totaling dollar_figure all payable to businesses such as hechinger home depot and providence lighting all of these businesses sell goods which can be used to repair or renovate an office or a personal_residence all the checks were drawn on the same checking account that petitioner used to pay personal and business_expenses none of the checks contained any notations identifying their intended purpose and petitioner did not provide any invoices from the persons who did the repair work in the case of taxable_year petitioner did not indicate what his cost of labor was or provide a check payable to a contractor or individual for the repair work allegedly done in short we cannot tell from the record whether petitioner bought several fixtures for his new home or whether he in fact repaired one of his offices petitioner has not met his burden petitioner testified that he had some renovation work done on his pennsauken new jersey office in of proving that he is entitled to the claimed deduction for either year parking tolls petitioner claimed a deduction for parking tolls of dollar_figure for the taxable_year neither petitioner nor respondent conceded the issue in their stipulations or argued the point in brief or at trial however petitioner has the burden_of_proof see rule a accordingly in the absence of any evidence offered by petitioner with respect to this issue respondent's determination is sustained see rule b b mortgage points petitioner claims he is entitled to a dollar_figure deduction under schedule a for home mortgage points in respondent disallowed petitioner's deduction for mortgage points due to lack of substantiation there is no evidence to substantiate petitioner's deduction for mortgage points in as a result we sustain respondent's determination regarding this deduction c accuracy-related_penalty the final issue is whether petitioner is liable for the accuracy-related_penalty under sec_6662 for and sec_6662 imposes a penalty in an amount equal to percent of the portion of the underpayment_of_tax attributable to a taxpayer's negligence disregard of rules and regulations or - - any substantial_understatement_of_income_tax see sec_6662 a b and b sec_6662 provides that the term negligence includes any failure to make a reasonable attempt to comply with the provisions of this title and the term disregard includes any careless reckless or intentional disregard of rules or regulations the commissioner's determination that a taxpayer was negligent is presumptively correct and the burden is on the taxpayer to show lack of negligence see 56_tc_248 an understatement_of_tax is substantial if it exceeds the greater of percent of the tax required to be shown on the return for the taxable_year or dollar_figure see sec_6662 a i and ii the accuracy-related_penalty will apply unless petitioner can demonstrate that there was reasonable_cause for the underpayment and that he acted in good_faith with respect to the underpayment see sec_6664 on the basis of the entire record we conclude that petitioner has not established that there was reasonable_cause and that he acted in good_faith with respect to the underpayment_of_tax petitioner did not meet his burden of proving that he was not negligent respondent's deficiency determination exceeds percent of the amount required to be shown on the return and is more than dollar_figure we therefore hold that petitioner is -- - liable for an accuracy-related_penalty of percent of the entire underpayment for each year decisions will be entered under rule - -17- appendix a schedule c deductions initially disallowed by respondent advertising dollar_figure dollar_figure bad_debt big_number big_number car truck big_number big_number insurance big_number big_number mortgage -q- big_number office expense big_number big_number repairs and maintenance big_number big_number supplies big_number big_number taxes travel big_number big_number meals entertainment big_number big_number utilities big_number wages big_number big_number other expenses -q- big_number postage big_number --q- filing fees big_number -q- donations big_number --q- telephone big_number --q- parking tolls big_number -q- amounts disallowed big_number big_number -- - appendix b schedule c deductions allowed by respondent advertising dollar_figure --o- bad_debt -q- -0- insurance big_number dollar_figure office expense big_number big_number repairs and maintenance big_number big_number supplies big_number big_number taxe sec_266 big_number utilities big_number big_number wages big_number big_number postage big_number filing fees big_number big_number natural_gas big_number telephone big_number big_number total big_number big_number ‘petitioner incorrectly deducted a bad_debt expense of dollar_figure in on schedule c the parties agree that petitioner is not entitled to the deduction and that the items petitioner claimed as a bad_debt expense are deductible as office expenses this consists of dollar_figure in expenses substantiated by petitioner and the dollar_figure bad_debt expense reclassified as an office expense and allowed as a deduction


department of the treasury internal_revenue_service washington d c tax_exempt_and_government_entities_division aug uniform issue list tep ral t legend taxpayer plan financial institution-a financial_institution b amount dear this is in response to your request dated date and supplemented by communication dated date in which your authorized representative on your behalf requested a waiver of the 60-day rollover requirement contained in sec_402 of the internal_revenue_code the code’ the following facts and representations have been submitted under penalty of perjury in support of the ruling requested taxpayer represents that she received a distribution from plan of amount taxpayer asserts that her failure to accomplish a rollover within the 60-day period prescribed by sec_402 of the code was due to errors made by financial_institution a and financial_institution b taxpayer further represents that amount has not been used for any other purpose on date taxpayer received a distribution of amount from plan in which she was a participant plan was administrated by financial_institution a taxpayer instructed financial_institution b to establish an individual_retirement_account ira in her name to accept a rollover_contribution from plan taxpayer then contacted financial_institution a and requested that a rollover_distribution be made to financial_institution b financial_institution a issued a check to taxpayer titled in a manner indicating the check was to constitute a direct_rollover however the check made no reference to the individual_retirement_account the check was deposited with financial_institution b on date but it was deposited in a non-ira account and taxpayer had no indication that the account was not an ira until almost three years after the distribution was made further financial_institution a filed an irs form 1099-r with respect to the distribution and coded it consistent with it being a direct_rollover based on the facts and representations you request a ruling that the internal_revenue_service the service waive the day rollover requirement contained in sec_402 of the code with respect to the distribution of amount sec_402 of the code provides that if any portion of the balance_to_the_credit of an employee in a qualified_trust is paid to the employee in an eligible_rollover_distribution and the distributee transfers any portion of the property received in such distribution to an eligible_retirement_plan and in the case of a distribution_of_property other than money the amount so transferred consists of the property distributed then such distribution to the extent transferred shall not be includible in gross_income for the taxable_year in which paid sec_402 states that such rollover must be accomplished within days following the day on which the distributee received the property an ira constitutes one form of eligible_retirement_plan sec_402 of the code provides that the secretary may waive the day requirement under sec_402 where the failure to waive such requirement would be against equity or good conscience including casualty disaster or other events beyond the reasonable control of the individual subject_to such requirement revproc_2003_16 2003_4_irb_359 date provides that in determining whether to grant a waiver of the 60-day rollover requirement pursuant to sec_402 of the code the service will consider all relevant facts and circumstances including errors committed by a financial_institution inability to complete a rollover due to death disability hospitalization incarceration restrictions imposed by a foreign_country or postal error the use of the amount distributed for example in the case of payment by check whether the check was cashed and the time elapsed since the distribution occurred the information presented and documentation submitted is consistent with taxpayer's assertion that her failure to accomplish a timely rollover was a result of errors committed by both financial_institution a and financial_institution b that led to amount being contributed to a non-ira account therefore pursuant to sec_402 of the code the service hereby waives the 60-day rollover requirement with respect to the distribution of amount from plan taxpayer is granted a period of days from the issuance of this ruling letter to contribute amount into a rollover ira provided all other requirements of sec_402 of the code except the 60-day requirement are met with respect to such contribution amount will be considered a rollover_contribution within the meaning of sec_402 of the code this ruling does not authorize the rollover of amounts that are required to be distributed under sec_401 no opinion is expressed as to the tax treatment of the transaction described herein under the provisions of any other section of either the code or regulations that may be applicable hereto this letter is directed solely to the taxpayer who requested it sec_6110 of the code provides that it may not be used or cited as precedent if you wish to inquire about this ruling please contact please address all correspondence to se t ep ra t2 sincerely yours ne levine manager lans technical group enclosures deleted copy of letter_ruling notice of intention to disclose cc


department of the treasury internal_revenue_service washington d c date number release date cc dom fs p si uilc internal_revenue_service national_office field_service_advice memorandum for assistant district_counsel from assistant chief_counsel field service cc dom fs subject grantor retained annuity trusts this field_service_advice responds to your memorandum dated date field_service_advice is not binding on examination or appeals and is not a final case determination this document is not to be cited as precedent legend decedent trustee date date month year dollar_figurea dollar_figureb dollar_figurec dollar_figured dollar_figuree dollar_figuref dollar_figureg dollar_figureh dollar_figurei dollar_figurej dollar_figurek x y issue whether any part of the corpus of the grantor_retained_annuity_trust grat is includable in decedent’s gross_estate under sec_2036 and or conclusion sec_2036 includes in decedent’s gross_estate the amount of corpus necessary to yield the guaranteed annual payment to the decedent based upon the applicable_federal_rate on decedent’s date of death sec_2039 includes in decedent’s gross_estate the value of the entire corpus of the grantor_retained_annuity_trust at the time of decedent’s death facts on date decedent executed a grantor_retained_annuity_trust grat by and between herself as grantor and trustee the grat's initial principal_amount was dollar_figurea which was contributed by decedent a gift_tax_return was filed and audited and the gift_tax liability was agreed upon and paid in full the decedent filed a year federal gift_tax_return form_709 reporting dollar_figureb of gifts made the remainder_interest of the grat and total gift_tax owed of dollar_figurec the internal_revenue_service audited this federal gift_tax_return and positively adjusted the tax_liability in the amount of dollar_figured for a total_tax owed of dollar_figuree pursuant to the terms of the grat the decedent would receive an annual annuity in the amount of x of the grat's initial value the payments were to be made monthly for a term of y years or decedent’s earlier death the monthly payment was dollar_figuref totaling dollar_figureg per year at the expiration of the term or decedent’s earlier death the trust corpus was to be transferred lump sum to the remaindermen who were decedent's three children decedent died on date during the third year of the grat from date through month of the third year of the grat decedent received the required dollar_figuref per month for a total of dollar_figureh the value of the assets within the grat on the date of death was dollar_figurei the executor filed a federal estate_tax_return form_706 on behalf of decedent and included dollar_figurej of the grat in decedent's gross_estate under sec_2036 in the statutory_notice_of_deficiency the commissioner determined that the entire trust principal in the amount of dollar_figurei was includable in the decedent's gross_estate under sec_2039 accordingly the net_adjustment for this issue was dollar_figurek the difference between the amount the executor included under sec_2036 and the amount includable under sec_2039 ie the value of the grat at decedent’s date of death law analysis sec_2036 provides in pertinent part that a decedent’s gross_estate shall include the value of any interest in property transferred by the decedent if the decedent retained for his life or for any period not ascertainable without reference to his death or for any period which does not in fact end before his death the possession or enjoyment of or the right to income from the property sec_20_2036-1 provides generally that if the decedent retained or reserved an interest or right with respect to all of the property transferred by the decedent the amount to be included in the gross_estate under sec_2036 is the value of the entire property on the date of death if the decedent retained a right with respect to only part of the property transferred the amount to be included in the decedent’s gross_estate under sec_2036 is the proportionate amount of corpus revrul_82_105 1982_1_cb_133 involves a situation where the decedent prior to his death created a charitable_remainder_annuity_trust pursuant to which the decedent retained the right to receive an annuity of 12x dollars for life the ruling concludes that the decedent’s retained annuity represents the retained right to receive all of the income from all or a specific_portion of the trust for purposes of sec_2036 that portion of the trust corpus with respect to which the decedent retained a right to receive all of the income is includable in his gross_estate under sec_2036 see 49_tc_140 acq 1973_2_cb_3 under the ruling the amount of the corpus with respect to which the decedent retained the income is that amount of corpus that would be sufficient to yield the annual annuity based on the assumed rate of return prescribed by the regulations as of the applicable_valuation_date the revenue_ruling prescribes the following formula for this determination annual annuity assumed rate of return amount includable under the trust agreement in the instant case decedent transferred property to the grat but retained the right to receive an annuity_payment for a term of y years or his earlier death because decedent died during the term decedent retained this interest at death accordingly the portion of the value of the grat includable in decedent’s gross_estate under sec_2036 is the amount of corpus necessary to yield dollar_figureg a year the amount of decedent’s retained annuity based upon the applicable_federal_rate under sec_7520 as of the date of decedent’s death sec_2039 provides in pertinent part that the gross_estate shall include the value of an annuity_or_other_payment receivable by any beneficiary by reason of surviving the decedent under any form of contract or agreement if under the contract or agreement an annuity_or_other_payment was payable to the decedent or the decedent possessed the right to receive such annuity or payment either alone or in conjunction with another for his life or for any period not ascertainable without reference to his death or for any period which does not in fact end before his death sec_2039 provides in pertinent part that the amount includable under sec_2039 is the part of the value of the annuity_or_other_payment receivable under the contract or agreement as is proportionate to the part of the purchase_price contributed by the decedent sec_20_2039-1 provides in part that the term annuity_or_other_payment as used with respect to both the decedent and the survivor beneficiary has reference to a payment or payments that may be equal or unequal conditional or unconditional periodic or sporadic sec_20_2039-1 further provides that the term contract or agreement includes understandings arrangements and plans under the facts presented in this case the entire value of the lump sum payments made to decedent’s three children upon decedent’s death is includable in decedent’s gross_estate under sec_2039 all of the sec_2039 a requirements are satisfied as follows the lump sum payments to the survivor beneficiaries qualify as an annuity_or_other_payment under sec_20_2039-1 the annuity payments to the decedent similarly qualify the fact that the payments to the survivor beneficiaries are to be made pursuant to the terms of the grat agreement satisfy the contract or agreement requirement in sec_2039 a the annuity was in fact payable to decedent until his death thus satisfying the requirement that the annuity be payable to the decedent for his life for a period not ascertainable without reference to his death or for a period that did not in fact end before his death under sec_2039 the amount includable is the entire value of the amounts receivable by the survivor beneficiaries if the entire purchase_price of the annuity was contributed by the decedent although the term purchase_price in sec_2039 implies the acquisition of a commercial_annuity nothing in the language of sec_2039 limits its application to commercial annuities in fact the broad reference to any contract or agreement pursuant to which the payment or payments to a beneficiary must be made indicates such a narrow application was not intended furthermore there is nothing in the legislative_history to indicate that the purchase_price language used in sec_2039 was intended to limit the types of annuities or other_payments to which sec_2039 applies to the contrary in enacting sec_2039 the focus of congress was on the amount contributed by the decedent to the cost of the annuity_or_other_payment as compared with the amount contributed by another see s rep no 83d cong 2d sess sec_2039 was intended to include in the gross_estate only that portion of an annuity's value representing the decedent's contribution to its cost see also neeley v united_states 613_f2d_802 ct_cl in enacting sec_2039 congress concluded that it would be inappropriate to include in the gross_estate the value of an annuity attributable to contributions by the surviving beneficiary or contributions from another as a gift accordingly because the decedent contributed one hundred percent of the assets to the grat the entire value of the trust corpus the amount receivable by the survivor beneficiaries is includable in decedent’s gross_estate under sec_2039 alternatively as stated above the amount includable in decedent’s gross_estate under sec_2036 is the amount of corpus necessary to yield the amount of decedent’s retained annuity based upon the applicable_federal_rate under sec_7520 as of the date of decedent’s death case development hazards and other consideration sec_1although several private letter rulings the first of which was published in recommend the application of sec_2039 to the remainder_interest of a grantor_retained_annuity_trust private letter rulings reflect nothing more than the position of the service with respect to a particular taxpayer and are not to be cited as precedent sec_6110 please call if you have any further questions assistant chief_counsel field service by melissa c liquerman senior technician reviewer passthroughs special industries branch field service division