department of the treasury internal_revenue_service tax_exempt_and_government_entities_division release number release date ugust taxpayer_identification_number n form tax_year s ended y person to contact id number contact numbers telephone fax uil legend taxpayer organization’s name n ein ve saxpaye r advocate office ffic taxpayer certified mail - return receipt requested dear we have enclosed a copy of our report of examination explaining why we believe revocation of your exempt status under sec_501 of the internal_revenue_code code is necessary if you accept our findings take no further action we will issue a final revocation letter if you do not agree with our proposed revocation you must submit to us a written request for appeals_office consideration within days from the date of this letter to protest our decision your protest should include a statement of the facts the applicable law and arguments in support of your position an appeals officer will review your case the appeals_office is independent of the director eo examinations the appeals_office resolves most disputes informally and promptly the enclosed publication the examination process and publication exempt_organizations appeal procedures for unagreed issues explain how to appeal an internal_revenue_service irs decision publication also includes information on your rights as a taxpayer and the irs collection process you may also request that we refer this matter for technical_advice as explained in publication if we issue a determination_letter to you based on technical_advice no further administrative appeal is available to you within the irs regarding the issue that was the subject of the technical_advice letter catalog number 34809f if we do not hear from you within days from the date of this letter we will process your case based on the recommendations shown in the report of examination if you do not protest this proposed determination within days from the date of this letter the irs will consider it to be a failure to exhaust your available administrative remedies sec_7428 of the code provides in part a declaratory_judgment or decree under this section shall not be issued in any proceeding unless the tax_court the claims_court or the district_court of the united_states for the district of columbia determines that the organization involved has exhausted its administrative remedies within the internal_revenue_service we will then issue a final revocation letter we will also notify the appropriate state officials of the revocation in accordance with sec_6104 of the code 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 ta if you have any questions please call the contact person at the telephone number shown in the heading of this letter the most convenient time to call if we need to contact you if you write please provide a telephone number and thank you for your cooperation sincerely marsha ramirez director eo examinations enclosures publication publication report of examination letter catalog number 34809f department of the treasury internal_revenue_service commerce street dallas tx tax_exempt_and_government_entities_division legend o taxpayer organization’s name n ein y year revoked ta taxpayer advocates office date person to contact identification_number contact telephone number form_990 in reply refer to te_ge review staff ein n uil taxpayer dear last date for filing a petition with the tax_court this is a final adverse determination as to your exempt status under sec_501 of the internal_revenue_code because you have not established that you are observing the conditions required to continue exempt status recognition of your exemption from federal_income_tax as an organization described in internal_revenue_code sec_501 as well as your status as a private_foundation under sec_501 a is retroactively revoked to y processing of income_tax returns and assessment of any taxes due will not be delayed should a petition for declaratory_judgment be filed under sec_7428 of the internal_revenue_code contributions to your organization are no longer deductible under sec_170 of the internal_revenue_code our determination was made for the reason that you have failed to establish that you are operated exclusively for exempt purposes within the meaning of sec_501 of the internal_revenue_code you operate for the benefit of private interests if you decide to contest this determination in court you must initiate a suit for declaratory_judgment in the united_states tax_court the united_states claim court or the district_court of the united_states for the district of columbia before the day after the date this determination was mailed to you contact the clerk of the appropriate court of the rules for initiating suits for declaratory_judgment you also have the right to contact the office_of_the_taxpayer_advocate however you should first contact the person whose name and telephone number are shown above since this person can access your tax information and can help you get answers you can call and ask for taxpayer_advocate assistance or you can contact the taxpayer_advocate from the site where the tax_deficiency was determined by calling ta or writing to ta taxpayer_advocate assistance cannot be used as a substitute for established irs procedures formal appeals processes etc the taxpayer_advocate is not able to reverse legal or technically correct_tax determinations nor extend the time fixed by law that you have to file a petition in the united_states tax_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 we will notify the appropriate state officials of this action as required by sec_6104 of the internal_revenue_code if you have any questions please contact the person whose name and telephone number are shown in the heading of this letter sincerely yours lois lerner director exempt_organizations schedule number or exhibit a aoe ean explanations of items rev january name of taxpayer ’ taxpayer tax identification_number year period ended n y i legend taxpayer organization's name city city's name n ein xx web site y year period ended z name of police department issues the taxpayer was granted exemption under sec_501 of the internal_revenue_code after conducting the examination on the association's form_990 for year ended y it was determined that the activities conducted by the organization do not meet the requirements for c -- rather they are more qualified for exempt status under sec_501 of the internal_revenue_code as such the taxpayer's exempt status under c should be revoked and the organization should be encouraged to reapply for exemption under c facts as stated on the form_990 under part the taxpayer's primary exempt_purpose is to assist and promote various village projects they work for the best interests of residents of city promoting and assisting in village improvement projects various pamphlets and brochures explaining the taxpayer's activities were obtained during the examination each season the taxpayer puts on a event that promotes the city also according to their web site xx they act as a liaison for the residents of city to the other departments such as the z police department and zoning boards etc ete a further description of their tax exempt_purpose as provided by the organization states the taxpayer is a non-profit organization whose purposes include acting as a non-partisan civic organization to encourage and aid all residents both full and part-time or the city to work together for the best interest of the city and to promote its civic development and improvement other activities that the taxpayer is involved in are charitable in nature for the year under examination approximately of their expenses reported on the were charitable in nature they made donation to various charitable causes such as the salvation army city library and the city needy fund among others law sec_1_501_c_3_-1 must be both organized and operated exclusively for one or more of the purposes specified in such section if an organization fails to meet either the organizational_test or the operational_test it is not exempt in order to be exempt as an organization described in sec_501 an organization sec_1_501_c_3_-1 an organization will be regarded as operated exclusively for one or more exempt purposes only if it engages primarily in activities which accomplish one or more of such exempt purposes specified in sec_501 an organization will not be so regarded if more than an insubstantial part of its activities is not in furtherance of an exempt_purpose sec_53_4942_b_-1 for purposes of this section the term substantially_all shall mean or more haswell v united_states better business bureau of washington d c vs united_states taxpayer's position during a conversation with the organization's cpa who holds the power_of_attorney for this examination she informed the agent that the organization held a board meeting to discuss their exempt status after researching the relevant sections of the internal_revenue_code and the treasury regulations they informed their cpa that although the taxpayer engages in a substantial amount of activities that are charitable in nature that their primary activities are more qualified for exemption under sec_501 of the internal_revenue_code form 886-a catalog number 20810w _-_- page publish no irs gov department of the treasury-internal revenue service a aoe rev explanations of items any january tax identification_number year period ended schedule number or exhibit name of taxpayer taxpayer n y government's position following the tax law as stated in the treasury regulations the government's position is that the taxpayer does not qualify for exemption under sec_501 of the internal_revenue_code as it does not meet the operational_test the operational_test outlined in sec_1_501_c_3_-1 of the regulations states that an organization will not meet the operational_test if more than an insubstantial part of its activities are not in furtherance of an exempt_purpose in order to be deemed insubstantial according to the regulations and court precedent haswell v united_states an activity must be less than of the organization's total operations the taxpayer's primary activity is promoting their village these activities meet the definition of social welfare under sec_501 of the internal_revenue_code social welfare can also be considered a charitable activity under sec_1_501_c_3_-1 after reviewing the facts and circumstances of this case -- it was determined that the social welfare activities undertaken by the taxpayer do not meet the definition of charitable as outlined by the code and regulations and as such these activities are not in furtherance of an exempt_purpose under sec_501 of the internal_revenue_code conclusion since the taxpayer's primary activities are not in furtherance of an exempt_purpose under sec_501 of the internal_revenue_code their exemption under this section should be revoked they will be informed by the agent to reapply for exemption using a form_1024 as aa civic league under sec_501 of the code department of the treasury-internal revenue service catalog number 20810w form 886-a publish no irs gov page


t c memo united_states tax_court catherine beverly petitioner v commissioner of internal revenue respondent docket no 10774-03l filed date p filed a bankruptcy petition r subsequently issued to p a final notice_of_intent_to_levy and notice of your right to hearing final notice_of_intent_to_levy under sec_6330 i r c after p’s bankruptcy case was closed r issued to p a notice_of_determination concerning collection action s p filed with the court a petition for lien or levy action r filed a motion for summary_judgment and a supplement thereto held the final notice_of_intent_to_levy was issued to p in violation of the automatic_stay imposed under u s c sec_362 and was invalid and of no effect held further r’s motion for summary_judgment as supplemented is denied and a decision will be entered that respondent may not proceed with the proposed collection action catherine beverly pro_se karen baker and michael w bitner for respondent memorandum opinion panuthos chief special_trial_judge this collection review case is before the court on respondent’s motion for summary_judgment as supplemented filed pursuant to rule summary_judgment is intended to expedite litigation and avoid unnecessary and expensive trials fla peach corp v commissioner 90_tc_678 85_tc_527 summary_judgment may be granted with respect to all or any part of the legal issues in controversy if the pleadings answers to interrogatories depositions admissions and any other acceptable materials together with the affidavits if any show that there is no genuine issue as to any material fact and that a decision may be rendered as a matter of law rule b 98_tc_518 affd 17_f3d_965 7th cir 90_tc_753 the moving party bears the burden of proving that there is no genuine issue of material fact and factual inferences will be read in a manner most favorable to the party opposing summary_judgment dahlstrom v unless otherwise indicated section references are to the internal_revenue_code as amended rule references are to the tax_court rules_of_practice and procedure commissioner 85_tc_812 79_tc_340 based upon our review of the record we are satisfied that there is no genuine issue as to any material fact and that judgment may be rendered as a matter of law however as discussed in detail below we conclude that the law does not support respondent’s position we hold that the final notice_of_intent_to_levy was issued to petitioner in violation of the automatic_stay arising from her case in bankruptcy and therefore is invalid accordingly we shall deny respondent’s motion for summary_judgment as supplemented and we shall enter a decision that respondent may not proceed with the proposed collection action background2 on date petitioner filed a voluntary petition for relief under chapter of the bankruptcy code with the u s bankruptcy court for the southern district of illinois on date respondent issued to petitioner a final notice_of_intent_to_levy and notice of your right to a hearing under sec_6330 final notice_of_intent_to_levy with regard to her unpaid federal income taxes for to and and on date the bankruptcy court issued an order the record establishes and or the parties do not dispute the following dismissing petitioner’s bankruptcy case due to her failure_to_file required schedules on date the bankruptcy court entered an order closing petitioner’s case in the meantime on date petitioner filed a second bankruptcy petition on date petitioner filed with respondent a form request for a collection_due_process_hearing challenging the proposed levy on date the bankruptcy court dismissed petitioner’s second bankruptcy case on date respondent issued to petitioner a notice_of_determination concerning collection action s under sec_6320 and or notice_of_determination which stated that respondent intended to proceed with the proposed levy on date petitioner filed with the court a petition for lien or levy action challenging respondent’s notice_of_determination at the time the petition was filed petitioner resided in collinsville illinois as indicated respondent filed a motion for summary_judgment respondent contends that the court should sustain the notice_of_determination on the ground that the appeals officer did not abuse her discretion in rejecting petitioner’s offer in the petition arrived at the court in an envelope bearing a timely u s postal service postmark dated date see sec_7502 compromise--the sole issue that petitioner purportedly raised during the administrative proceedings--because petitioner was not current in filing her tax returns at that time respondent’s motion was called for hearing at the court’s motions session held in washington d c during the hearing counsel for respondent informed the court that respondent had recently discovered that the final notice_of_intent_to_levy was issued to petitioner while petitioner’s first bankruptcy case remained open the court subsequently directed respondent to file a supplement to his motion addressing the question whether the final notice_of_intent_to_levy was issued to petitioner in violation of the automatic_stay imposed under u s c sec_362 respondent filed a supplement as directed and the matter was called for further hearing at the court’s motions session respondent maintains that while the issuance of the final notice_of_intent_to_levy may have violated the automatic_stay petitioner should nevertheless be estopped from arguing that the final notice_of_intent_to_levy was issued in violation of the automatic_stay because she failed to inform respondent during the administrative proceedings that she had filed a bankruptcy petition upon questioning by the court respondent was hesitant to acknowledge that the final notice_of_intent_to_levy violated the automatic_stay in a footnote to his supplement to the motion for summary_judgment respondent states that it is not clear continued discussion sec_6331 provides that if any person liable to pay any_tax neglects or refuses to pay such tax within days after notice_and_demand for payment the secretary is authorized to collect such tax by levy upon property belonging to the person sec_6331 provides that the secretary is obliged to provide the person with notice including notice of the administrative appeals available to the person before proceeding with collection by levy on the person’s property sec_6330 generally provides that the commissioner cannot proceed with the collection_of_taxes by way of a levy on a person’s property until the person has been given notice of and the opportunity for an administrative review of the matter in the form of an appeals_office hearing and if dissatisfied with judicial review of the administrative determination sec_6330 provides for judicial review of the administrative determination in the tax_court or a federal district_court as may be appropriate to obtain judicial review the person must file a petition with the appropriate continued whether the providing of a notice of right to a hearing under sec_6330 is an ‘act to collect’ in violation of the automatic_stay respondent further states that the final notice_of_intent_to_levy required under sec_6331 is in the same document as the notice of a right to hearing respondent concludes in the footnote that arguably in contrast to the notice_of_intent_to_levy and the notice_of_levy the mere notice of a right to a pre- levy hearing does not violate the stay court within days of the mailing of the notice_of_determination sec_6330 there is no dispute in this case that respondent issued to petitioner a final notice_of_intent_to_levy after petitioner filed her bankruptcy petition and while the automatic_stay remained in effect under the circumstances we must evaluate respondent’s position in light of the provisions governing the automatic_stay title of the united_states_code provides uniform procedures designed to promote the effective rehabilitation of the bankrupt debtor and when necessary the equitable distribution of his or her assets see h rept pincite one key to achieving these aims is the automatic_stay which generally operates to temporarily bar actions against or concerning the debtor or property of the debtor or the bankruptcy_estate see 97_tc_544 96_tc_895 the automatic_stay provisions are set forth in u s c sec_362 which provides in pertinent part a except as provided in subsection b of this section a petition filed under sec_301 sec_302 or sec_303 of this title operates as a stay applicable to all entities of -- sec_6330 is effective with respect to collection actions initiated more than days after date date see internal_revenue_service restructuring and reform act of publaw_105_206 112_stat_750 the commencement or continuation including the issuance or employment of process of a judicial administrative or other action or proceeding against the debtor that was or could have been commenced before the commencement of the case under this title or to recover a claim against the debtor that arose before the commencement of the case under this title any act to obtain possession of property of the estate or of property from the estate or to exercise control_over property of the estate any act to collect assess or recover a claim against the debtor that arose before the commencement of the case under this title unless relief from the automatic_stay is granted by order of the bankruptcy court see u s c sec_362 the automatic_stay generally remains in effect until the earliest of the closing of the case dismissal of the case or the grant or denial of a discharge u s c sec_362 see allison v commissioner supra pincite 96_tc_10 94_tc_1 analysis as previously discussed the automatic_stay under u s c sec_362 bars the commencement or continuation including the issuance or employment of process of a judicial administrative or other action or proceeding against the debtor that was or could have been commenced before the commencement of the case under this title based upon the plain language of u s c sec_362 we conclude that respondent violated the automatic_stay when he issued to petitioner the final notice_of_intent_to_levy dated date in particular there is no dispute in this case that respondent could have issued a final notice_of_intent_to_levy to petitioner regarding her unpaid income taxes for to and and before petitioner filed her bankruptcy petition moreover we are satisfied that the issuance of the final notice_of_intent_to_levy constituted the commencement of an administrative_proceeding against petitioner within the meaning of u s c sec_362 see eg smith v commissioner t c __ holding that a notice_of_determination issued under sec_6330 to a taxpayer debtor in bankruptcy constituted the continuation of an administrative collection action against the debtor within the meaning of u s c sec_362 in particular when the commissioner issues to a person a final notice_of_intent_to_levy that person is entitled to invoke the administrative and judicial procedures prescribed under sec_6330 id at __ indeed should such person fail to timely request an administrative hearing the commissioner generally is free to proceed with the proposed levy consistent with the foregoing we conclude that u s c sec_362 barred respondent from issuing to petitioner the final notice_of_intent_to_levy dated date our holding that the issuance to petitioner of the final notice_of_intent_to_levy violated the automatic_stay is consistent with both bankruptcy case law and respondent’s administrative guidance see in re parker bankr bankr s d ala the commissioner conceded and the bankruptcy court held that the issuance of a final notice_of_intent_to_levy under sec_6330 violated the automatic_stay in re covington bankr bankr d s c the bankruptcy court held that a final notice_of_intent_to_levy did not constitute a notice_and_demand for payment within the meaning of u s c sec_362 and that such notice was issued to the debtor in violation of the stay see also chief_counsel adv date a final notice_of_intent_to_levy issued to a person who had filed a bankruptcy petition violated the automatic_stay and was void at this point a brief comment regarding the court’s jurisdiction is warranted we recently held in smith v commissioner t c __ that a notice_of_determination under sec_6330 issued to a taxpayer debtor while the automatic_stay was in effect was invalid and we dismissed the case for lack of respondent does not contend that the final notice_of_intent_to_levy qualified under any of the exceptions to the automatic_stay prescribed in u s c sec_362 jurisdiction on that ground the facts in the present case are distinguishable from those in smith v commissioner t c __ specifically the notice_of_determination upon which this case is based was issued to petitioner well after the automatic_stay was terminated because the petition was timely filed in response to a notice_of_determination that is valid on its face we conclude that petitioner properly invoked our jurisdiction under sec_6330 see 117_tc_122 116_tc_263 114_tc_492 see also rule b respondent maintains that petitioner should be estopped from asserting that the final notice_of_intent_to_levy violated the automatic_stay because she failed to inform respondent during the administrative proceedings that she had filed a bankruptcy petition respondent cites 739_f2d_249 7th cir for the proposition that a debtor may be barred by the equitable doctrine_of laches from challenging an action that arguably violated the automatic_stay we are not persuaded by respondent’s argument the record suggests that petitioner was acting pro_se throughout the administrative proceedings without more we presume that petitioner acted in good_faith and that she was unaware that respondent’s issuance of the final notice_of_intent_to_levy violated the automatic_stay respondent on the other hand had previously issued administrative guidance in the form of a chief_counsel advisory cited above concluding that the issuance of a final notice_of_intent_to_levy to a person with an open bankruptcy case would violate the automatic_stay considering respondent’s administrative guidance on this specific point we disagree with respondent that petitioner should be estopped considering all the circumstances we decline to apply an equitable principle to bar consideration of the validity of the final notice_of_intent_to_levy we recently noted that collection activity undertaken in violation of the automatic_stay generally is considered void or invalid see smith v commissioner t c __ citing 9b am jur 2d bankruptcy sec the u s court_of_appeals for the seventh circuit the court to which an appeal in this case would lie adheres to this view see 250_f3d_1077 7th cir in sum we conclude that the final notice_of_intent_to_levy was issued to petitioner in violation of the automatic_stay and therefore it was invalid it follows that respondent abused his discretion by concluding in the notice_of_determination that the proposed levy should proceed to reflect the foregoing an order denying respondent’s motion for summary_judgment as supplemented and a decision will be entered for petitioner


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 intl br1 - plr-137096-05 date date ----------- ------------- --------------------------- ---------------------- tin ----------------- tax_year ------- a country b date c year d dear -------------- this is in reply to a letter dated date requesting a ruling that a’s loss of lawful permanent resident status expatriation did not have for one of its principal purposes the avoidance of u s taxes under subtitle a or subtitle b of the code the information submitted for consideration is substantially as set forth below the ruling contained in this letter is predicated upon facts and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party this office has not verified any of the material submitted in support of the request for a ruling verification of the factual information representations and other data may be required as a part of the audit process a was born in country b on date c a expatriated in year d a will be subject_to country c tax on her worldwide income and estate on the date of a's expatriation her net_worth exceeded the applicable_amount set forth in sec_877 sec_877 generally provides that a citizen who loses u s citizenship or a u s long- term resident who ceases to be taxed as a lawful permanent resident individuals who expatriate within the 10-year period immediately preceding the close of the taxable in re plr-137096-05 year will be subject_to the special rules of sec_877 for such taxable_year unless such loss did not have for one of its principal purposes the avoidance of u s taxes sec_2107 and sec_2501 provide special estate and gift_tax regimes respectively for individuals who expatriate with a principal purpose to avoid u s taxes a former u s citizen or former u s long-term_resident will be treated as having expatriated with a principal purpose to avoid u s taxes for purposes of sec_877 sec_2107 and sec_2501 if the individual's average income_tax_liability or the individual's net_worth on the date of expatriation exceed certain thresholds see sec_877 sec_2107 and sec_2501 a former u s citizen whose net_worth or average tax_liability exceeds these thresholds however will not be presumed to have a principal purpose of tax_avoidance if that former citizen is described within certain statutory categories and submits a request for a ruling within one year of the date of loss of u s citizenship for the secretary's determination as to whether such loss had for one of its principal purposes the avoidance of u s taxes see sec_877 sec_2107 and sec_2501 under notice_98_34 1998_2_cb_29 modifying notice_97_19 1997_1_cb_394 a former long-term_resident whose net_worth or average tax_liability exceeds the applicable thresholds will not be presumed to have a principal purpose of tax_avoidance if that former resident is described within certain categories and submits a complete and good_faith request for a ruling as to whether such loss had for one of its principal purposes the avoidance of u s taxes notice_98_34 requires that certain information be submitted with a request for a ruling that an individual's expatriation did not have for one of its principal purposes the avoidance of u s taxes a is eligible to request a ruling pursuant to notice_98_34 because she is a citizen and resident fully subject_to tax in country b the country in which she was born a submitted all of the information required to be submitted by notice_97_19 as modified by notice_98_34 including additional information requested by the service after review of the submission accordingly based solely on the facts submitted and the representations made we conclude that a has made a complete and good_faith submission in accordance with sec_877 and notice_98_34 therefore a will not be presumed under sec_877 to have had as one of her principal purposes for expatriating the avoidance of u s taxes we further conclude that the taxpayer will not be treated under sec_877 as having as one of her principal purposes for expatriating the avoidance of in re plr-137096-05 u s taxes because the information submitted clearly establishes the lack of a principal purpose to avoid taxes under subtitle a or b of the code 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 in addition no opinion is expressed as to a's u s tax_liability for the taxable years prior to or after her expatriation under sections of the code other than sec_877 sec_2107 and sec_2501 a copy of this letter must be attached to a's u s income_tax return for the year in which a obtained the ruling whether or not a is otherwise required to file a return 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 pursuant to a power_of_attorney on file in this office a copy of this ruling letter is being furnished to a’s authorized representatives senior technical reviewer cc ______________ karen a rennie cc intl br1 sincerely


department of the treasury internal_revenue_service washington d c t a x e x e m p t a n d g o v e r n m e n t e n t i t i e s d i v i s i o n contact person telephone number identification_number employer_identification_number number release date date uil legend a b c d e f g x --------------------------- by letter dated date a foundation requests a ruling regarding approval of a proposed set-aside grant to be made to b the university foundation under the suitability test of sec_4942 of the internal_revenue_code_of_1986 as amended the university foundation is a nonprofit corporation formed to support the c a public university the university the university foundation is tax-exempt pursuant to sec_501 of the code the foundation requests that the set-aside apply to the foundation’s fiscal_year ended june ------ the foundation proposes to set_aside ----x the grant for the purpose of providing funding for a new e building for the university’s d the project the project will provide a state-of-the-art facility for the d the project will provide facilities for all aspects of the college of e’s programs the foundation plans to pay the grant in five equal installments commencing june ------ with a final payment scheduled for june ------ if the project is completed prior to june ------ the foundation will accelerate payment of the remaining installments to the completion date the foundation does not anticipate that there will be any additions to the set-aside after its initial establishment the university has finalized the design and budget estimates for the project and has concluded that it will cost approximately ---------x it is anticipated that approximately -- ---------x of this amount will be provided from the state of f the university expects to begin the design and planning phase by early and commence construction in the use of a set-aside is necessary to provide the university with a funding commitment while permitting the foundation to retain control_over the distribution of its funds to ensure that i construction progresses as planned ii funding is received from other sources and iii contributions from the foundation are used solely for the purpose of construction of the project as provided in the proposed grant agreement funding will be conditioned upon completion of progress reports by the university foundation containing information regarding the progress of development and construction of the project the university foundation must provide the foundation with a progress report every six months until the university foundation spends all grant funds although the grant agreement contains anticipated dates for the payment of the grant payment is contingent upon the university securing state funding completion of the project and the use of grant funds for the project a set-aside is essential to ensure that the foundation’s committed support for the construction of the project is used for that purpose this is of particular importance for the project because one-half of the funding required must be provided by the state of f and the availability of this amount is potentially subject_to budgeting constraints in the event the university is unable to go forward with construction the foundation does not want the funds it contributes to be spent for the general operating budget of the university foundation or the university the foundation believes that a set-aside is the best mechanism to provide a funding commitment while ensuring the proper use of the foundation’s contributions the project involves the construction of a new state-of-the-art building located on the university’s campus to house the e its current facilities are outdated and of insufficient scope and size to fulfill current needs of students and faculty in addition to classrooms and faculty and administrative offices the new_building will house a computer g writing and editing lab library and reference room and a career and student advice center the university estimates that the project will cost ----------x the university is seeking to raise ---------x of the projected cost through private donations the university has received commitments from other donors for --------x and grant applications are pending for the balance of the funds necessary to complete the project because construction of the project has not yet commenced the directors of the foundation thought it would be prudent to commit to payments over a longer period of time than currently estimated for construction in case there are delays it is anticipated that construction will commence in as indicated above payment of the grant would be accelerated if amounts remain unpaid upon completion of construction the ------x that will be set_aside for purposes of the project will actually be paid within the five-year payment period specified in the grant agreement this payment period will end no later than months after the date of the first set_aside sec_4942 of the code defines a qualifying_distribution as a any amount_paid to accomplish one or more purposes described in sec_170 other than any contribution to i an organization controlled by the foundation or one or more disqualified persons or ii a private_foundation which is not an operating_foundation except as otherwise provided or b any amount_paid to acquire an asset used directly in carrying out one or more purposes described in sec_170 sec_4942 of the code provides that for all taxable years beginning on or after date an amount set- aside for a specific project which comes within one or more purposes described in sec_170 may be treated as a qualifying_distribution if it meets the requirements of subparagraph b of sec_4942 sec_4942 of the code provides that an amount set-aside for a specific project may be treated as a qualifying_distribution if at the time of the set-aside the foundation establishes to the satisfaction of the secretary that the amount will be paid for the specific project within five years and the project is one which can be better accomplished by such set-aside rather than by immediate payment of funds the suitability test sec_53_4942_a_-3 of the foundation and similar excise_taxes regulations provides that an amount set-aside for a specific project that is for one or more of the purposes described in sec_170 or may be treated as a qualifying_distribution in the year in which set-aside but not in the year in which actually paid if the requirements of sec_4942 and this paragraph are satisfied the requirements of this paragraph b are satisfied if the private_foundation establishes to the satisfaction of the commissioner that the amount set-aside will be paid for the specific project within months after it is set-aside and i the set-aside satisfies the suitability test or ii the foundation satisfies the cash distribution test sec_53_4942_a_-3 of the regulations provides that the suitability test is satisfied if the foundation establishes that the specific project is one in which relatively long-term grants or expenditures must be made in order to assure the continuity of particular charitable projects or program-related investments for example a plan to erect a building to house a direct charitable educational or similar exempt activity of the foundation sec_53_4942_b_-1 of the regulations provides in part that any amount set-aside by a foundation for a specific project such as the acquisition restoration or construction of additional buildings or facilities which are to be used by the foundation directly for the active_conduct of the foundation's exempt facilities shall be deemed to be a qualifying_distribution expended directly for the active_conduct of the foundation's exempt facilities if such amount has initially been shown to meet the set-aside_requirements in sec_53_4942_a_-3 of the regulations you have stated that your proposed set-aside will accomplish a purpose described in sec_170 of the code specifically providing funds for the construction of a new academic building on the campus of a state university the subjects to be taught in such building are closely related to your tax-exempt purposes the facility will be completed by approximately june ------ which is within the months from the date of the set- aside the set-aside should satisfy the suitability test because the expenditures are to be used for the design and construction of the building and could not be made in the taxable_year ending june ------ as required under sec_53_4942_a_-3 of the regulations further you have established to our satisfaction that the project is long-term in nature and is better accomplished by future expenditures than by current ones based on the foregoing we rule that the set-aside of ------x specifically devoted to the construction of the above described facility meets the requirements of sec_4942 of the code and sec_53_4942_a_-3 of the regulations accordingly the set-aside can be treated as a qualifying_distribution expended directly for the active_conduct of exempt_activities for your taxable_year ending june ------ we direct your attention to sec_53_4942_a_-3 of the regulations entitled evidence of set-aside this section provides that a set-aside approved by the internal_revenue_service shall be evidenced by the entry of a dollar amount on the books_and_records of a private_foundation as a pledge or obligation to be paid at a future date or dates sec_53_4942_a_-3 of the regulations provides that any set-aside approved by the internal_revenue_service must be evidenced by the entry of a dollar amount in your books_and_records as a pledge or obligation to be paid at a future date or dates further the amount of the set-aside must be taken into account in determining your minimum_investment_return see sec_53_4942_a_-2 of the regulations and any income attributable to a set-aside must be taken into account in computing your adjusted_net_income see sec_53_4942_a_-2 of the regulations please keep a copy of this ruling in your organization's permanent records this ruling will be made available for public inspection under sec_6110 of the code after certain deletions of identifying information are made for details see enclosed notice notice of intention to disclose a copy of this ruling with deletions that we intend to make available for public inspection is attached to notice if you disagree with our proposed deletions you should follow the instructions in notice if you have any questions about this ruling please contact the person whose name and telephone number are shown in the heading of this letter sincerely enclosure notice andrew f megosh jr acting manager exempt_organization technical group


number release date id office uilc cca_2011020708303937 ---------- from ------------------- sent monday february am to ------------------- cc ------------------------------------ subject re tefra questions we are auditing the partnership taxable_year so it does not matter if a second return changes the reported numbers to be valid the fpaa only needs to make a final_determination of the amount and allocation of partnership items - we only need to be clear in the fpaa as to which starting numbers the adjustments are being made from but it should not make a difference which numbers we start with since in both cases we are going to arrive at a bottom line number regardless of what number the partnership starts with


department of the treasury washington dc person to contact -------- id no --------------- telephone number --------------------- refer reply to cc intl br1 - plr-145196-03 date date internal_revenue_service number release date index number --------------------------- ----------------------- --------------------------- -------- ------------------------------ ------------------------------ ------------------------------ ------------------------------ ------------------------------ ------------------------------ ------------------------ ---------- ------------------ ----- --------- ------- ----------------- ----------------------------- ----------------- ------------------ taxpayer country a date b country c colony year d date e city f date g date h - ty ------- this is in response to a letter from your authorized representative on your dear ------------- behalf requesting a ruling under sec_877 of the internal_revenue_code_of_1986 code that your loss of u s permanent resident status did not have for one of its principal purposes the avoidance of u s taxes under subtitle a or subtitle b of the code representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in support of the request for rulings it is subject_to verification on the rulings contained in this letter are based upon information and taxpayer was born in country a on date b and has been a citizen of on date e taxpayer moved to city f for purposes of employment in mid-date sec_877 generally provides that a citizen who loses u s citizenship or a u s plr-145196-03 examination the information submitted for consideration is substantially as set forth below country a since birth his wife was born in country c colony in year d and has been a citizen of country c since birth g after a change in employment status taxpayer moved with his wife to country c where he is subject_to tax on his worldwide income as a resident of country c taxpayer surrendered his green card at the u s embassy in country c on date h on the date of taxpayer’s expatriation taxpayer’s net_worth exceeded the applicable_amount set forth in sec_877 long-term_resident who ceases to be taxed as a lawful permanent resident individuals who expatriate within the 10-year period immediately preceding the close of the taxable_year will be taxed under sec_877 and the special rules of sec_877 for such taxable_year unless such loss did not have for one of its principal purposes the avoidance of u s taxes sec_2107 and sec_2501 provide special estate and gift_tax regimes respectively for individuals who expatriate with a principal purpose to avoid u s taxes with a principal purpose to avoid u s taxes for purposes of sec_877 sec_2107 and sec_2501 if the individual's average income_tax_liability or the individual's net_worth on the date of expatriation exceed certain thresholds see sec_877 sec_2107 and sec_2501 thresholds however will not be presumed to have a principal purpose of tax_avoidance if that former citizen is described within certain statutory categories and submits a request for a ruling within one year of the date of loss of u s citizenship for the secretary's determination as to whether such loss had for one of its principal purposes the avoidance of u s taxes see sec_877 sec_2107 and sec_2501 under notice_98_34 1998_2_cb_29 modifying notice_97_19 1997_1_cb_394 an eligible former long-term_resident whose net_worth or average tax_liability exceeds the applicable thresholds will not be presumed to have a principal purpose of tax_avoidance if that former resident is described within certain categories and submits a complete and good_faith request for a ruling as to whether such loss had for one of its principal purposes the avoidance of u s taxes a former u s citizen whose net_worth or average tax_liability exceeds these a former citizen or former long term-resident will be treated as having expatriated under section iv of notice_97_19 as modified by section iv of notice_98_34 a taxpayer submitted all the information required by notice_98_34 including any plr-145196-03 notice_98_34 requires that certain information be submitted with a request for a ruling that an individual's expatriation did not have for one of its principal purposes the avoidance of u s taxes former long-term_resident is eligible to submit a request for a ruling if he becomes not later than the close of a reasonable period after his expatriation a resident fully liable to income_tax in the country where his spouse was born additional information requested by the service after review of the submission accordingly based solely on the information submitted and the representations made we conclude that taxpayer has made a complete and good_faith submission in accordance with sec_877 and notice_98_34 and therefore taxpayer will not be presumed to have expatriated with a principal purpose of tax_avoidance it is further held that taxpayer will not be treated under sec_877 as having as one of his principal purposes for expatriating the avoidance of u s taxes because the information submitted clearly establishes the lack of such a principal purpose to avoid tax under subtitle a or b of the code concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter in addition no opinion is expressed as to taxpayer’s u s tax_liability for taxable periods prior to his expatriation or for taxable periods after his expatriation under sections of the code other than sec_877 sec_2107 and sec_2501 the code provides that it may not be used or cited as precedent letter is being sent to your authorized representative relevant this ruling is directed only to the taxpayer s requesting it sec_6110 of in accordance with the power_of_attorney on file with this office a copy of this a copy of this letter must be attached to any income_tax return to which it is except as expressly provided herein no opinion is expressed or implied sincerely karen rennie-quarrie assistant to the branch chief cc intl br1 plr-145196-03 office of the associate chief_counsel international


internal_revenue_service department of the treasury number release date index number washington dc person to contact telephone number refer reply to cc corp b03 plr-121622-02 date date distributing controlled trust trust sub shareholder trustee trustee business m plr-121622-02 business n date date state x aa bb cc dd ee ff xxx dear we respond to your representative’s letter dated date for rulings concerning the federal_income_tax consequences of a proposed transaction additional information was submitted in a letter dated date the material information submitted for consideration is summarized below distributing a state x corporation is currently engaged directly in business m and business n the shares of distributing are all held by shareholder or for the benefit of his descendants through trust and trust distributing has aa shares of common_stock outstanding which are held in the following manner bb shares by trust cc shares by trust and dd shares by shareholder shareholder is not in a position of control as to trustee trustee of trust and does not have the power to remove trustee trustee of trust controlled is a newly created state x corporation and is wholly owned by distributing distributing and controlled use an accrual_method of accounting for each of their federal_income_tax returns with a taxable_year ending on date on date distributing sold its ownership interests in sub to a third party in a transaction unrelated to the proposed transaction discussed herein plr-121622-02 we have received financial information indicating that business m and business n each have had gross_receipts and operating_expenses representative of the active_conduct_of_a_trade_or_business for each of the past five years a difference of opinion has arisen between shareholder and trustee and trustee as trustees to trust and trust respectively regarding the future operations of the businesses of distributing business n tends to produce more stable and consistent annual returns which better matches the investment goals of the two trusts business m tends to be more sporadic and long-term in nature and possesses opportunities to expand into development activities in which additional capital contributions by the shareholders or debt could be required which shareholder favors accordingly to resolve the conflicting goals of the shareholders the following transaction is proposed i distributing will contribute cash having an approximate value of dollar_figurexxx and ee of business n to controlled the contribution ii distributing will distribute bb shares of controlled stock to trust in exchange for all of trust 1's stock in distributing distributing will distribute cc shares of controlled stock to trust in exchange for all of trust 2's stock in distributing together the distribution after the proposed transaction controlled will be wholly owned by trust and trust and distributing will be wholly owned by shareholder distributing will remain engaged directly in business n and business m controlled will be directly engaged in business n independent of distributing the taxpayers have made the following representations in connection with the proposed transaction a b c the fair_market_value of the controlled stock to be received by each shareholder of distributing will be approximately equal to the fair_market_value of distributing stock surrendered by the shareholder in the exchange no part of the consideration to be distributed by distributing will be received by a shareholder as a creditor employee or in any capacity other than that of a shareholder of distributing the five years of financial information submitted on behalf of business m and business n is representative of each business’ respective present operations and with regard to each business there has been no substantial operational changes since the date of the last financial plr-121622-02 d e f g h i j k l m statements submitted except for the sale of distributing’s interest in sub in a transaction otherwise unrelated to the transaction proposed herein following the distribution distributing and controlled each will continue the active_conduct of its business independently and with its separate employees and controlled may employ distributing as a consultant for its business n assets for a period not greater than ff months the distribution of controlled stock is carried out for the following corporate business purposes fit and focus the distribution of controlled stock is motivated in whole or substantial part by this corporate business_purpose distributing is not an s_corporation within the meaning of sec_1361 and there is no plan or intention by distributing or controlled to make an s_corporation_election pursuant to sec_1362 there is no plan or intention by the shareholders of distributing to sell exchange transfer by gift or otherwise dispose_of any of their stock in either distributing or controlled after the transaction there is no plan or intention by either distributing or controlled directly or through any subsidiary_corporation to purchase any of its outstanding_stock after the transaction there is no plan or intention to liquidate either distributing or controlled to merge either corporation with any other corporation or to sell or otherwise dispose_of the assets of either corporation after the transaction except in the ordinary course of business no intercorporate debt will exist between distributing and controlled at the time of or subsequent to the distribution payments made in connection with all continuing transactions if any between distributing and controlled will be for fair_market_value based on terms and conditions arrived at by the parties bargaining at arm’s length neither distributing nor controlled is an investment_company as defined in sec_368 and iv the distribution is not part of a plan or series of related transactions within the meaning of sec_355 pursuant to which one or more persons will acquire directly or indirectly stock possessing percent or more of the total combined voting power of all classes of stock of either plr-121622-02 distributing or controlled or stock possessing percent or more of the total value of all classes of stock of distributing or controlled based solely on the information submitted and the representations as set forth above we hold as follows the contribution followed by the distribution will constitute a reorganization within the meaning of sec_368 distributing and controlled each will be a_party_to_a_reorganization within the meaning of sec_368 distributing will recognize no gain_or_loss on the contribution sec_361 sec_357 and sec_357 controlled will recognize no gain_or_loss on the contribution sec_1032 controlled’s basis in each asset received in the contribution will equal the basis of that asset in the hands of distributing immediately prior to the transfer sec_362 controlled’s holding_period for each asset received from distributing will include the period during which distributing held such asset sec_1223 distributing will recognize no gain_or_loss on the distribution sec_361 trust and trust will recognize no gain_or_loss and no amount will be included in their income upon receipt of controlled stock in exchange for their distributing stock sec_355 the basis of the controlled stock received by trust and trust in the transaction will equal the basis of the distributing stock surrendered by each of the shareholders respectively in exchange therefor sec_358 the holding_period of the controlled stock received by trust and trust in the transaction will include the holding_period of the distributing stock surrendered in exchange therefor provided the respective shareholder held the distributing stock as a capital_asset on the date of the distribution sec_1223 as provided in sec_312 proper allocation of earnings_and_profits between distributing and controlled will be made under sec_1_312-10 except as specifically set forth above no opinion is expressed concerning the federal tax consequences of the proposed transaction under any other provision of the plr-121622-02 code and regulations or about the tax treatment of any conditions existing at the time of or effects resulting from the proposed transaction the rulings contained in this letter are predicated upon the facts and representations submitted by the taxpayers and accompanied by a penalties of perjury statement executed by an appropriate party this office has not verified any of the materials submitted in support of the request for a ruling verification of the information representations and other data may be required as part of the audit process see section dollar_figure of revproc_2002_1 2002_1_irb_1 which discusses in greater detail the revocation or modification of ruling letters however when the criteria in section dollar_figure of revproc_2002_1 i r b pincite are satisfied a ruling is not revoked or modified retroactively except in rare or unusual circumstances this ruling is directed only to the taxpayer s requesting it sec_6110 of the code provides that it may not be used or cited as precedent a copy of this letter should be attached to the federal_income_tax returns of the taxpayers involved for the taxable_year in which the transaction covered by this ruling letter is consummated pursuant to a power_of_attorney on file in this office a copy of this letter has been sent to each of your authorized representatives sincerely yours richard e coss senior counsel office of associate chief_counsel corporate cc


internal_revenue_service number release date index number ------------------------------ --------------------------------------------------------- -------------------------- ------------------------------------------------------- ------------------------------------ department of the treasury washington dc person to contact ------------------------- id no ------------- telephone number --------------------- refer reply to cc fip b02 plr-135776-07 date november -------------------------- legend taxpayer -------------------------- ----------------------------------------------------------------------- date dear ------------------ this is in reply to a letter dated date requesting a ruling on behalf of taxpayer the requested ruling is that to the extent that taxpayer recognizes sec_988 gains on certain credit facilities and foreign notes described below those sec_988 gains will be treated as qualifying_income under sec_856 and of the internal_revenue_code facts taxpayer is a publicly traded domestic_corporation that elected to be taxed as a real_estate_investment_trust reit beginning with its tax_year ended date taxpayer is engaged in the commercial real_estate finance business with a principal focus on originating and investing in loans including loans secured either by mortgages on real_property unsecured debt securities or real_property assets that are leased to third party tenants its unsecured multi-currency revolving credit agreements the credit facilities taxpayer invests in loans denominated in non-u s currencies generally pounds sterling and euros as part of its overall portfolio taxpayer intends to continue to invest in non-u s dollar denominated loans as well as non-u s real_property assets collectively the foreign investments taxpayer desires to finance the acquisition of the foreign investments by borrowing on its existing multi-currency revolving credit taxpayer generally finances the acquisition of its assets through borrowings on plr-135776-07 facilities in the currencies that match the currencies of the foreign investments for example taxpayer would borrow amounts on the credit facilities in euros to acquire a foreign investment denominated in euros once the amounts outstanding on the credit facilities have grown to a sufficient size taxpayer will issue debt obligations denominated in the same foreign_currency the foreign notes and use the proceeds to pay down the credit facilities the foreign notes will generally have a fixed term and will pay interest at a fixed or customary floating rate such as libor neither principal nor interest on the foreign notes will be based on the revenues or profits of taxpayer or any other person taxpayer represents that its principal purpose in incurring non-u s dollar denominated debt is to finance the acquisition and ownership of its foreign investments on a cost- effective basis and not to speculate in foreign_currencies taxpayer represents that the credit facilities and the foreign notes will be used for the valid business_purpose of financing in a cost-effective manner the acquisition of primarily reit-qualifying assets additionally taxpayer represents that it does not intend the credit facilities or the foreign notes to be a means of speculating in foreign_currency law and analysis to qualify as a reit an entity must derive at least percent of its gross_income from sources listed in sec_856 and at least percent of its gross_income from sources listed in sec_856 among the sources of gross_income that satisfy the percent income test in sec_856 is interest on obligations secured_by mortgages on real_property or on interests_in_real_property a reit may satisfy the percent income test under sec_856 with income derived from interest gains from foreign_currency are not among the enumerated sources listed in either sec_856 or c sec_985 provides in general that all determinations for federal_income_tax purposes shall be made in a taxpayer’s functional_currency sec_988 defines a sec_988 transaction as any transaction described in sec_988 if the amount which the taxpayer is entitled to receive or is required to pay by reason of such transaction is denominated in terms of a nonfunctional_currency or is determined by reference to the value of or more nonfunctional currencies under sec_988 a sec_988 transaction includes the acquisition of a debt_instrument or becoming the obligor under a debt_instrument sec_988 provides that the term foreign_currency_gain means any gain from a sec_988 transaction to the extent that such gain does not exceed gain plr-135776-07 realized by reason of changes in exchange rates on or after the booking_date and before the payment_date in the present case taxpayer will acquire the foreign investments by borrowing amounts denominated in foreign_currencies under the credit facilities and foreign notes when taxpayer makes a payment of either principal or interest on the debt obligations sec_988 gains can arise when the u s dollar taxpayer’s functional_currency appreciates relative to the foreign_currency the sec_988 gain is thus attributable to fluctuation of the exchange rates of currency used to make payments on the debt obligations incurred to acquire qualifying_assets in revrul_2007_33 2007_21_irb_1281 a reit recognized income from rents unlike the facts presented in revrul_2007_33 the facts and representations in denominated in euros the reit also recognized interest_income on euro denominated mortgage loans and sec_988 foreign_currency_gain when the value of the euro changed in value against the dollar the revenue_ruling holds that if sec_988 gain is recognized with respect to income recognized by a reit the gain is treated as qualifying_income under sec_856 or to the extent that the underlying income so qualifies this case indicate that the sec_988 gain is attributable to a liability and expense of taxpayer’s that arose in connection with the acquisition of qualifying reit assets similar to revrul_2007_33 however there is a close nexus to taxpayer’s business of investing in loans and real_property assets which produce income that qualifies under sec_856 or the sec_988 gain recognized in connection with the production of otherwise qualifying_income is treated as being qualified income to the extent that the underlying income so qualifies credit facilities and foreign notes used to acquire assets from which income is derived that qualifies under sec_856 or there is a sufficient nexus to treat the sec_988 income as income that qualifies under sec_856 or except as specifically ruled upon above no opinion is expressed concerning any federal_income_tax consequences relating to the facts herein under any other provision of the code specifically we do not rule whether taxpayer otherwise qualifies as a reit under part ii of subchapter_m of chapter of the code we conclude that to the extent taxpayer recognizes sec_988 income on the plr-135776-07 this ruling is directed only to the taxpayer requesting it taxpayer should attach a copy of this ruling to each tax_return to which it applies sec_6110 of the code provides that this ruling may not be used or cited as precedent sincerely william e coppersmith william e coppersmith chief branch office of associate chief_counsel financial institutions products


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 b02 plr-142279-09 date january legend x country date dear -------------- ----------------------------------------------------- ------- --------------- --------------------- ------------------- this responds to your letter dated date submitted on behalf of x requesting an extension of time under sec_301_9100-3 of the procedure and administration regulations to file an election to be classified as a partnership for federal tax purposes the information submitted states that x was formed in country on date x represents that as a foreign eligible_entity x was eligible to elect to be treated as a partnership for federal tax purposes effective date however x inadvertently failed to timely file a form_8832 entity classification election sec_301_7701-3 of the income_tax regulations provides that so long as a business_entity is not classified as a corporation under sec_301_7701-2 or an eligible_entity it may elect its classification for federal tax purposes sec_301_7701-3 further provides that an eligible_entity with at least two members can elect to be classified as either an association and thus a corporation under plr-142279-09 sec_301_7701-2 or as a partnership and an eligible_entity with a single owner can elect to be classified as an association or to be disregarded as an entity separate from its owner sec_301_7701-3 provides that unless the entity elects otherwise a foreign eligible_entity is a partnership if it has two or more members and at least one member does not have limited_liability except as provided in sec_301_7701-3 sec_301_7701-3 provides that an eligible_entity may elect to be classified other than as provided under sec_301_7701-3 by filing a form_8832 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 on the election form the date specified on form_8832 cannot be more than days prior to the date on which the election is filed and cannot be more than months after the date on which the election 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 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 defines the term regulatory election as including an election with a deadline prescribed by a regulation 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 an election sec_301_9100-2 provides automatic extensions 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 sec_301_9100-3 provides that request 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 based solely on the facts submitted and representations made we conclude that the requirements of sec_301_9100-3 have been satisfied accordingly x is granted an extension of sixty days from the date of this letter to elect to be classified as a partnership for federal tax purposes effective date the election should be made by filing form_8832 with the appropriate service_center a copy of this letter should be attached to the election 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 plr-142279-09 this ruling is directed only to the taxpayer requesting it sec_6110 of the internal_revenue_code provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office a copy of this letter will be sent to x's authorized representative sincerely curt g wilson associate chief_counsel passthroughs special industries enclosure copy of this letter copy for sec_6110 purposes


internal_revenue_service gry gy cr ' majreres ses ol oc s l cf -60 sor ogee department of the treasury washington dc person to contact telephone number refer reply to date feb sec_999 op e eo t employer_identification_number key district legend l t w o a dear applicant this is in further response to your ruling_request dated as modified by subsequent correspondence april concerning the tax treatment of contributions to m formed welfare_benefit_fund may responded to issue sec_1 and as indicated in the ruling letter the administrative file was then forwarded to the exempt_organizations division to respond to issue sec_3 and a ruling letter dated actuarial branch of our employee_plans division of your letter as discussed below earlier in a newly the sponsoring company n provides health insurance and post-retirement medical benefits for its employees represented by the union is provided pursuant to the terms of collective bargaining agreements with the health_insurance_coverage for these employees the most recent agreement was negotiated in n has established m which will fund post-retirement accident and health benefits for o retirees establishment of m obligation through an account under sec_401 internal_revenue_code the sec_401 account previously established under a pension_plan n sponsors n paid the balance of the post-retirement health benefits from its general assets n funded a portion of the health benefit prior to the of the the sole purpose of m is to fund the post-retirement medical benefits set forth in the collective bargaining agreement pension_plan will be amended to provide that the post-retirement medical benefits will be provided first by the assets in the sec_401 account and then from m income_tax as veba described in sec_501 of the code a voluntary employees’ beneficiary association is exempt from federal the m n intends to contribute to m an amount equal to the present_value of post-retirement health obligations for those persons whose benefits are funded under the sec_401 account less the value of the assets held in the sec_401 account n has represented that no additional_amounts will be contributed to the h account if the sum of the assets held in the h account and assets held in m for post-retirement health benefit obligations exceeds the present_value of post-retirement health obligations for those persons whose benefits are funded under the h account and or m the value of the the value of ii i our employee_plans division ruled favorably on the first two issues posed in your ruling_request as follows - whether n’s contributions to m will constitute issue contributions to a welfare_benefit_fund maintained pursuant to a collective bargaining agreement within the meaning of sec_419a f account limit under sec_419 a of the code and wouid therefore not be limited by any - whether n’s contributions to m to fund post-retirement issue medical benefits for retirees will be treated as not exceeding m’s qualified_cost under sec_419 which such contributions are made and the amount of any such deductions with respect to such contributions shall not be limited by reference to the cost allocation principles described in rev c b rul c b rul rul c b for n’s taxable_year in and rev rev the following two issues to be addressed below fall within our jurisdiction - whether the gross_income of m that is set_aside to fund issue post-retirement medical benefits will constitute exempt_function_income under sec_512 of the code issue sec_505 whether m of the code is subject_to the nondiscrimination_rules of sec_511 of the internal_revenue_code imposes a tax on the unrelated_business_taxable_income defined in sec_512 organizations exempt from tax under sec_501 of sec_512 of the code defines the term unrelated_business_taxable_income to mean the gross_income derived by any organization from any unrelated_trade_or_business defined in sec_513 regularly carried on by it deductions which are directly connected with the carrying on of such trade_or_business both computed with the modifications provided in subsection b less the allowable sec_513 of the code provides that the term unrelated_trade_or_business means in the case of any organization subject_to the tax imposed by sec_511 conduct of which is not substantially related to the exercise or performance by such organization of its charitable educational or exemption other purpose or function constituting the basis for its any trade_or_business the sec_1_513-1 of the income_tax regulations provides that a trade_or_business is related to exempt purposes only where the conduct of the business activities has a causal relationship to the achievement of exempt purposes other than through the production_of_income related for purposes of sec_513 of the code only if the causal relationship is to exist the production or the performance of the service from which the gross_income is derived must contribute importantly to the accomplishment of exempt purposes productive of gross_income contribute importantly to such purposes depends in each case upon the facts and circumstances involved for this relationship whether the activities a substantial one further it is substantially sec_512 a of the code provides that in the case of an organization described in sec_501 the term unrelated_business_taxable_income means the gross_income excluding-any exempt_function_income less the deductions allowed by chapter which are directly connected with the production of the gross_income excluding exempt_function_income both computed with the modifications set forth in certain paragraphs of sec_512 sec_512 of the code provides that for purposes the term exempt_function_income means the of subparagraph a gross_income from dues members of the organization as consideration for providing such members or their dependents or guests goods facilities or services in furtherance of the purposes for which the fees charges or similar amounts paid_by such term also means all income organization is tax exempt other than an amount equal to the gross_income derived from any unrelated_trade_or_business regularly carried on by such organization computed as sec_512 which is set_aside in the case of a sec_501 organization to provide for the payment of life sick accident or other_benefits amount which is attributable to income so set_aside is used for a purpose other than that just described such amount shall be included under subparagraph a income for the taxable_year if the organization were subject_to if during the taxable_year an in unrelated business taxable sec_512 i of the code provides that in the case of an organization described in sec_501 a set_aside for the payment of life sick accident or other_benefits may be taken into account under sec_512 only to the extent that such set-aside does not result in an amount of assets set_aside for such purpose in excess of the account limit determined under sec_419a for the taxable_year not taking into account any reserve described in sec_419a post retirement medical benefits a for our employee_plans division has ruled that m is maintained pursuant to a collective bargaining agreement within the meaning of sec_419a of the code accordingly the account limit set forth in sec_512 now rule that the gross_income of m which is set_aside for the payment of post retirement medical benefits will constitute exempt_function_income within the meaning of sec_512 b unrelated_business_income accordingly this income is not subject_to tax as e i does not apply therefore we sec_501 of the code describes a voluntary employees’ beneficiary association veba providing for the payment of life sick accident or other_benefits to its members or their dependents or designated beneficiaries and in which no part of its net_earnings inures other than through such payments to the benefit of any private_shareholder_or_individual sec_505 of the code sets forth additional requirements for an organization desiring to qualify for exemption under sec_501 after december organization described in sec_501 which is part of a plan shall not be exempt under sec_501 unless such plan meets the requirements of sec_505 forth the following nondiscrimination requirements sec_505 states that an is effective for all plan years beginning sec_505 sets it a each class of benefits under the plan is provided under a classification of employees which is set forth in the plan and which is found by the secretary not to be discriminatory in favor of employees who are highly compensated individuals and in the case of each class of benefits such benefits do b not discriminate in favor of employees who are highly compensated individuals sec_505 of the code provides that sec_505 shall not apply to any organization which is part of a plan maintained pursuant to an agreement between employee_representatives and one or more employers if the secretary finds that such agreement is a collective bargaining agreement and that such plan was the subject of good_faith bargaining between such employee_representatives and such employer or employers in the present instance m is maintained pursuant to a collective bargaining agreement which was the subject of good_faith bargaining nondiscrimination requirements of sec_505 of the code will not apply to m therefore we rule that the between n and this ruling is based on the understanding that there will be no material changes in the facts upon which it changes that may have a bearing upon your tax status should be reported to your key district_director is based any we are sending a copy of this ruling to your key district for exempt_organizations matters a - because this letter could help resolve any questio you should keep it with your permanent records out your tax status if you have any questions about this ruling please contact the person whose name and telephone number are shown in the heading of this letter this ruling is directed only to the organization that requested it may not be used or cited as precedent sec_6110 of the code provides that it isguey o thank you for your cooperation sincerely aeretel vy heok gerald v sack chief exempt_organizations technical branch


office_of_chief_counsel department of the treasury internal_revenue_service washington d c number info release date cc intl br1 ----------- genin-141933-03 uil ------------------------------ --------------------------------------------------- -------------------------------- reference distributions of pension plans to nonresident_aliens dear -------------- this responds to your letter to the associate chief_counsel international dated date in response to your inquiry we are providing the following general information this information_letter is advisory only and has no binding effect on the internal_revenue_service you have asked about the application of article pensions annuities alimony and child_support of the united states-australia income_tax treaty treaty available on the internet at http www irs treas gov pub irs-trty aus pdf to a nonresident_alien who has worked in the united_states as an independent_contractor and returned to australia your letter refers specifically to australian athletes and actors who worked temporarily in the united_states accumulated a u s pension and then returned to australia we assume for purposes of this letter that the individuals will be residents of australia within the meaning of paragraph a of article residence at the time the distributions are made article of the treaty provides in pertinent part emphasis added subject_to the provisions of article governmental remuneration pensions and other similar remuneration paid to an individual who is a resident of one of the contracting states in genin-141933-03 consideration of past employment shall be taxable only in that state the term pensions and other similar remuneration as used in this article means periodic_payments made by reason of retirement or death in consideration for services rendered or by way of compensation paid after retirement for injuries received in connection with past employment the u s model income_tax treaty model treaty available on the internet at http www irs treas gov pub irs-trty usmodel pdf contains a provision similar to article of the treaty the treasury_department technical explanation to the model treaty sets forth the requirements that a pension distribution must satisfy in order to qualify for exemption from u s taxation under the pension article the technical explanation contains the following in addition certain distribution_requirements must be met before distributions from these plans would fall under paragraph to qualify as a pension distribution or similar remuneration from a u s plan the employee must have been either employed by the same employer for five years or be at least years old at the time of the distribution in addition the distribution must be made either a on account of death or disability b as part of a series of substantially equal payments over the employee’s life expectancy or over the joint life expectancy of the employee and a beneficiary or c after the employee attained the age of finally the distribution must be made either after separation_from_service or on or after attainment of age a distribution from a pension_plan solely due to termination of the pension_plan is not a distribution falling under paragraph when a distribution does not meet these requirements it does not qualify as a pension for purposes of article of the model treaty although the technical explanation to the model treaty is not directly applicable to the treaty similar principles would be applicable in a case where a distribution does not qualify as a pension the distribution then may be subject_to taxation in the united_states as income from employment depending on the nature of the employment any of article independent personal services article dependent_personal_services or article entertainers might apply to the distribution we hope this information will be helpful to you if you require a definitive determination of the law applicable to your particular facts you may submit a genin-141933-03 request for a private_letter_ruling to this office pursuant to the rules set forth in revproc_2003_1 which is available on the internet at http www irs gov pub irs-irbs irb03-01 pdf if you should have any further questions in this matter please contact ------------------- at ---------------------- not a toll-free number sincerely m grace fleeman senior counsel branch office of associate chief_counsel international