department of the treasury internal_revenue_service washington d c tax_exempt_and_government_entities_division number release date date uil contact person identification_number contact number employer_identification_number form required to be filed tax years dear this is our final_determination that you do not qualify for exemption from federal_income_tax as an organization described in internal_revenue_code sec_501 c recently we sent you a letter in response to your application that proposed an adverse determination the letter explained the facts law and rationale and gave you days to file a protest since we did not receive a protest within the requisite days the proposed adverse determination is now final because you do not qualify for exemption as an organization described in code sec_501 donors may not deduct contributions to you under code sec_170 you must file federai income_tax returns on the form and for the years listed above within days of this file the returns in accordance with their letter unless you request an extension of time to file instructions and do not send them to this office failure_to_file the returns timely may result in a penalty we will make this letter and our proposed adverse determination_letter available for public inspection under code sec_6110 after deleting certain identifying information the enclosed notice notice of intention to disclose and review the two attached letters that show our proposed deletions if you disagree with aur prapased deletions follow the instructions in notice action in accordance with code sec_6104 we will notify the appropriate state officials of our determination by sending them a copy of this final letter and the proposed adverse letter you should contact your state officials if you have any questions about how this determination may affect your state responsibilities and requirements if you agree with our deletions you do not need to take any further please read if you have any questions about this letter please contact the person whose name and telephone number are shown in the heading of this letter federal_income_tax status and responsibilities please contact irs customer service pincite-829-1040 or the irs customer service number for businesses the irs customer service number for people with hearing impairments is if you have any questions about your sincerely robert choi director exempt_organizations rulings agreements enclosure notice redacted proposed adverse determination_letter redacted final adverse determination_letter department of the treasury internal_revenue_service washington d c contact person identification_number contact number fax number employer_identification_number tox bxempt ang rovernment entities date division date uil code legend state state dollar_figure statute a state dollar_figure statute b dear we have considered your application_for recognition of exemption from federal_income_tax under section a of the internal_revenue_code the code based on the information provided we have concluded that you do net qualify for exemption under sec_507 the basis for our conclusion is set forth below facts ‘you were formed on date v as a non-profit membership corporation under the laws of state s asticle iv of your articles of incorporation stated the corporation is a political_organization as defined in u s c sec_527 and state s statute as amended and is organized and operated exclusively for the purpose of accepting contributions and making expenditures_for the transition_period between the election of a as of state s and your articles did not include language stating that the organization's purposes are charitable or are otherwise to accomplish any of the purposes described in sec_504 of the code article xhi stated that in the event of your liquidation dissolution or winding up your net assets will be disposed of exclusively for the purpose of the corporation or in accordance with law on date x and on date z_ you condueted all of your a was elected of state activities between date v your date of formation and date z when your operations ended on date u you filed form_1023 application_for recognition of exemption under sec_501 of the internal_revenue_code on date t we sent you a letter proposing to deny your application did not receive a timely protest the proposed denial letter was final ‘on date y you amended your articles of incorporation to state that you are organized and operated exclusively for educational and charitable purposes within the meaning of sec_501 of the code article iv of your amended articles states we sent you a letter stating that because we you did not file a protest on date s the corporation shail be organized and operated exclusively for the educational and charitable purposes within the meaning of sec_501 of the internal_revenue_code_of_1986 as amended or the corresponding section of any future federal fax code the code the corporation is formed fo i engage in research the gathering of information analyzing such data and the publication of the results fo educate and associate together administrators scholars and others i assist local governments in the metropolitan ragion by studying and recommending regional policies directed at the sotution of mutual problems that transcend the focal jurisdictions and iii promote civic pride in the community the state and the country by providing ceremonies at patriotic and community functions adticle xiii of your amended articles states that in the event of your dissolution of final liquidation ary net assets shall be distributed to one such organization or organizations organized and operated exclusively for charitable or educational_purposes under section c of the code or to the federal government or to a state_or_local_government for a public purpose as the board_of directors shall determin on date z you filed a new form_1023 itis that application that is the subject of this letter from date v your date of formation until date z when you ceased operations you carried on the three related activities described below your original articles of incorporation stated that your board_of directors consists of between two and seven members your articles also stated that the members of the corporation are the persons who serve on your board_of directors from date v yaur date of formation unti date z when your operations ceased you had two directors b who also served as your president and c who also served as your treasurer and secretary under your bylaws because they were directors they were also members of the corporation ‘your bylaws stated that your president is your chief_executive_officer with general powers and duties of supervision and management the president is authorized to perform all other duties required by the board the president also presides at all meetings of the board_of directors and the members pursuant to your bylaws directors determine your mission and purposes participate in electing other directors to your board select appoint and review the performance of officers and manage any personnel you have stated that your directors establish and conduct your fundraising programs approve your budget and monitor your programs cis the managing director of a firm in city r state s prior to b’s participation in your organization he served as a's a and as a’s since date z b has served as a’s you created including and working groups hereafter collectively referred to as the for the purpose of conducting research into issues of public concern to the cifizens of state dollar_figure and attempting to find solutions to such problems the were targeted towards making specific recommendations to a about these issues the focused on issues related to the consisted of volunteers and staff the meetings of the were open to both the public and the media each prepared a report for a that addressed key issues themes and findings which were the result of the public meetings and information gathered and made specific recommendations to a the subject matter of the was based on a’s policies and platform which described during for example a press release stated a press release dated stated a press release stated apress release stated several were created for the purpose of reviewing candidates for in and making recommendations to a regarding those candidates for example a press release stated apress release stated apress release stated the issued its final reports before 4’s you state that these reports were available to the general_public on a website x until date w these reports are not currently available on this website or elsewhere on the intermet but copies may be obtained from a’s office free of charge you state that the accounted for approximately percent of your time and resources employment activities in addition you created and maintained a website on which users could submit their resumes to you for the purpose of applying for appointed non-civil service job positions within state s you collected submissions from applicants through this website and hired human resources specialists to sart through the submissions to identify the most quaiified applicants you provided the information of to the for review the conducted interviews and chose the individuals wished to hire for these positions you created and maintained a database containing information for over individuals interested in positions with the state s available to each of the for use as a resource in filing you made this database appointed non-civil service positions in their departments you state that if you had not undertaken this activity the state civil service office would have performed these activities ‘you state that these activities accounted for approximately percent of your time and resources public events you state that you also conducted a series of intended to promote civic pride in state s and promote patriotism at the state and national level that accompanied the a these activities included a free family festival called d with the exception of the these events were free and open to the general_public invitations were issued for the but were not checked at the door members of the press were invited to all events which were televised to the general_public you state that these activities accounted for approximately percent of your time and resources state law provides that dollar_figurea of state funds are available for_the_use_of a upon his request ues state s statute b you state that a did not accept this funding but instead you paid for alt of the office expenses law sec_801 of the code describes a corporation organized and operated exclusively for charitable educational and other purposes provided that no part ofits net_earnings inures to the benefit of any private_shareholder_or_individual sec_1_501_c_3_-1 of the income_tax regulations ‘regulations’ states that to be described in sec_501 of the code an organization must be both organized and operated exclusively for one or more of the purposes specified in such section if an organization fails to meet either the organizational_test or the operational_test it is not exempt its articles of organization expressly empower it sec_1_501_c_3_-1 of the regulations states that an organization is organized exclusively for one or more exempt purposes only if its articles of organization limit the purposes of the organization to one or more exempt purposes and do not expressly empower the organization to engage other than as an insubstantial part of its activities in activities which are not in furtherance of one or more exempt purposes sec_1 c -1 b ii of the regulations states that an organization is not organized exclusively for one of more exempt purposes if to carry on as more than an insubstantial part of its activities activities which are not in furtherance of one or more exempt purposes sec_1_501_c_3_-1 fiv of the regulations states that no organization will be considered to be organized exclusively for one or more exempt purposes if under its articles of organization its purposes are broader than the purposes specified in sec_501 sec_1_501_c_3_-1 li of the regulations states that an organization is not organized exclusively for one or more exempt purposes if its arficles of organization expressly empawer it to have objectives and engage in activities that would characterize it as an action_organization a8 defined in sec_1 c -1 c of the regulations sec_1_501_c_3_-1 i b of the regulations states that an organization is an action_organization if a substantial part of its activities is attempting to influence legislation which includes advocating the adoption or rejection of legislation sec_1_501_c_3_-1 iv of the regulations states it has the following two ‘an organization is an action_organization if characteristics a its main or primary objective or objectives as distinguished from its incidental or secondary objectives may be attained only by legislation or a defeat of proposed_legislation and b it advocates or campaigns for the attainment of such main or primary objective or objectives as distinguished from engaging in nonpartisan analysis study or research and making the results thereof available to the public in determining whether an organization has such characteristics all the surrounding facts and circumstances including the articles and all activities of the organization are to be considered sec_1_501_c_3_-1 of the regulations provides that an organization will be ragarded as operated exclusively for one or more exempt purposes only if it engages primarily in activities that acoomplish one or more of such exempt purposes specified in sec_601 of the code an organization will not be regarded as exempt if more than an insubstantial part of its activities further a non-exempt purpose sec_1_501_c_3_-1 of the regulations provides that an organization may be recognized as exempt under sec_501 of the code if itis operated exclusively for one or more of the following purposes religious charitable scientific testing for public safety literary educational or prevention of cruelty to children or animals sec_1 c -1 ii of the regulations provides that an organization is not organized or operated exclusively for one or more exempt purposes unless it serves a public rather than a private interest to mest the requirements of this subsection an organization must establish that it is not organized or operated for the benefit of private interests such as designated individuals the creator or his family shareholders of the organization or persons controlled directly or indirectly by such private interests sec_1 c -1 d of the regulations provides that the term charitable is used in saction c of the code in its generally accepted legal sense this term ineludes relief of the poor and distressed or of the underprivileged the erection of public buildings monuments it also includes the promotion of social or works and lessening the burdens of government welfare by relieving the paor and distressed or the underprivileged combating community deterioration lessening neighborhood tansions and eliminating prejudice and discrimination sec_1_501_c_3_-1 of the regulations includes in the definition of educational activities the instruction or training of the individual for the purpose of improving or developing his capabilities and the instruction of the public on subjects useful to the individual and beneficial to the community revrul_62_71 1962_1_cb_85 states that an organization which as its primary objective advocates the adoption of a doctrine or theory which can become effective only by the enactment of legislation does not qualify for exemption under sec_501 of the code because it is an action_organization and thus is not operated exclusively for educational_purposes within the meaning of sec_501 c the organization conducted research made surveys of economic conditions moderated discussion groups and published books and pamphlets the organization's research activities were primarily concerned with a theory or doctrine that could be put into effect only by legislative action in rev_rul 1984_1_cb_191 an organization was exempt from federal_income_tax as an organization described in sec_501 c of the code because it was organized and operated exclusively for educational_purposes the issue was whether it also qualified as an organization described in sec_503 b of the cade educational_organization which normally maintains a regular faculty and curriculum and normally has a regularly enrolled body of pupils or students in attendance at the place where its educational activities are regularly carried on ruling concluded that the organization did not also quality as this type of organization based on the facts presented this revenue sec_503 described an the organization was created to assist local governments in rev_rul 1966_2_cb_210 the organization's primary purpose was to bring about a fair and open-minded consideration of social political and international questions by the promotion and sponsorship of a public forum at which debates and lectures were conducted in carrying out its primary purpose it invited prominent individuals to discuss varying political and social matters and national and community interest it also sponsored debates it invited individuals representing opposing viewpoints to debate particular topics frequently the persons invited to lecture or debate are controversial and occasionally there is opposition to their appearance in revrul_70_79 c of a metropolitan region by studying and recommending regional policies directed at the solution the organization ‘of mutual problems that transcend the local jurisdictions but affect all of them held meetings to discuss identify and cooperate in developing regional plans and policies for ‘such problems as water and air pollution waste disposal water supply and transportation a staff of experts engaged by the organization researched and analyzed problems discussed at the meetings and distributed reports to the local governments and news media although some of the plans and policies formulated by the organization could only be carried out through legislative enactments the organization did not direct its efforts or expend funds in making any legislative recommendations preparing prospective legislation or contacting legislators for the purpose of influencing_legislation the ruling concluded that in conducting nonpartisan analysis study and research into these problems and publishing the results for the benefit of the general_public it also was engaging in educational activities the ruling also concluded that because the organization did not advocate the adoption of any legislation or legislative action to implement these findings it was not an action_organization therefore the organization qualified for exemption under sec_501 of the code revrul_70_186 1970_1_cb_129 described a nonprofit organization formed and operated to preserve and improve a lake for public recreation the organization was financed by contributions from lake front property owners from members of the community adjacent to the lake and from municipalities bordering the lake the ruling held that because the organization ensured the continued use of the lake for public recreational purposes it was performing a charitable activity and exempt under sec_501 of the code the benefits derived from the organization's activities flowed principally to the general_public through the maintenance and improvement of public recreational facilities and any private benefits derived by the lake front property owners did not lessen the public benefits flowing from the organization's operations however the ruling noted that the case was distinguishable from a situation where an organization uses its funds primarily to foster private interests and the benefit if any to the general_public is only incidental revrul_74_117 1974_1_cb_128 involved an organization that was formed for the purpose of implementing an orderly change_of administration of the office of the gavemor of a state in the most efficient and economical fashion by assisting the governor-elect during the period between his election and inauguration ts principal functions were to screen and select applicants for important state appointive offices and to prepare a legislative message and program reflecting the party's platform and a proposed budget and budget message for the governor- elect which he will present for enactment by the legislature immediately after his inauguration the ruling concluded that the organization was not lessening the burdens of government within the meaning of sec_1 c -1 d of the regulations because the state government had not provided services of this type for the govemior-elect and thus had not recognized the activities as functions of government prior to his inauguration the ruling also concluded that while the people of the jurisdiction may weil derive a substantial benefit from the organization's activities its predominant purpose was to effectuate changes in the government's policies and personnel which would make them correspond with the partisan political interests of the governor-elect and his political_party since these activities are partisan in nature and are directed to a substantial extent fo the adoption of legislation the organization was deemed an action_organization as described in sec_1 c -1 c revrul_78_84 1978_1_cb_150 held that an organization formed by citizens of a community the community the state and the country by providing a color guard to promote civic pride in and conducting flag-raising and other ceremonies at patriotic and community functions was promoting patriotism a recognized charitable objective and qualified for exemption under sec_501 of the code the organization otherwise qualified for exemption under sec_501 and was formed specifically for the purpose of promoting civic pride in the community the state and the country the organization conducted flag-raising ceremonies on holidays and at dedications of newly installed flag poles in the community it conducted military funerals for deceased veterans and participated in community parades the organization's expenditures were for uniforms and other necessary equipment by providing a color guard and conducting ceremonies at patriotic celebrations and other community events the organization was opsrating exclusively for charitable purposes rev_rul 1986_1_cb_177 applied the criteria set out in revrul_85_2 infra for determining whether an organization’s activities lessen the burdens of government in this ruling the organization was created to assist a county's law enforcement agencies in policing illegal narcotics traffic mora effectively the organization provided funds that allowed the county's agents to engage in certain activities for which funds were not otherwise available this ruling concluded that by funding activities that the county treats as an integral part of its program to prevent the trafficking of illegal narcotics the county demonstrated that it considered these activities to be its burden county by enabling it to augment its law enforcement activities thus the organization was lessening the burdens of the revrul_85_2 1985_1_cb_178 states that to determine whether an activity is a burden of government the question is whether there is an objective manifestation by the government that it considers such activity to be part of its burden the fact that an organization is engaged in an activity that is somatimes undertaken by the goverment is insufficient to establish a burden of government similarly the fact that the government or an official of the government expresses approval of an organization and its activities is also not sufficient to establish that the organization is lessening the burdens of government a close interrelationship between the government and the organization is evidence that the organization is actually lessening the burdens of the government to determine whether the organization is actually lessening the burdens of government all the relevant facts and circumstances must be considered in 326_us_279 the supreme court held that the presence of a single non-exempt purpose if substantial in nature will destroy the exemption regardless of the number or importance of truly exempt purposes ‘the court found that the trade_association had an underlying commercial motive’ that distinguished its educational program from that carried out by a university in 90_tc_1033 one of the issues was whether a periodical published by a fraternity was ‘educational’ within the meaning of sec_1 -1 i of the regulations in concluding that it was not the tax_court stated an educational purpose is served only where a public interest rather than a private interest of the petitioning organization is the primary beneficiary of the educational activity id pincite in 88_tc_1 aff'd without bublished opinion 838_f2d_465 cir the court_of_appeals upheld the decision of the tax_court that the organization did not lessen a burden of government within the meaning of sec_1_501_c_3_-1 of the regulations and thus was not exempt under sec_501 of the code the organization provided a wide range of services and facilities to the residents of columbia maryland the organization contended that if it did not provide these services and facilities the loca or state government would have te provide them the tax_court stated that this assertion does not mean that the organization's activities ara in fact a burden of government county accepts the organizations activities as their responsibility and recognizes the organization as acting on their behalf activities actually lessen the burden of the state_or_local_government instead the organization must demonstrate that the state of maryland or the in addition the organization must establish that its co ality auditing inc v commissioner 114_tc_498 the organization inspected if two criteria are satisfied and audited the facilities of steel fabricators to determine whether they met certain industry standards to qualify for certification in concluding that the organization did not lessen the burdens of government within the meaning of sec_1_501_c_3_-1 of the regulations the ‘tax court stated an organization can be classified as having the charitable purpose of lessening the burdens of government only it first a governmental_unit must consider the activities engaged in by the organization to be its burden it must be shown that a governmental_unit accepts the activities as its responsibilty and recognizes the organization as acting on its behalf additional factors such as whether the activities are part of a legislated governmental program or an express governmental delegation of function should be considered in the determination of whether activities constitute a government burden the court also said second the organization's performance of the activities must actually lessen the burdens of government id pincite in 92_tc_1053 the court held that an organization operating a schoo to frain individuals far careers as political campaign professionals did not exclusively serve purposes described in sec_501 of the code because it did not operate on a nonpartisan basis and it served private interests more than incidentally the court concluded that the organization conducted its activities to benefit one political party's candidates and entities although the candidates and entities benefited were not organization insiders the court stated that the conferral of benefits on disinterested persons who are not members of a charitable_class may cause an organization to serve a private interest within the meaning of sec_1 -1 d i of the regulations analysis based on our analysis of the information you submitted with your appfication and in subsequent correspondence we have determined that you were not organized and operated exclusively for ‘one or more tax-exempt purposes within the meaning of sec_501 of the code and therefore do not qualify as an organization described in sec_501 c to be described in sec_501 of the code an organization must be both organized and operated exclusively far one or mare of the purposes specified in such section the organizational_test and the operational_test respectively if an organization fails to meet sither the organizational_test or the operational_test it is nat exempt see sec_1 c - a of the regulations for the reasons explained below we have concluded that you failed to satisfy both the organizational_test and the operational_test 1al test organize ‘an organization is organized exclusively for one or more exempt purposes only if its articles of organization limit the purposes of the organization to one or more exempt purposes and do nat expressly empower the organization to engage other than as an insubstantial part of its activities in activities which are not in furtherance of one or more exempt purposes correspondingly an organization is not organized exclusively for one or more exempt purposes if its articles of organization expressly empower it to carry on as more than an insubstantial part of its activities activities which are not in furtherance of one or more exempt purposes in addition no organization will be considered to be organized exclusively for one or more exempt purposes if under its articles of organization its purposes are broader than the purposes specified in sec_504 c see sec_1_501_c_3_-1 of the regulations from date v your date of formation until date z when you ceased operations your articles of incorporation stated that you were a political_organization as defined in u s c e and that you were organized and operated exclusively for the purpose of accepting contributions and making expenditures_for the transition_period between the election of a as of the state s and it was not until date y affer you ceased operations that you amended your articles of incorporation to delete this language and to state that you are organized and operated exclusively for the educational and charitable purposes within the meaning of sec_801 of the code therefore from the date of your formation until you ceased operations you were not organized exclusively for one or more exempt purposes as required by sec_1_501_c_3_-1 of the regulations rather you were organized to engage in activities that furthered non-exempt purposes in addition during this period your articles of incorporation did not limit your purposes to one of more exempt purposes as required by sec_1 c -1 b of the fegulations but expressly empowered you to engage in activities that are not in furtherance of one or mare exempt purposes therefore from date v your date of formation until date z when you ceased operations you failed to satisfy the organizational_test as described in sec_1_501_c_3_-1 of the regulations oper ial test an organization is operated exclusively for one or more exempt purposes only if it engages primarily in activities that accomplish one or more of the exempt purposes specified in sec_504 c and if not more than an insubstantial part ofits activities further a non-exempt purpose see eg sec_1 c -1 c of the regulations better business bureau of washinaton d c ine v united_states supra exempt purposes include among others charitable or educational_purposes and lessening the burdens of government see section big_number -1 d your primary activity accounting for percent of your time and resources consisted of operating the ‘the primary purpose of your was to develop and make specific recommendations to a based on the public policy issues addressed during for however the operation of the did not further an exempt_purpose within the meaning of sec_1_501_c_3_-1 of the regulations educational for purposes of sec_601 of the code educational activities include the instruction or training of the individual for the purpose of improving or developing his capabilities or the instruction of the public on subjects useful to the individual and beneficial to the community sea sec_4 c -1 d of the regulations the primary purpose of your was to develop and make specific recommendations to a based on the public policy issues addressed during campaign for although the meetings of the were open to the general_public and the final reports were available on your website for almost a year the principal purpose for which yau conducted the was to develop and make recommendations to a with respect to issues identified during ‘campaign and only incidentally for the purpose of educating or informing the general_public your principal purpose was not to instruct the public on subjects useful to the individual and beneficial to the community as required by sec_1 c -1 d i of the regutations but rather to develop and make spacific recommendations to a based on the public policy issues addressed during campaign for see also phi delta theta fratemity v commissioner supra an educational purpose is served only where a public interest rather than a private interest of the petitioning organization ig the primary beneficiary of the educational activity you cite three revenue rulings in support of your position that you are an educational_organization within the meaning of sec_1 c -1 of the regulations revrul_64_128 supra revrul_86_258 supra and revrul_70_78 supra revrul_64_128 is not applicable to your situation the issue in that ruling was not whather the ‘organization qualified as an educational_organization within the meaning of sec_1 c - d i of the regulations but whether it also qualified as one described in sec_503 b in addition you are distinguishable from the organization discussed in revrul_86_256 the purpose of the organization described in this ruling was to bring about a fair and open-minded consideration of social paltical and international questions by the promotion and sponsorship of a public forum at which debates and lectures were conducted it invited prominent individuals to discuss varying political and social matters of national and community interest in sponsoring debates it invited individuals representing opposing viewpoints and frequently the persons invited to lecture or debate were controversial and occasionally there was opposition to their appearance however the primary purpose of your was to develop and make specific recommendations to a based on the public policy issues addressed during campaign for thus the issues your considered were partisan in nature you ate also different from the organization described in rev_rul that organization studied and recommended regional policies directed at solving various problems affecting certain local jurisdictions it did not direct its efforts or expend funds in making any legislative recommendations also because it did not advocate the adoption of any legislation or legislative action to implement its findings it was not an action_organization however the primary purpose of your was to develop and make specific recommendations to a based on the public policy issues addressed during campaign for the recommendations your made to a were suggestions to a for legislation as solutions to the issues addressed organization within the meaning of sec_1 c -1 c of the regulations for purposes of sec_501 of the code the term charitable includes lessening the burdens of goverment see sec_1 c -1 d of the regulations whether an organization's activity is a burden of government depends on whether there is an objective manifestation by the governmental that it considers such activity to be part of its burden the fact an organization is engaged in an activity that is sometimes undertaken by the govemment is insufficient to establish a burden of government in determining whether an organization is actually lessening the burdens of government all the relevant facts and circumstances must be considered inc v commissioner supra recreation assoc v commissioner supra quality auditing co see eg revrul_85_1 supra’ revrul_85_2 supra columbia park and further as discussed below we have concluded that your are an action lessening the burdens of government you have not established that operating the was a governmental responsibility of state s you have not identified any statements or actions by the state s government by which it officially acknowledged or recognized that conducting the activities of the or making legislative recommendations to the was a state governmental obligation nor have you demonstrated that the state s state government had expressly approved your activities as helping to relieve the state of a state responsibility see eg supra although state law appropriated dollar_figurea for_the_use_of the these funds were state dollar_figure statute b the fact that a available only if requested by the and only rejected these funds is not relevant because the statute does not address expenses for the activities of your relating to developing and making specific recommendations to the thus you ave similar to the organizations in columbia park and commissioner supra and quality auditing co recreation assoc v rev_rul supra rev_rul inc supra finally you are also to the organization described in revrul_74_117 supra which concluded that the organization's activities did not relieve any burden of the government within the meaning of sec_1 c -1 d of the regulations in that ruling the organization screened and selected applicants for important state appointive offices and prepared a legislative message and program reflecting the party's platform and a proposed budget and budget message for the governor-elect to present for enactment by the legislature immediately after his inauguration your activities the purpose of which was to develop and make specific recommendations to a based on the public issues identified during campaign for and your employment activities as described above are to those carried on by the organization described in this ruling therefore your operation of the does not lessen the burdens of government’ within the meaning of sec_1 c -1 d of the regulations action_organization furthermore based on all the facts and circumstances we have concluded that you were an action_organization within the meaning of sec_1 c -1 c of the regulations an organization is an action_organization if a substantial part of its activities is attempting to influence legislation which includes advocating the adoption or rejection of legislation the primary purpose of your was to develop and make specific recommendations to a based on the public policy issues addressed during campaign for thus because your operation of the was partisan in nature and was directed to a substantial extent toward the adoption of iegislation you were an action_organization under sec_1 c -1 of the regulations in this respect you were to the organization in revrul_74_117 supra you are also similar to the organization in revrul_62_71 supra which concluded that an organization that adopted a doctrine or theary that can become effective only by the enactment of legislation is an action_organization suggestions for legislation as solutions to the issues addressed therefore because you were an ‘action’ organization described in sec_1 c -1 c of the regulations you were not operated exclusively for one or more exempt purposes as required in sec_1 -1 a of the regulations the recommendations your made to a were public events your public events activities accounted for percent of your overall time and resources therefore they do not constitute your primary activity within the meaning of sec_1 c - thus even if these activities promoted patriotism and civic pride a sec_1 of the regulations described in revrul_78_84 supra because you did not operate primarily for these purposes you were not operated exclusively for one or more exempt purposes as required by sec_1 c -1a of the regulations ‘substantial nor xempt purpose sec_1 c -1 c of the regulations better business bureau of inc supra in addition even if your furthered an exempt_purpose your employment activities as explained below furthered a substantial non-exempt purpose thus precluding you from qualifying for exemption under sec_501 of the code an organization will not be regarded as operated exclusively for one or more exempt purposes if more than an insubstantial part of its activities further a non-exempt purpose the presence of a single substantial non-exempt purpose will destroy exemption even if additional exempt purposes are present see e a washington d c employment activities ‘your employment activities did not further a charitable purpose within the meaning of sec_1 c -1 d of the regulations because they did not lessen the burdens of government revrul_85_1 supra revrul_85_2 supra within the meaning of that regulation see e a columbia commissioner supra your employment activities provided employment services for the with respect to your conducting these activities on your own did not replace governmental activities that were the responsibility of the state s civil service office because you have not established that these specific activities were a governmental burden you state that had you not carried on these activities however the fact that a governmental agency may undertake an activity if requested is insufficient to establish that the activity is a burden of the government further you have demonstrated no official acknowledgement by state s that these activities were governmental burden or that the state had formally approved you conducting these activities as a means of relieving this burden park and recreation assoc v commissioner supra quality auditing co inc v furthermore your employment activities ware to the employment activities conducted by the organization in revrul_74_147 supra i screening and selecting applicants for important state appointive offices that the organization's activities did not relieve any burden of the government within the meaning of sec_1 c -1 d of the regulations that ruling concluded therefore your employment activities which you state accounted for percent of your time and resources furthered a substantial non-exempt purpose impermissible private benefit furthermare even if you otherwise qualified for exemption as an organization described in sec_501 of the code your activities furthered a substantial private interest therefore you are precluded from otherwise qualifying for exemption ‘an organization is not organized or operated exclusively for one or more exempt purposes unless it serves a public rather than a private interest it is not organized or operated for the benefit of private interests sea sec_1 c - fi of the regulations thus an organization must establish that officer the primary purpose of your was to develop and make specific recommendations to a based on the public policy issues addressed curing campaign for b one of your two members directors and officers previously served as a's a and as a’ 's currently b serves as a as one of your officers b held the position of president under your bylaws the president also served as your chief_executive_officer your other member director and c was a practicing thus b had the authority to exercise substantial influence and control_over your operations and activities accordingly you were not governed by an independent board and your principal officer the president and chief_executive_officer _ b's close connection to a strongly suggests that your board_of directors did not represent a broad public interest but rather that you were operated primarily for the personal benefit of a who was a private citizen until additionally you are to the organization described in revrul_74_117 supra one of the conclusions in that ruling was that while the people of the jurisdiction may well deriva a substantial benefit from the organization's activities its predominant purpose was to effectuate changes in the government's policies and personnel which would make them correspond with the partisan political interests of and thus your activities by means of the public policy recommendations it made to a and your employment activities by identifying and recommending candidates for appointive non-civil service positions conferred a more than incidental private benefit on a a private citizen until and the political_party represents these activities are also similar to the type of benefits conferred on private individuals by the organization in amarican gampaian academy supra therefore you were operated primarily for the benefit of private interests rather than public interests in violation of the proscription in sec_1_501_c_3_-1 of the regulations conclusion you have not established that you met both the organizational_test and the operational tests because you were not organized and operated exclusively for one or more exempt purposes your primary activities did not further a charitable or educational purpose or lessen the burdens of government instead your primary activities furthered a substantial non-exempt purpose in addition you were an action_organization finally you operated primarily for the benefit of private rather than public interests accordingly you de not qualify far exemption as an organization described in sec_501 of the cade and you must file federal_income_tax returns you have the right to file protest if you believe this determination is incorrect to protest you must submit a statement of your views and fully explain your reasoning you must submit the statement signed by one of your officers within days from the date of this letter we will consider your statement and decide if the information affects our determination your protest statement should be accompanied by the following declaration under penalties of perjury deciare that have examined this protest statement including accompanying documents and to the best of my knowledge and belief the statement contains all the relevant facts and such facts are true correct and complete for more information about representation see publication practice_before_the_irs you also have a right to request a conference to discuss your protest this request should be made when you file your protest statement an attorney certified_public_accountant or an individual enrolled to practice before the intemal revenue service may represent you if you want representation during the conference procedures you must file a proper power_of_attorney form_2848 pawar of atfomey and declaration of representative if you have not already done so and power_of_attorney all forms and publications mentioned in this letter can be found at www irs gov forms and publications f you do not file a protest within days you will not be able to file a suit for declaratory_judgment in court because the internal_revenue_service irs will consider the failure to protest as a failure to exhaust available administrative remedies code sec_7428 provides in part that a declaratory_judgment or decree shall not be issued in any proceeding unless the tax_court the united_states court of federal claims or the district_court of the united_states for the district of columbia determines that the organization involved has exhausted all of the administrative remedies available to it within the irs if you do not intend to protest this determination you do not need to take any further action if we do not hear from you within days we will issue a final adverse determination_letter that letter will provide information about filing tax retums and other matters please send your protest statement form_2848 and any supporting documents to this address internal_revenue_service constitution ave nw washington dc ‘you may also fax your statement using the fax number shown in the heading of this letter if you fax your statement please call the person identified in the heading of this letter to confirm that he or she received your fax tf you have any questions please contact the parson whose name and telephone number are shown in the heading of this letter in accordance with the power_of_attorney currently on file with the internal_revenue_service we are sending a copy of this letter to your authorized representative sincerely robert choi director exempt_organizations rulings agreements


t c memo united_states tax_court michael r and sheila olsen petitioners v commissioner of internal revenue respondent docket no filed date michael and sheila olsen pro sese daniel j parent for respondent memorandum opinion wolfe special_trial_judge respondent determined a deficiency in petitioners' federal_income_tax in the amount of s600 for the taxable_year this matter is before the court on respondent's motion for entry of decision on date this case was recalled for trial in san francisco california after the execution of a - - stipulation of facts and several hours of testimony by petitioner sheila olsen the court called a recess the parties then met to confer and negotiate in private when the court recalled the case counsel for respondent announced that the parties had reached a settlement respondent's counsel read the oral stipulation of settlement into the record as follows following along the notice_of_deficiency there was unemployment_compensation of dollar_figure which the petitioners agree belongs in their income there were schedule c other expenses of dollar_figure the petitioners agree they're not allowed those expenses there was a depreciation schedule c expense allowed of dollar_figure to the taxpayer's credit petitioners agree they will not take that additional_depreciation and the petitioners agree that they are not entitled to dollar_figure of rent that was previously allowed this will result in an increased deficiency respondent's counsel further noted that there was no penalty in the notice_of_deficiency and under the stipulated settlement there still are no penalties the court then asked petitioners whether the oral stipulation as read into the record by respondent's counsel was satisfactory petitioners each replied yes your honor the court then ordered the parties to submit a written stipulation for decision within days the court further stated that the court would entertain a motion for entry of decision if the court did not receive a stipulation for decision the court again inquired whether petitioners understood the court's insistence on a stipulation for decision and its willingness to entertain a motion for decision petitioners both responded in the affirmative the court then inquired whether petitioners understood the amount of net tax that would result from the agreement sheila olsen responded yes they told us he gave us an idea respondent sent petitioners a proposed decision document supported by a calculation of the deficiency in income_tax petitioners refused to execute the decision document consequently respondent filed a motion for entry of decision on date respondent contends that we should enter a decision that reflects the terms orally stipulated by the parties respondent submitted a calculation of tax that reflects the specific terms of the settlement on which the parties orally agreed rule 91l e tax_court rules_of_practice and procedure concerning stipulation for trial provides in part a stipulation shall be treated to the extent of its terms as a conclusive admission by the parties to the stipulation unless otherwise permitted by the court or agreed upon by those parties the court will not permit a party to a stipulation to qualify change or contradict a stipulation in whole or in part except that it may do so where justice requires this court regularly enforces a settlement stipulation whether written or orally stipulated into the record unless for reasons of justice a party should be relieved from that stipulation see 476_f2d_628 2d cir affg per curiam tcmemo_1971_219 85_tc_359 saigh v commissioner t1t c lee v commissioner tcmemo_1993_254 the record in this case clearly shows that the stipulation was read into the record and agreed to by petitioners and was fairly and freely entered into by both parties when the court asked petitioners whether they agreed with the stipulation petitioners responded yes your honor petitioners also understood the amount of net tax due resulting from the agreement the record includes no evidence or reasonable argument to show that justice regquires that petitioners be relieved of their stipulation accordingly we hold that the parties' oral stipulation is binding and enforceable moreover we find that respondent's calculation of tax accurately reflects the stipulation that was orally read into the record therefore we grant respondent's motion for entry of decision and hold that petitioners are liable for a deficiency in income_tax for the year in the amount of dollar_figure to reflect the foregoing an appropriate order and decision will be entered


internal_revenue_service department of treasury significant index nos washington dc coniact person telephone number in mnererence op e ep t date jun pa legend - taxpayer a taxpayerb trust e trust f ira m iran ira o ira p dear this is in response to your request for a private_letter_ruling dated as submitted on your behalf by your authorized revised by a letter dated representative in support of your request you have submitted the following facts and representations 4y page taxpayer a and taxpayer b were husband and wife on taxpayer a and taxpayer b each created a revocable_living_trust - trust e and trust f respectively the settlor of trust f is taxpayer b taxpayer a and taxpayer b both executed first amendments to their revocable living trusts on age of sixty-six taxpayer b is presently age sixty-four taxpayer a died on at the at his death taxpayer a was the participant of numerous individual_retirement_accounts iras and named taxpayer b individually as beneficiary of some of the iras and named trust f as the beneficiary of other iras the beneficiary designations for the iras were executed by taxpayer a at various times prior to his death taxpayer b serves as trustee of trust f taxpayer b is also the settlor and the sole current beneficiary of trust f and retains the right to amend or revoke trust f in whole or in part sec_3_2 of trust f provides as follows the settlor expressly reserves the right at any time and from time to time during settlor’s lifetime by instrument in writing delivered to the trustee to alter amend or revoke this agreement either in whole or in part in case of revocation the insurance policies securities and property held in trust hereunder or that part thereof as to which the agreement may be revoked shall be delivered by the trustee to the settlor or in accordance with the settlor’s written instructions during taxpayer b’s lifetime paragraph a of trust f provides that the trustee will pay to taxpayer b or apply for her benefit all of the net_income from trust f in convenient installments but at least monthly paragraph b of trust f provides that during taxpayer b’s lifetime the trustee will make discretionary principal payments to taxpayer b for her health support and maintenance paragraph b also requires the trustee to pay taxpayer b the finally amount of any and all taxes state county or federal or otherwise arising from trust f paragraph b authorizes the trustee to make discretionary principal payments ‘to or for the support maintenance health and education of settlor’s spouse taxpayer a and other dependents since taxpayer a is deceased and taxpayer b has no other dependents taxpayer b is the sole current beneficiary of trust f and holds the unfettered right to revoke trust f either in whole or in part the custodians of taxpayer a’s iras ie iras m n o p and q have not distributed it is proposed that the custodians will distribute the ira proceeds any ira proceeds to trust f in lump sums to trust f revoke trust f with respect to iras m n o p and q and will direct the custodians of iras m n o p and q to transfer the balances to an ira which will be established in taxpayer b’s name in a direct trustee-to-trustee transfer as the term is used in sec_401 of the code in order to achieve a spousal_rollover taxpayer b will immediately if taxpayer b does not alter amend or revoke trust f with respect to the ira page proceeds taxpayer a’s ira proceeds must be distributed to trust f and will be added to the trust f estate to be administered under the terms of trust f it is represented that iras m n o p and q met the requirements of sec_408 of the code at all times and that the ira set up and maintained by taxpayer b to hold the assets transferred from iras m n o p and q will also meet the requirements of sec_408 of the code based on the above you request the following letter rulings iras m n o p and q do not represent inherited iras within the meaning of code sec_408 with respect to taxpayer b taxpayer b is eligible to roll over the lump sum distributions from iras m n o p and q into an ira established and maintained in her own name pursuant to sec_408 of the code if as part of partially revoking trust f she directs the custodians of iras m n o p and q to transfer the ira balances to an ira established and maintained in her own name in a direct trustee-to-trustee transfer as the term is used in sec_401 of the code taxpayer b will not be required to include in gross_income for federal_income_tax purposes for the year in which the spousal_rollover is timely made any portion of the amounts transferred from iras m n o p and q to an ira established and maintained in her own name sec_408 of the code states except as otherwise provided that any amount_paid or distributed out of an ira shall be included in gross_income by the payee or distributee as the case may be in the manner provided under sec_72 sec_408 of the code provides that sec_408 does not apply to any amount_paid or distributed out of an ira to the individual for whose benefit the account is maintained if the entire amount received including money and any other_property is paid into an ira other than an endowment_contract for the benefit of such individual not later than the day after the day on which he or she receives the payment or distribution sec_408 of the code provides in pertinent part that in the case of an inherited ira sec_408 shall not apply to any amount received by an individual from such account and no amount transferred from such account to another ira shall be excluded from income by reason of such transfer and such inherited account shall not be treated as an ira for purposes of determining whether any other amount is a rollover_contribution sec_408 of the code provides that an ira shall be treated as inherited if page the individual for whose benefit the account is maintained acquired such account by reason of the death of another individual and such individual was not the surviving_spouse of such other individual thus pursuant to sec_408 of the code a surviving_spouse who acquires ira proceeds from and by reason of the death of a husband may elect to treat those ira proceeds as her own and roll them over into her own ira sec_408 of the code provides generally that sec_408 shall not apply to any amount to the extent such amount is required to be distributed under either subsection a or b sec_1_408-8 a-4 b of the proposed_regulations provides in part that in the case of an individual dying after date the only beneficiary of the individual who may elect to treat the beneficiary’s entire_interest in the trust or the remaining part of such interest if distributions thereof has commenced to the beneficiary as the beneficiary’s own account is the individual’s surviving_spouse ifthe surviving_spouse makes such an election the spouse’s interest in the account would then be subject_to the distribution_requirements of sec_401 of the code rather than those of sec_401 of the code generally if a decedent’s ira passes through a third party eg a_trust and then is distributed to the decedent’s surviving_spouse said spouse will be treated as acquiring it from the trust a third party and not from the decedent thus generally said surviving_spouse will not be eligible to roll it over into his or her ira however in a situation where the surviving_spouse is the sole trustee of a_trust which trust is the beneficiary of an ira the surviving_spouse has the power_to_revoke the trust and does revoke it and as a result of the revocation the ira proceeds are paid directly to the surviving_spouse the internal_revenue_service service will treat the surviving_spouse as having acquired the ira proceeds from the decedent and not from the trust in the present case trust f is the named beneficiary of the proceeds of taxpayer a’s iras taxpayer b is the surviving_spouse of taxpayer a the settlor of trust f and the sole current beneficiary of trust f taxpayer b is the sole trustee of trust f and taxpayer b has the power_to_revoke trust f and receive all of the trust f assets taxpayer b intends to cause the proceeds of taxpayer a’s iras to be paid to trust f the beneficiary thereof subsequent to payment taxpayer b will revoke trust f pursuant to trust terms asa result of said revocation the proceeds of taxpayer a’s iras will be payable to taxpayer b taxpayer b as trustee of trust f will then pay herself as the settlor of trust f the proceeds of taxpayer a’s iras under the circumstances the service will not apply the general_rule but for purposes of code sec_408 will treat taxpayer b as having acquired iras m n o p and q directly from taxpayer a and not from trust f furthermore as noted above taxpayer b is the surviving_spouse of taxpayer a vege therefore with respect to your first ruling_request we conclude that iras m n o p and q do not represent inherited iras within the meaning of code sec_408 with tespect to taxpayer b with respect to ruling requests two and three we conclude that taxpayer b is eligible to roll over the lump sum distributions from iras m n o p and q into an ira established and maintained in her own name in a direct trustee-to-trustee transfer as the term is used in sec_401 of the code we also conclude that taxpayer b will not be required to include in gross_income for federal_income_tax purposes for the year in which the spousal_rollover is timely made any portion of the amounts transferred from iras m n o p and q to an ira established and maintained in taxpayer b’s own name the above ruling is based upon the assumption that iras m n o p and q established by taxpayer a and the ira to be established by taxpayer b met the requirements of sec_408 of the code at all times during the transaction and that the transfers from iras m n o p and q to the ira established by taxpayer b will meet all the applicable_requirements of sec_408 of the code a copy of this ruling is being sent to your authorized representative in accordance with a power_of_attorney on file in this office incerely ny oyce e floyd chief employee_plans technical branch enclosures deleted copy of this letter notice of intention to disclose cc


department of thetreasury j x internal_revenue_service vo oo washington d c tax_exempt_and_government_entities_division uniform issue list se vt ep ral ty xxxxx xxxxx xxxxx legend taxpayer a xxxxx ira x xxxxx ira y xxxxx ira z xxxxx financial_institution c xxxxx financial_institution d xxxxx individual e xxxxx amount n dollar_figure xxxxx amount o dollar_figure xxxxx amount p dollar_figure xxxxx date xxxxx date xxxxx date xxxxx date xxxxx date xxxxx xxxxx page date xxxxx date xxxxxxx dear xxxxxx this is in response to a letter ruling’ request dated date as supplemented by correspondence dated september and date and date submitted by your authorized representative on your behalf for a waiver of the 60-day rollover requirement contained in sec_408 of the internal_revenue_code code the following facts and representations have been made subject_to penalties of perjury taxpayer a age represents that he received distributions from ira x ira y and ira z of amount n amount o and amount p respectively taxpayer a asserts that his failure to accomplish a rollover within the 60-day period prescribed by sec_408 of the code was due to the refusal of financial_institution d to accept the rollover when the checks representing the distributions were presented by taxpayer a taxpayer a further represents that amounts n o and p have not been used for any other purpose taxpayer a maintained three individual_retirement_arrangements ira x ira y and ira z with financial_institution c in taxpayer a decided to roll over all three iras to financial_institution d the account balances of ira x ira y and ira z minus certain stock securities were distributed to taxpayer a in check sec_1 and respectively financial_institution c mailed check dated date check dated date and check dated date to taxpayer a’s residence directly from financial_institution c to financial_institution d taxpayer a received check for amount n on date he received check for amount o and check for amount p on date that portion of the iras invested in stock was to be transferred prior to his actual receipt of the distribution checks taxpayer a contacted his financial advisor individual e who is employed by financial_institution d taxpayer a informed individual e of taxpayer a’s decision to have maintenance of his ira investments switched from financial_institution c to financial_institution d individual e agreed to take care of the preliminaries for the trustee to trustee stock transfer which individual e estimated would take approximately three weeks individual e also told taxpayer a that upon receipt by financial_institution d of the necessary paperwork from financial_institution c he would then contact taxpayer a to arrange a meeting between individual e and taxpayer a at the offices of financial_institution d to finalize processing of the ira assets previously held by financial_institution c into ira investments held by xxxxx page financial_institution d however several weeks passed and individual e did not contact taxpayer a on date taxpayer a contacted financial_institution d at which time financial_institution d gave taxpayer a an appointment for date which was fewer than days after taxpayer a received check sec_1 and taxpayer a presented these checks to individual e to accomplish the planned rollover of the distributions from iras x y and z to an ira at financial_institution d however financial_institution d refused to accept the checks based on the above facts and representations you request a ruling that the internal_revenue_service waive the 60-day rollover requirement contained in sec_408 of the code with respect to the distribution of amount n amount o and amount p from ira x ira y and ira z sec_408 of the code provides that except as otherwise provided in sec_408 any amount_paid or distributed out of an ira shall be included in gross_income by the payee or distributee as the case may be in the manner provided under sec_72 of the code sec_408 of the code defines and provides the rules applicable to ira_rollovers sec_408 of the code provides that sec_408 does not apply to any amount_paid or distributed out of an ira to the individual for whose benefit the ira is maintained if-- i ii the entire amount received including money and any other_property is paid into an ira for the benefit of such individual not later than the day after the day on which the individual receives the payment or distribution or the entire amount received including money and any other_property is paid into an eligible_retirement_plan other than an ira for the benefit of such individual not later than the day after the date on which the payment or distribution is received except that the maximum amount which may be paid into such plan may not exceed the portion of the amount received which is includible in gross_income determined without regard to sec_408 sec_408 of the code provides that sec_408 does not apply to any amount described in sec_408 received by an individual from an ira if at any time during the 1-year period ending on the day of such receipt such individual received any other amount described in section xxxxx page d a i from an ira which was not includible in gross_income because of the application of sec_408 d sec_408 of the code provides a similar 60-day rollover period for partial rollovers sec_408 of the code provides that the secretary may waive the day requirement under sec_408 and sec_408 where the failure to waive such requirement would be against equity or good conscience including casualty disaster or other events beyond the reasonable control of the individual subject_to such requirement only distributions that occurred after date are eligible for the waiver under sec_408 of the code whether to grant a waiver of the 60-day rollover requirement pursuant to sec_408 the service will consider all relevant facts and circumstances including errors committed by a financial_institution inability to complete a rollover due to death disability hospitalization incarceration restrictions imposed by a foreign_country or postal error the use of the amount distributed for example in the case of payment by check whether the check was cashed and the time elapsed since the distribution occurred the information presented and documentation submitted by taxpayer a is consistent with his assertion that his failure to accomplish a timely rollover was caused by the refusal of financial_institution d to accept the rollover when the checks representing the distributions were presented by taxpayer a therefore pursuant to sec_408 of the code the service hereby waives the 60-day rollover requirement with respect to the distribution of amounts n o and p from iras x y and z taxpayer a is granted a period of days from the issuance of this ruling letter to contribute amounts n o and p into a rollover ira or iras provided all other requirements of sec_408 of the code except the 60-day requirement are met with respect to amount n amount o and amount p contribution of each amount will be considered a rollover_contribution within the meaning of sec_408 of the code this ruling assumes that ira x ira y and ira z satisfied the qualification requirements of sec_408 of the code at all times relevant to this transaction this ruling is directed only to the taxpayer who requested it sec_6110 of the code provides that it may not be used or cited as precedent a copy of this letter has been sent to your authorized representative in accordance with a power_of_attorney on file in this office 20vu938034 page if you wish to inquire about this ruling please contact 000c i d 000k by telephone at xxxxx please address all correspondence to se t ep ra‘t4 sincerely yours pp otnn a whrhaetp - donzell h littlejohn manager employee_plans technical group enclosures deleted copy of ruling letter notice of intention to disclose cc xxxxx xxxxx xxxxx xxxxxk


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-112256-04 date date -------------------------------------------------- -------------- ------------------------------------------ ---------------------- legend x --------------------------------------------------- country entity date dear ---------------- this letter responds to a letter dated date written on behalf of x requesting a ruling that x be granted an extension of time under sec_301_9100-3 of the procedure and administration regulations to file an election under sec_301_7701-3 to be treated as a disregarded_entity for federal tax purposes facts according to the information submitted x is a country entity x intended to elect to be treated as a disregarded_entity for federal tax purposes effective date however the form_8832 entity classification election inadvertently was not timely filed x represents that it is an entity that is eligible to elect under sec_301_7701-3 to be a disregarded_entity for federal_income_tax purposes sec_301_7701-3 provides in part that a business_entity that is not law and analysis classified as a corporation under sec_301_7701-2 or an eligible_entity can elect its classification for federal tax purposes as provided in sec_301_7701-3 plr-112256-04 sec_301_7701-3 provides guidance on the classification of a foreign eligible_entity for federal 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 a foreign eligible_entity has one owner it may elect to be treated as a disregarded_entity pursuant to the rules in sec_301_7701-3 if a foreign eligible_entity has more than one owner it may elect to be treated as a partnership pursuant to the rules in sec_301_7701-3 sec_301_7701-3 provides that an entity classification election must be filed on form_8832 and can be effective up to days prior to the date the form is filed or up to months after the date on which the form 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 defines the term regulatory election as including an election whose deadline is 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_9100-1 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 sec_301 a conclusion based solely on the facts submitted and the 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 form_8832 with the appropriate service_center and elect to be treated as a disregarded_entity for federal tax purposes effective date to be valid the election must contain any consents required under sec_301_7701-3 and iii further a copy of this letter should be attached to the election plr-112256-04 except as specifically set forth above no opinion is expressed or implied as to the federal_income_tax consequences of the transactions described above under any other provision of the code this ruling is directed only to the taxpayer on whose behalf it was requested sec_6110 of the internal_revenue_code provides that it may not be used or cited as precedent pursuant to a power_of_attorney on file with this office a copy of this letter is sincerely s heather c maloy heather c maloy associate chief_counsel passthroughs and special industries being sent to your authorized representative enclosures cc --------------------------- copy of this letter copy for sec_6110 purposes -------------- ------------------------------------- --------------------- -------------------------------------- ------------------------------------------------------------- -------------------------------------- -------------------------


internal_revenue_service index no 468a number release date cc dom p si plr-106971-98 re revised schedule of ruling amounts taxpayer parent plant location commission a commission b state a district fund law dear this letter responds to the request of taxpayer dated date and supplemental information submitted by taxpayer for a revised schedule of ruling amounts in accordance with sec_1_468a-3 of the income_tax regulations taxpayer is requesting a review of the prior revised schedule of ruling amounts since pursuant to the law the estimated date on which the plant will no longer be included in taxpayer’s rate base for ratemaking purposes has been revised taxpayer was previously granted a revised schedule of ruling amounts on date information was submitted pursuant to sec_1_468a-3 we understand the facts as presented by taxpayer to be as plr-106971-98 follows taxpayer as one of the owners of the plant has a interest as a tenant in common the plant is situated in location the plant’s operating license is schedule to expire on taxpayer is under the jurisdiction of commission a and commission b for a total of these percentages may vary slightly from year to year taxpayer proposes to decommission the plant using the prompt removal dismantling method taxpayer is under the audit jurisdiction of the district_director of district the request for a revised schedule of ruling amounts relates only to commission a on the governor of state a signed the law under the law certain costs relating to generation-related assets and obligations including the plant which are being collected by commission a approved rates on in commission a determined that the costs of the plant were would be recovered over a period ending on because of the law the previous for the plant will be further the law did not change the amount of decommissioning costs for the plant included in taxpayer’s cost of service as set forth in nor commission a’s underlying assumptions regarding such decommissioning costs including the period of years over which decommissioning costs for the plant will be included in taxpayer’s cost of service there will be no change in the decommissioning costs for the plant nor the ruling amounts that were authorized in taxpayer’s prior revised schedule of ruling amounts dated date in commission a included decommission costs of in taxpayer’s cost of service plr-106971-98 for ratemaking purposes commission a used a base cost of for decommissioning the taxpayer’s interest in the plant the cost of decommissioning the plant escalated at annually results in a future decommissioning cost of the funding_period for the plant extends from the level_funding limitation period extends from the estimated_useful_life of the plant is the estimated period for which the fund will be in effect is therefore the qualifying percentage is the after-tax rate of return expected to be earned on the assets of the fund is previously the energy policy act of was taken into account in determining the after-tax rate of return there are no proceedings before either commission that may result in an increase or decrease in the amount of decommissioning costs for the plant included in taxpayer’s cost of service for ratemaking purposes sec_468a of the internal_revenue_code provides that a taxpayer may elect to deduct the amount of payments made to a qualified nuclear decommissioning fund however sec_468a limits the amount_paid into the fund for any_tax year to the lesser_of the amount of nuclear decommissioning costs allocable to the fund that is included in the taxpayer’s cost of service for ratemaking purposes for the tax_year or the ruling_amount applicable to this year sec_468a of the code provides that no deduction shall be allowed for any payment to the nuclear decommissioning fund unless the taxpayer requests and receives from the secretary a schedule of ruling amounts the ruling_amount for any_tax year is defined under sec_468a as the amount which the secretary determines to be necessary to fund that portion of nuclear decommissioning costs which bears the same ratio to the nuclear power plant as the period for which the fund is in effect bears to the estimated_useful_life of the plant this term is further defined to include the amount necessary to prevent excessive funding of nuclear decommissioning costs or funding of these costs at a rate more rapid than level_funding taking into account such discount rates as the secretary deems appropriate sec_468a of the code provides that a taxpayer shall be deemed to have made a payment to the nuclear decommissioning plr-106971-98 fund on the last day of the tax_year if the payment is made on account of this tax_year within months after the close of the tax_year sec_1_468a-1 of the regulations provides that an eligible_taxpayer may elect to deduct nuclear decommissioning costs under sec_468a of the code an eligible_taxpayer as defined under sec_1_468a-1 is a taxpayer that has a qualifying interest in a nuclear power plant as defined under sec_1_468a-1 a qualifying interest is among other things a direct ownership_interest including an interest held as a tenant in common or joint tenant sec_1_468a-2 of the regulations provides that the maximum amount of cash payments made or deemed made to a nuclear decommissioning fund during any_tax year shall not exceed the lesser_of the cost of service amount applicable to the nuclear decommissioning fund for such tax_year or the ruling_amount applicable to the nuclear decommissioning fund for such tax_year sec_1_468a-3 of the regulations provides that in general a schedule of ruling amounts for a nuclear decommissioning fund is a ruling specifying annual payments that over the tax years remaining in the funding_period as of the date the schedule first applies will result in a projected balance of the nuclear decommissioning fund as of the last day of the funding_period equal to and in no event more than the amount of decommissioning costs allocable to the fund sec_1_468a-3 bases the schedule of ruling amounts on the reasonable assumptions and determinations used by the applicable public_utility commission s in establishing or approving the amount of decommissioning costs to be included in the cost of service for ratemaking purposes taking into account amounts that are otherwise required to be included in the taxpayer’s income under sec_88 of the code and the regulations thereunder each schedule of ruling amounts shall be based on the public_utility commission’s reasonable assumptions concerning i the after-tax rate of return to be earned by the amounts collected for decommissioning ii the total estimated cost of decommissioning the nuclear power plant and iii the frequency of contributions to the nuclear decommissioning fund for a tax_year plr-106971-98 sec_1_468a-3 of the regulations permits the internal_revenue_service to provide a schedule of ruling amounts identical to the schedule proposed by the taxpayer but no such schedule shall be provided by the service unless the taxpayer’s proposed schedule is consistent with the principles and provisions of this section sec_1_468a-3 of the regulations provides that the ruling_amount specified in a schedule of ruling amounts for any_tax year in the level_funding limitation period shall not be less than the ruling_amount specified in such schedule for any earlier tax_year under sec_1_468a-3 the level_funding limitation period begins on the first day of the first tax_year for which a deductible payment is made to the nuclear decommissioning fund and ends on the last day of the tax_year that includes the estimated date on which the nuclear power plant will no longer be included in the taxpayer’s rate base for ratemaking purposes sec_1_468a-3 of the regulations provides that the amount of decommissioning costs allocable to a nuclear decommissioning fund is the taxpayer’s share of the total estimated cost of decommissioning the nuclear power plant multiplied by the qualifying percentage sec_1_468a-3 of the regulations provides that in general the total estimated cost of decommissioning a nuclear power plant is the reasonably estimated cost of decommissioning used by the applicable public_utility commission in establishing or approving the amount of these costs to be included in cost of service for ratemaking purposes sec_1_468a-3 of the regulations provides that a taxpayer’s share of the total estimated cost of decommissioning a nuclear power plant equals the total estimated cost of decommissioning such plant multiplied by the taxpayer’s qualifying interest in the plant sec_1_468a-3 of the regulations provides that if two or more public_utility commissions establish or approve rates for electric energy generated by a single nuclear power plant then the schedule of ruling amounts shall be separately determined pursuant to the rules of sec_1_468a-3 through e for each public_utility commission that has determined the amount of decommissioning costs to be included in the cost of service for ratemaking purposes for this plant under section plr-106971-98 468a-3 f this separate determination shall be based on the reasonable assumptions and determinations used by the relevant public_utility commission and shall take into account only that portion of the total estimated cost of decommissioning that is properly allocable to the ratepayer whose rates are established or approved by the public_utility commission according to sec_1_468a-3 the ruling amounts for any_tax year is the sum of the ruling amounts for such tax_year determined under the separate schedules of ruling amounts sec_1_468a-3 of the regulations provides that the internal_revenue_service shall not provide a taxpayer with a schedule of ruling amounts for any nuclear decommissioning fund unless the public_utility commission that establishes or approves the rates for electric energy generated by the plant has determined the amount of decommissioning costs to be included in the taxpayer’s cost of service for ratemaking purposes and has disclosed the after-tax rate of return and any other assumptions and determinations used in establishing or approving the amount sec_1_468a-3 of the regulations provides that a taxpayer is required to request a revised schedule of ruling amounts for a nuclear decommissioning fund if a any public_utility commission that establishes or approves rates for the furnishing or sale of electric energy generated by a nuclear power plant to which the nuclear decommissioning fund relates increases the proposed period over which the decommissioning costs of the nuclear power plant will be included in cost of service for ratemaking purposes adjusts the estimated date on which the nuclear power plant will no longer be included in the taxpayer’s rate base for ratemaking purposes or reduces the amount of decommissioning costs to be included in cost of service for any_tax year and b the taxpayer’s most recent request for a schedule of ruling amounts did not provide notice to the service of such action by any public_utility commission we have examined the representations and data submitted by the taxpayer in relation to the requirements set forth in the code and the regulations based solely on these representations of the facts we reach the following conclusions taxpayer has a qualifying interest in the plant and is therefore an eligible_taxpayer under plr-106971-98 sec_1_468a-1 of the regulations commissions a and b have previously determined the amount of decommissioning costs to be included in the taxpayer’s cost of service for ratemaking purposes as required by sec_1_468a-3 of the regulations the taxpayer as one of the owners of the plant has previously calculated its share of the total decommissioning costs under sec_1_468a-3 of the regulations the taxpayer subject_to the jurisdiction of two public_utility commissions for ratemaking purposes has previously calculated its share of the total decommissioning costs allocable to commission a as required by sec_1_468a-3 of the regulations the taxpayer has previously proposed a schedule of ruling amounts which meets the requirements of sec_1_468a-3 and of the regulations the annual payments specified in the proposed schedule of ruling amounts are based on the reasonable assumptions and determinations used by commission a and will result in a projected fund balance at the end of the funding_period equal to or less than the amount of decommissioning costs allocable to the fund the maximum amount of cash payments made or deemed made to the fund during any_tax year is restricted to the lesser amount of the decommissioning costs applicable to such fund or the ruling applicable to this fund as set forth under sec_1 468a- b of the regulations the qualifying percentage under sec_1_468a-3 of the regulations is calculated to be based on the above determinations we conclude that the plr-106971-98 taxpayer’s proposed schedule of ruling amounts satisfies the requirements of sec_468a of the code approved schedule of ruling amounts tax_year sec_1 commissions a and b year a b total each year through approval of the schedule of ruling amounts is contingent on there being no change in the facts and circumstances known or assumed at the time the current ruling is issued if any of the events described in sec_1_468a-3 of the regulations occur in future years the taxpayer must request a review and revision of the schedule of ruling amounts generally the taxpayer is required to file such a request on or before the deemed payment deadline date for the first tax_year in which the rates reflecting such action became effective when no such event occurs the taxpayer must file a request for a revised schedule of ruling amounts on or before the deemed payment deadline of the 10th tax_year following the close of the tax_year in which the most recent schedule of ruling amounts was received the approved schedule of ruling amounts is relevant only to those payments made to the fund payments allocable to any funds other than the fund cannot qualify for purposes of the deduction under the provisions of sec_468a of the code as stated earlier payments made to such fund can qualify only to the extent that they do not exceed the lesser_of the decommissioning costs applicable to such fund or the ruling amounts applicable to this fund in the tax_year this ruling is directed only to the taxpayer who requested it section 6llo j of the code provides it may not be used or cited as precedent the ruling amounts for commission b were approved in a prior schedule of ruling amounts these ruling amounts continued only through plr-106971-98 pursuant to a copy of the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representatives pursuant to sec_1_468a-7 of the regulations a copy of this letter must be attached with the required election statement to the taxpayer’s federal_income_tax return for each tax_year in which the taxpayer claims a deduction for payments made to the fund sincerely yours charles b ramsey chief branch office of assistant chief_counsel passthroughs and special industries


tcmemo_2013_142 united_states tax_court joseph toth petitioner v commissioner of internal revenue respondent docket no filed date joseph toth pro_se timothy s murphy robert d heitmeyer a gary begun and john d davis for respondent memorandum opinion chiechi judge this case is before us on a motion for summary_judgment which respondent filed pursuant to rule and to which respondent filed a all rule references are to the tax_court rules_of_practice and procedure all section references are to the internal_revenue_code in effect for the year at issue supplement we shall grant respondent’s motion - - background the record establishes and or the parties do not dispute the following petitioner resided in michigan at the time he filed the petition during petitioner worked for jacobs technology inc jacobs technology during that year petitioner received wage income from jacobs technology of dollar_figure during petitioner also received unemployment_compensation from the michigan employment security commission of dollar_figure he also won during that year a detroit tigers fantasy package valued at dollar_figure that cbs radio inc had provided petitioner did not file a federal_income_tax tax_return for his taxable_year respondent prepared a substitute for return for that taxable_year on date respondent issued to petitioner a notice_of_deficiency with respect to his taxable_year in that notice respondent determined the we shall refer collectively to the motion for summary_judgment and the supplement thereto that respondent filed as respondent’s motion petitioner filed a response to respondent’s motion petitioner’s response and respondent filed a reply to that response respondent’s reply we shall sometimes refer to respondent’s motion and respondent’s reply as respondent’s filings following deficiency in and additions to petitioner’s tax for his taxable_year additions to tax under secs deficiency dollar_figure a dollar_figure a dollar_figure a dollar_figure on date we issued an order date order in which we ordered petitioner to file a response to respondent’s motion for summary_judgment in that order we also indicated that our review of the record suggested that petitioner might intend to advance in this case certain frivolous and or groundless statements contentions arguments and or questions we reminded petitioner in the date order about sec_6673 and admonished him that if he advanced in this case frivolous and or groundless statements contentions arguments and or questions and or instituted or maintained this proceeding primarily for delay we would impose on him a penalty under sec_6673 in an amount not exceeding dollar_figure on date petitioner filed petitioner’s response discussion we may grant summary_judgment where there is no genuine dispute as to any material fact and a decision may be rendered as a matter of law rule b 98_tc_518 aff’d 17_f3d_965 7th cir in respondent’s filings respondent seeks summary adjudication that petitioner is liable for the following deficiency in and additions to petitioner’s tax for his taxable_year additions to tax under secs deficiency dollar_figure a dollar_figure a dollar_figure a dollar_figure it is petitioner’s position that there are genuine disputes of material fact that preclude us from granting respondent’s motion in support of that position petitioner advances in petitioner’s response certain statements contentions and or arguments that we find to be frivolous and or groundless based upon our examination of the entire record before us we conclude that there is no genuine dispute as to any material fact that requires a trial we further conclude that respondent is entitled to summary adjudication as a matter of law we turn now sua sponte to sec_6673 a provision that we brought to petitioner’s attention in our date order sec_6673 authorizes us to require a taxpayer to pay to the united_states a penalty in an amount not to exceed dollar_figure whenever it appears to us inter alia that the taxpayer instituted or maintained a proceeding before us primarily for delay sec_6673 or that the taxpayer’s position in a proceeding before us is frivolous or groundless sec_6673 in our date order we ordered petitioner to file a response to respondent’s motion for summary_judgment we also admonished petitioner in that order that we would impose a penalty on him under sec_6673 if he advanced frivolous and or groundless statements contentions arguments and or questions and or instituted or maintained this proceeding primarily for delay nonetheless petitioner advances in petitioner’s response certain statements contentions and or arguments that we find to be frivolous and or groundless on the record before us we find that petitioner’s position in this case is frivolous and groundless and that he instituted and maintained this case primarily for delay accordingly we shall impose on petitioner a penalty under sec_6673 in the amount of dollar_figure we have considered any statements contentions arguments and or questions of petitioner that are not frivolous and or groundless and that are not discussed herein and we find them to be without merit and or irrelevant on the record before us we shall grant respondent’s motion to reflect the foregoing an order granting respondent’s motion and decision for respondent will be entered