internal_revenue_service department of the treasury index number washington dc number release date person to contact telephone number refer reply to cc dom corp plr-102838-00 date date legend foreign z foreign x foreign y parent sub sub subsidiaries date a date b date c date x date parent’s company official plr-102838-00 outside tax professional new outside tax professional authorized representatives business a dollar_figurex dollar_figurey dollar_figurez dollar_figureaa dollar_figurebb dollar_figurecc condition x x y plr-102838-00 dear this responds to your date request that our ruling letter concerning the above taxpayers which was addressed to you and dated date prior letter_ruling be amended our prior letter_ruling granted a day extension of time under sec_301_9100-1 of the procedure and administration regulations for parent as the common parent of the consolidated_group to file a statement of allowed loss under sec_1 c with respect to the deconsolidation of sub during the taxable_year ending on date x sometimes hereinafter referred to as the election the election is required in order to obtain the benefits of sec_1 c information was also received in letters dated april june august and date parent’s taxable years affected by the election were under examination while we were determining whether to grant the extension and pursuant revproc_1999_2 1999_1_irb_73 which has been superseded by revproc_2000_2 i r b we coordinated the request with the applicable district director’s office before we issued our prior letter_ruling the material information submitted for consideration is summarized below certain information was received in connection with your date request that explains why notwithstanding that the taxpayers filed the election pursuant to our prior letter_ruling the taxpayers were not able to file the election within the day period required by our prior letter_ruling such information also establishes that the taxpayer acted reasonably and in good_faith and that granting further relief will not prejudice the interests of the government accordingly our prior letter_ruling is hereby amended to read as follows parent is the common parent of a consolidated_group that has a calendar taxable_year and uses the accrual_method of accounting prior to date a sub was a wholly owned domestic subsidiary of parent and the subsidiaries were wholly owned domestic subsidiaries of sub on date a sub was a foreign_corporation that was x owned by foreign x and y by parent parent was a wholly owned subsidiary of foreign x and foreign x was a subsidiary of foreign y it is represented that parent and sub were under common_control within the meaning of sec_304 parent and its subsidiaries are engaged in business a on date which is in a taxable_year subsequent to the taxable_year that date x is in foreign z acquired foreign x from foreign y the applicable country of incorporation and residency of the foreign_corporations are set forth above in the redacted legend on date a parent sold all of the stock of sub to sub for dollar_figurex which is represented to be the then fair_market_value of the sub stock it is further represented that parent's basis in its sub stock was dollar_figurey and that the excess of parent’s basis in the sub stock over its fair_market_value was dollar_figurez the transaction resulted in the deconsolidation of sub and the subsidiaries it is represented that i the date a transaction was subject_to sec_304 ii the date a transaction resulted in the deconsolidation of sub iii sec_1 b applies to plr-102838-00 the date a transaction and iv parent is entitled to the benefits of sec_1 c it is also represented that an election under sec_338 was not made with respect to the acquisition by sub of the stock of sub or the subsidiaries moreover parent will determine the amount of basis_reduction under sec_1 b in accordance with sec_1 c on its tax_return for the taxable_year ending on date x parent attached information that i described the sec_304 sale of sub stock to sub for dollar_figurex and ii identified that parent’s basis in the sub stock had been reduced from dollar_figurey to dollar_figureaa a reduction of dollar_figurecc pursuant to sec_1 c this information was not in the form specified by sec_1 c and was not entitled allowed loss under sec_1 c parent's return for the taxable_year ending on date x which includes the date on which the transfer and deconsolidation occurred was filed on date b the extended due_date therefor which is after date the effective date of sec_1 the election was not attached to the return or otherwise filed the period of limitations on assessments under sec_6501 has not expired for parent's and its subsidiaries’ specifically for parent’s sub 1's sub 2's and the subsidiaries’ taxable_year s in which the deconsolidation occurred the taxable years in which the election should have been filed or any taxable years that would have been affected by the election had it been timely filed parent as the common parent of the consolidated_group was required by sec_1 c to make and attach the election to its return for the year in which the deconsolidation occurred in order to limit the amount of basis_reduction required under sec_1 b to the sum of the amounts specified in sec_1 c the election was due on date b ie the extended due_date on which parent’s return was filed for the taxable_year ending on date x the year in which the deconsolidation of sub occurred as an attachment to the return however for various reasons the election was not attached to the return or otherwise filed on date c parent’s company official new outside tax professional and authorized representatives discovered the election had not been filed subsequently this request under sec_301_9100-1 for an extension of time to file the election was submitted to the service subsequent to the issuance of our prior letter_ruling parent amended its return to attach thereto a copy of the election and our prior letter_ruling however for various reasons parent was not able to file the election within the required day period sec_1 b provides that as a general_rule if a member's basis in a share of stock of a subsidiary exceeds its value immediately before a deconsolidation of the share the basis of the share is reduced at that time to an amount equal to its value sec_1 h provides that sec_1 is applicable with respect to deconsolidations on or after date plr-102838-00 sec_1 c as a general_rule provides that the amount of loss disallowed under sec_1 b with respect to a share of stock shall not exceed the sum determined by the formula specified in sec_1 c sec_1 c provides that sec_1 c ie the limitation on the amount of basis_reduction on deconsolidation applies only if the separate statement required under this paragraph is filed with the taxpayer's return for the year of the deconsolidation the statement must be entitled allowed loss under sec_1 c and the required information that must be contained therein is specified in sec_1 c sec_1_1502-77 provides that the common parent for all purposes other than for several purposes not relevant here shall be the sole agent for each subsidiary in the group duly authorized to act in its own name in all matters relating to the tax_liability of the consolidated_return_year under sec_301_9100-1 the commissioner has discretion to 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 internal_revenue_code except subtitles e g h and i provided the taxpayer demonstrates to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and granting relief will not prejudice the interests of the government sec_301_9100-1 defines the term regulatory election as including an election whose due_date is prescribed by a regulation revenue_ruling revenue_procedure notice or announcement sec_301_9100-1 through provide the standards the commissioner will use to determine whether to grant an extension of time to make a regulatory election sec_301_9100-1 sec_301_9100-2 provides automatic extensions of time for making certain elections sec_301_9100-3 provides extensions of time for making regulatory 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 in this case the time for filing the election was fixed by the regulations ie sec_1 c therefore the commissioner has discretionary authority under sec_301_9100-1 to grant an extension of time for parent to file the election provided parent shows it acted reasonably and in good_faith the requirements of sec_301_9100-1 and sec_301_9100-3 are satisfied and granting relief will not prejudice the interests of the government information affidavits and representations submitted by parent’s company official outside tax professional new outside tax professional and authorized representatives explain the circumstances that resulted in the failure_to_file the election plr-102838-00 and to prefect the election in accordance with our prior letter_ruling the information establishes that tax professionals were responsible for the election and for amending the return to prefect the election in accordance with our prior letter_ruling that parent relied on the tax professionals to timely make the election and to prefect the election in accordance with our prior letter_ruling and that the government will not be prejudiced if relief is granted see sec_301_9100-3 based on the facts and information submitted including the representations that have been made we conclude that parent acted reasonably and in good_faith in failing to timely file the election and to prefect the election in accordance with our prior letter_ruling the requirements of sec_301_9100-1 and sec_301_9100-3 are satisfied and granting relief will not prejudice the interests of the government accordingly subject_to the below conditions we grant an extension of time under sec_301_9100-1 until days from the date_of_issuance of this amended letter_ruling for parent as the common parent of the consolidated_group to prefect the election with respect to the deconsolidation of sub and its subsidiaries on date a as described above by amending its return to attached thereto a copy of this amended letter_ruling and to attach a copy of the election the required information set forth in sec_1 c and a copy of our prior letter_ruling if parent subsequent to the issuance of our prior letter_ruling has not already so amended its return the above extension of time is conditioned on i condition x which is set forth in the above redacted legend in order not to disclose identifying information and ii the taxpayers' parent's sub 1's sub 2's the subsidiaries’ and any and all of their subsidiaries' tax_liability being not lower in the aggregate for all years to which the election applies than it would have been if the election had been timely made taking into account the time_value_of_money no opinion is expressed as to the taxpayers' tax_liability for the years involved a determination thereof will be made by the district director's office upon audit of the federal_income_tax returns involved further no opinion is expressed as to the federal_income_tax effect if any if it is determined that the taxpayers' liability is lower sec_301_9100-3 parent should file the election in accordance with sec_1 c that is parent as the common parent of the consolidated_group should amended its return to attach a copy of this amended letter_ruling and to attach a copy of the election the required information set forth in sec_1 c and a copy of our prior letter_ruling if parent subsequent to the issuance of our prior letter_ruling has not already so amended its return no opinion is expressed as to the tax effects or consequences of filing the election late under the provisions of any other section of the code and regulations or as to the tax treatment of any conditions existing at the time of or resulting from filing the election late that are not specifically set forth in the above ruling for purposes of granting relief under sec_301_9100-1 we relied on certain statements and representations made by the taxpayer its employees and representatives however the district_director should verify plr-102838-00 all essential facts in addition notwithstanding that an extension is granted under sec_301_9100-1 to file the election penalties and interest that would otherwise be applicable if any continue to apply a copy of this letter is being sent to parent’s company official pursuant to the power_of_attorney on file in this office this letter is directed only to the taxpayer who requested it sec_6110 provides that it may not be used or cited as precedent sincerely yours assistant chief_counsel corporate by richard todd counsel to the assistant chief_counsel corporate


internal_revenue_service number release date index number ------------------------------------------------------ --------------------------- ------------------------------- ----------------------------------- department of the treasury washington dc third party communication date of communication month dd yyyy person to contact --------------------------- id no --------------- ----------------- telephone number --------------------- refer reply to cc ita b05 plr-126552-10 date date legend taxpayer state n partnership partnership b c tax_year property agency x years y years z years building year year advisor dear ---- ---------------------------------------------------- ------------- ------------------------------------------------------------------------- -------------------------------------------------------------- ---------------------------------------------- -------------------------------------------------- -------------------- ------------------------------------------------------------------------------------- ------------------------------------------------------- ----------------------------------------------------------------- ------------ -------------- -------------- ---------------- ------- ------- ---------------------------------------- this is in response to your letter of date requesting an extension of time under sec_301_9100-1 and sec_301_9100-3 of the regulations on procedure and administration to file an election under sec_168 of the internal_revenue_code the election the material information submitted for consideration is summarized below plr-126552-10 facts taxpayer is a corporation incorporated in state n taxpayer is a calendar_year taxpayer using the accrual_method of accounting taxpayer is a wholly-owned subsidiary of b which is a non-profit corporation that is a tax-exempt_entity under sec_501 taxpayer was created by b to serve as general_partner in partnership and partnership partnership is a state n limited_partnership that is owned by the dollar_figure general_partner taxpayer and the dollar_figure limited_partner c partnership is a calendar_year taxpayer using the accrual_method of accounting partnership was formed to acquire a leasehold interest in the rehabilitated building leased by partnership and to operate building on a day-to-day basis in order to obtain long term appreciation cash income and return_of_capital partnership is a state n limited_partnership owned by the general_partner taxpayer and the limited_partner partnership partnership was formed to sublease building from b to develop maintain improve and manage building and to further sublease building to partnership property was closed by the united_states navy agency and an independent third party then entered into a disposition and development agreement dda to redevelop property as a civic arts and cultural district in b was established to raise the funds to finance renovation of the buildings in property and to create and operate a new cultural community the buildings serve students families artists scientists and entrepreneurs b determined that project was placed on the national register of historic places the independent third party assigned a portion of its rights and obligations under the dda to b under the dda agency agreed to lease the land and buildings in property to b for a period of x years beginning on october year during year b applied to the national park service tax nps incentive program to certify that building contributes to the significance of property and therefore is a certified_historic_structure for purposes of the rehabilitation tax_credit htc part approval of building as a certified_historic_structure and final approval of the rehabilitation of building by nps is pending in december year b began discussions with advisor to determine how the htc could be used to make the redevelopment economically feasible the parties decided upon a two-tiered lease structure resulting in the creation of the above entities on february year b executed a sublease of the land and buildings in property to partnership for a period of approximately y years beginning on that date on the same day partnership executed a sublease with partnership as landlord for a plr-126552-10 term of approximately z years on a net_lease basis this second sublease also begins on february year and permits partnership as landlord to make an election under sec_50d of the code to pass rehabilitation tax_credits through to partnership in order to claim the htc the property cannot be tax-exempt_use_property in the case of property leased by a partnership with tax-exempt partners the portion of the property treated as tax-exempt_use_property is the tax-exempt partner’s highest proportionate share of any item_of_income or gain see sec_168 of the code since taxpayer is a wholly-owned subsidiary of b taxpayer is a tax-exempt_controlled_entity within the meaning of sec_168 however taxpayer may elect under sec_168 to not be treated as a tax-exempt_controlled_entity for purposes of sec_168 and h your submission represents that the need to file this election was discussed and anticipated by advisor and b moreover all parties to the transaction agreed to memorialize the requirement that taxpayer file the sec_168 election in its partnership_agreement the election was necessary so that the alternate depreciation system under sec_168 would not be applied to the property and any rehabilitation_expenditures would give rise to the htc in december year taxpayer’s chief financial officer cfo contacted an accounting firm to discuss tax and audit work for this transaction which included the tax_return for taxpayer your submission states that both parties were fully aware of the need to file the sec_168 election as required by the code and regulations for the taxpayer’s initial taxable_year ending december year the following january the accounting firm e-mailed taxpayer with its proposed fees for audit and tax work on this transaction the accounting firm’s e-mail did not include a list of the entities for which tax returns would be prepared and the cfo assumed they were the same entities that were listed in a previous e-mail however the accounting firm did not receive signed engagement letters for the tax and audit work for the taxpayer or any of the other entities in this transaction prior to the filing dates in march the accounting firm e-mailed the cfo that the time for filing the tax returns for various entities had been extended the e-mail included proof of federal electronic_filing acceptance for those entities but did not reference the taxpayer or any of the other entities in this transaction as one of the corporate tax returns being extended that same month the cfo was notified that his father suffered a severe stroke the cfo immediately left the office for the hospital the cfo did not return to his office but continued to access his office e-mail via pda and saw the message regarding the tax you represent that the amended and restated limited_partnership agreement for partnership was executed on february year and that it admitted c as the new limited_partner the original limited_partner b withdrew section dollar_figure of that agreement provides if any partner or constituent member is a non-profit entity the general_partner shall make the elections provided for under sec_168 of the code section dollar_figure - accountants-- states the first tax_return of the landlord that reflects the tax_credits shall be reviewed by the accountants to verify that the pass-through election under code sec_50 with respect to the tax_credits required under the master lease has been made plr-126552-10 extensions in his distraught state the cfo failed to notice that the extension for taxpayer was inadvertently omitted from those that were to be electronically filed by the march 15th due_date cfo’s father passed away and the cfo did not return to the office until three days after the due_date for taxpayer’s extension cfo was still under the impression that all extensions had been filed in a timely manner and did not discover that the taxpayer’s had been omitted until several weeks after the due_date accordingly taxpayer has not filed an income_tax return and is not under an extension the taxpayer is seeking relief under sec_301_9100-1 and sec_301_9100-3 for failure to make a timely election law and analysis sec_168 provides that for purposes of sec_168 if any property which is not tax-exempt_use_property is owned by a partnership which has both a tax-exempt_entity and a person who is not a tax-exempt_entity as partners and any allocation to the tax-exempt_entity of partnership items is not a qualified_allocation then an amount equal to such tax-exempt entity's proportionate share of such property shall be treated as tax-exempt_use_property sec_168 provides that for purposes of sec_168 any tax-exempt_controlled_entity shall be treated as a tax-exempt_entity sec_168 provides that for purposes of sec_168 a tax-exempt_controlled_entity may elect not to be treated as a tax-exempt_entity such an election election is irrevocable and will bind all tax-exempt entities holding an interest in the tax-exempt_controlled_entity sec_301_9100-7t requires elections under sec_168 to be made by the due_date of the tax_return for the first taxable_year for which the election is to be effective therefore the election is a regulatory election under sec_301_9100-1 under sec_301_9100-1 and sec_301_9100-3 the commissioner has discretion to grant a reasonable extension of time to make a regulatory election under all subtitles of the internal_revenue_code except subtitles e g h and i provided the taxpayer demonstrates to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government based on the facts and information submitted and representations made we conclude that taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government accordingly the requirements of the regulations for granting relief in this case have been satisfied and we grant an extension plr-126552-10 of time until days from the date_of_issuance of this letter for taxpayer to file the election taxpayer must file a federal_income_tax return for its tax_year ending on date and attach thereto the election and information set forth in sec_301_9100-7t taxpayer should also attach a copy of this letter to the return in addition pursuant to sec_301_9100-7t a copy of the election statement should also be attached to the federal_income_tax returns of each of the tax-exempt shareholders or beneficiaries of taxpayer except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter this ruling is directed only to the taxpayer s requesting it sec_6110 of the code provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representatives the rulings contained in this letter are based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in support of the request for rulings it is subject_to verification on examination plr-126552-10 a copy of this letter must be attached to any income_tax return to which it is relevant alternatively taxpayers filing their returns electronically may satisfy this requirement by attaching a statement to their return that provides the date and control number of the letter_ruling sincerely william a jackson branch chief branch office_of_chief_counsel income_tax accounting enclosure copy for sec_6110 purposes


internal_revenue_service number release date index number ------------------------------------- ------------------------------------------------------- -------------------------------- -------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ------------------- id no ------------- telephone number --------------------- refer reply to cc psi b01 plr-148691-08 date date legend x ------------------------------------------- --------------------------------------------------------- a b t1 t2 ---------------------- ---------------------- ---------------------------------------------- --------------------------------- t3 ----------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------- t4 d1 d2 d3 d4 d5 d6 ------------------------------------------------------------------------------- --------------------- --------------------- --------------------------- ---------------- ------------------ ---------------------- court ----------------------------------------------------------------- plr-148691-08 -- state ------------ dear -------------- this responds to a letter dated date submitted on behalf of x requesting a ruling under sec_1362 of the internal_revenue_code facts the information submitted states that x was incorporated under the laws of state on d1 x elected to be an s_corporation effective the same date at the time of the election t1 a grantor_trust was the sole shareholder of x on d2 all shares of x stock were transferred to t2 a grantor_trust on d3 a the grantor of t1 and t2 died on d4 x stock held by t2 was allocated equally between t3 and t4 t3 is a_trust described under sec_1361 t4 was intended to be a qualified_subchapter_s_trust qsst however b the income_beneficiary of t4 failed to file a timely qsst election furthermore t4 could not have been a valid qsst because its terms failed to require specifically that the income_interest of the current income_beneficiary in the trust shall terminate on the earlier of such beneficiary’s death or the termination of the trust and upon the termination of the trust during the life of the current income_beneficiary the trust shall distribute all of its assets to such beneficiary consequently x’s s election terminated on d4 on d5 the trustee petitioned court to modify the terms of t4 to qualify to be a qsst on d6 court approved the requested modification x represents that all relevant times x and its shareholders treated x as an s_corporation x further represents that the termination of x’s s election was inadvertent and was not motivated by tax_avoidance or retroactive tax planning x and its shareholders have agreed to make any adjustments consistent with the treatment of x as an s_corporation as may be required by the secretary law and analysis sec_1361 provides that the term as corporation means with respect to any taxable_year a small_business_corporation for which an election under ' a is in effect for such year sec_1361 defines a asmall business corporation as a domestic_corporation which is not an ineligible_corporation which does not a have more than shareholders b have as a shareholder a person other than an estate and other than a_trust described in sec_1361 or an organization described in sec_1361 who plr-148691-08 is not an individual c have a nonresident_alien as a shareholder and d have more than class of stock sec_1361 provides that a qsst whose beneficiary makes an election under sec_1361 will be treated as a_trust described in sec_1361 and the beneficiary of such trust shall be treated as the owner for purposes of sec_678 of that portion of the qsst which consists of s_corporation stock to which an election under sec_1361 applies sec_1361 provides that a beneficiary of a qsst may elect to have sec_1361 apply under sec_1361 this election will be effective up to days and months before the date of the election sec_1361 defines a qsst as a_trust a the terms of which require that i during the life of the current income_beneficiary there shall be only one income_beneficiary of the trust ii any corpus distributed during the life of the current income_beneficiary may be distributed only to such beneficiary iii the income_interest of the current beneficiary in the trust shall terminate on the earlier of the beneficiary’s death or the termination of the trust and iv upon the termination of the trust during the life of the current income_beneficiary the trust shall distribute all of its assets to that beneficiary and b all of the income within the meaning of sec_643 of which is distributed or required to be distributed currently to one individual who is a citizen or resident_of_the_united_states sec_1362 provides that an election under sec_1362 shall be terminated whenever at any time on or after the first day of the taxable_year for which a corporation is an s_corporation such corporation ceases to be a small_business_corporation a termination of an s_corporation_election under sec_1362 is effective on and after the date of cessation sec_1362 provides in part that if an election under ' a by any corporation was terminated under ' d the secretary determines that the circumstances resulting in the termination were inadvertent no later than a reasonable period of time after the discovery of the circumstances resulting in the termination steps were taken so that the corporation for which the termination occurred is a small_business_corporation and the corporation and each person who was a shareholder of the corporation at any time during the period of inadvertent termination of the s election agrees to make such adjustments consistent with the treatment of the corporation as an s_corporation as may be required by the secretary with respect to such period then notwithstanding the circumstances resulting in the termination the corporation is treated as an s_corporation during the period specified by the secretary revrul_93_79 1993_2_cb_269 provides that a state court order that reforms a_trust to meet the requirements of a qsst is recognized prospectively plr-148691-08 conclusion based solely on the facts submitted and the representations made we conclude that x’s election to be treated as an s_corporation terminated on d4 we also conclude that the termination was an inadvertent termination within the meaning of ' f we further conclude that t4 as modified meets the definition of a qsst under sec_1361 accordingly under the provisions of ' f x will be treated as continuing to be an s_corporation from d4 and thereafter provided that x s s_corporation_election was valid and was not otherwise terminated under ' d x’s shareholders in determining their respective income_tax liabilities during the termination period and thereafter must include their pro_rata share of the separately_stated computed items of income or loss of x as provided in sec_1366 make any adjustments to basis provided in sec_1367 and take into account any distributions made by x as provided in sec_1368 this ruling is conditioned upon the filing of a completed qsst election for t4 effective d6 with the appropriate service_center within days of the date of this letter and upon b’s being treated as the shareholder with respect to the x stock held by t4 effective d4 and thereafter except as specifically provide herein no opinion is expressed or implied as to the federal tax consequences of the facts described above under any other provision of the code in particular no opinion is expressed as to whether x is otherwise eligible to be an s_corporation this ruling is directed only to the taxpayer requesting it sec_6110 of the code provides that it may not be used or cited as precedent under a power_of_attorney on file in this office a copy of this letter will be sent to x’s authorized representative sincerely faith p colson faith p colson senior counsel branch office of associate chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes


t c memo united_states tax_court robert hunter gridley and barbara a gridley et al petitioners v commissioner of internal revenue respondent docket nos filed date declan j o'donnell and robert alan jones for petitioners henry e o'neill for respondent cases of the following petitioners have been consolidated herewith solely for the purpose of deciding petitioners’ motions for summary_judgment russell l fleer sr and sally a fleer docket nos and and robert h and barbara a gridley docket nos and although robert alan jones esq is listed as counsel of record in these cases he did not participate in the filing or prosecuting of the motions that are the subject of this opinion memorandum opinion beghe judge these consolidated cases are before the court on petitioners' motions for summary_judgment petitioners contend that they are entitled to entry of decision consistent with the decision entered by the court in the case of john r and maydee l thompson docket no as explained in greater detail below we will deny petitioners' motions background these cases are part of a large tax_shelter project currently comprising more than big_number cases arising from the commissioner's disallowance of interest deductions claimed by participants in investment programs created and administered by henry kersting kersting group cases due to the large number of kersting group cases and the variety of investment programs the commissioner and taxpayer representatives selected dockets as test cases to resolve the issues common to all of the cases in conjunction therewith and in advance of the trial of the test all section references are to the internal_revenue_code in effect for the years in issue unless otherwise indicated all rule references are to the tax_court rules_of_practice and procedure the dockets consolidated as test cases include jerry and patricia a dixon docket no john r and e maria cravens docket nos and ralph j rina docket no john r and maydee l thompson docket nos and hoyt w and barbara d young docket nos and robert l and carolyn s dufresne docket nos and terry d and gloria k owens docket no and richard and fidella hongsermeier docket no cases a large number of taxpayers including petitioners executed one of two stipulations entitled stipulation of settlement for tax_shelter adjustments piggyback agreements by which they agreed to be bound by the outcome in the test cases the motions for summary_judgment filed in these cases are identical in all material respects we observe however that the piggyback agreements relied upon by petitioners although similar can be distinguished depending upon whether they were executed and filed with the court in or in later years for the sake of completeness the two piggyback agreements are set forth in their entirety below robert and barbara gridley respondent determined deficiencies in and additions to robert and barbara gridley’s federal income taxes for and based upon the disallowance of kersting-related interest deductions petitioners contested respondent's determinations by filing timely petitions for redetermination assigned docket nos and in date brian j seery esq mr seery entered his appearance in each of the gridleys' three docketed cases shortly thereafter mr seery executed a stipulation of settlement for tax_shelter adjustments the piggyback at the time the petitions were filed the gridleys resided in san jose california agreement on the gridleys' behalf that was filed with the court on date the piggyback_agreement states stipulation of settlement for tax_shelter adjustments with respect to all adjustments in respondent's notice_of_deficiency relating to the kersting interest_deduction tax_shelter s the parties stipulate to the following terms of settlement the term kersting programs refers to interest_expense deductions or other related deductions associated with various programs promoted by henry kersting the kersting program deduction adjustments shall be redetermined on the same basis that the same program adjustments are resolved with respect to taxpayers trying the same program adjustments at the date session of the court in honolulu hawaii or such session as these cases may be adjourned or continued to by the court hereinafter tried case all issues involving the kersting programs shall be resolved as if the petitioner s in this case is the same as the taxpayers in the tried case a decision shall be submitted in this case when the decision in the tried case is entered following entry of the decision in this case petitioner s consents to the assessment and collection of the deficiencies attributable to the adjustments formulated by reference to the tax court's opinion notwithstanding the restrictions contained in sec_6213 the petitioner s in this case will testify or provide information in any case involving the same tax_shelter adjustments if subpoenaed and brian j seery esq subsequently withdrew as the gridleys' counsel in date declan j o'donnell esq filed an entry of appearance on behalf of the gridleys in each of their cases the petitioner s in this case consents to the disclosure of all tax returns and tax_return information for the purpose of respondent's discovering or submitting evidence in any case involving the same kersting program adjustments the parties agree to this stipulation of settlement russell and sally fleer respondent determined deficiencies in and additions to russell and sally fleer’s federal income taxes for and based upon the disallowance of kersting-related interest deductions the fleers contested respondent's determinations by filing timely petitions for redetermination assigned docket nos and in date mr seery entered his appearance in docket no on date mr seery executed a stipulation of settlement for tax_shelter adjustments the piggyback_agreement on the fleers’ behalf that was filed with the court on date the piggyback_agreement states stipulation of settlement for tax_shelter adjustments with respect to all adjustments in respondent's notice_of_deficiency relating to the kersting interest_deduction tax_shelter s the parties stipulate to the following terms of settlement at the time the petitions were filed the fleers resided in thousand oaks california brian j seery esq subsequently withdrew as the fleers' counsel in docket no on date declan j o'donnell esq filed an entry of appearance in both of the fleers’ docketed cases the kersting interest_deduction tax_shelter adjustments shall be redetermined on the same basis that the same tax_shelter adjustments are resolved with respect to taxpayers trying the same shelter adjustments at the date session of the court in wailuku maui hawaii or such session as these cases may be adjourned or continued to by the court hereinafter tried case all issues involving the kersting interest_deduction tax_shelter s shall be resolved as if the petitioner s in this case is the same as the taxpayers in the tried case a decision shall be submitted in this case when the decision in the tried case becomes final under sec_7481 following entry of the decision in this case petitioner s consent to the assessment and collection of the deficiencies attributable to the adjustments formulated by reference to the tax court's opinion notwithstanding the restrictions contained in sec_6213 the petitioners in this case will testify or provide information in any case involving the same tax_shelter adjustments if subpoenaed and the petitioners in this case consent to the disclosure of all tax returns and tax_return information for the purpose of respondent's discovering or submitting evidence in any case involving the same shelter adjustments if the court determines the sec_6621 penalties are applicable in the test case controlling petitioner' s’ case then the petitioner s concedes that sec_6621 is applicable to any underpayment_of_tax determined in their case s attributable to the kersting interest_deduction tax_shelter s if such underpayment exceeds dollar_figure in any one taxable_year with respect to adjustments in respondent's notice_of_deficiency relating to additions to the tax under sec_6653 the parties agree to the following a respondent concedes that the petitioner s are not liable for additions to tax under sec_6653 or sec_6653 or sec_6653 for any year prior to the taxable_year the parties agree to this stipulation of settlement on date the fleers executed a piggyback_agreement identical to the piggyback_agreement and filed the same with the court in docket no test case history on date following a trial on the merits of the test cases the court issued its memorandum opinion sustaining virtually all of respondent's determinations in each of the test cases see dixon v commissioner tcmemo_1991_614 thereafter the court entered decisions in the test cases in accordance with the court's opinion on date the court granted leave and filed respondent's motions to vacate the decisions in the test cases of john thompson docket nos and and john cravens docket nos and respondent stated in her motions to vacate that she believed her lead counsel in the trial of the test cases had prior to trial entered into contingent settlement agreements with thompson and cravens that were not made known to the court or to the other parties in the test cases and that the decisions entered by the court in those dockets did not accurately reflect the prior agreements respondent's motions to vacate requested a hearing so that the court could decide whether her trial attorney's prior agreement with thompson and cravens had affected the trial of the test cases or the opinion of the court on date the court granted respondent's motions by vacating and setting aside the decisions that the court had previously entered in the thompson and cravens cases and ordered the parties to file agreed decisions with the court or otherwise move as appropriate the court denied respondent's request for a hearing on date the court denied respondent's motion to vacate the decision filed in another of the test cases ralph j rina docket no stating the court has reviewed the testimony of cravens the testimony of thompson the stipulated facts and stipulated exhibits relating to the cravenses and the thompsons and the exhibits offered through thompson as a witness the court finds that these reviewed items had no material effect on the opinion which the court filed on date as that opinion relates to petitioner rina if the reviewed items were stricken from the record the court would file an opinion in all material respects like the opinion it filed on date with the exception of certain portions relating specifically and expressly to the cravenses or the thompsons and the court's findings analyses and conclusions relating to petitioner rina would remain the same on august and date the court entered decisions in the thompson and cravens dockets consistent with respondent's trial attorney's prior agreements with the taxpayers in those cases specifically the court entered the following decisions in the thompson cases year docket no -0- -0- dollar_figure -0- big_number -0- deficiency additions to tax the decisions entered in the thompson cases are now final all of the test cases with the exception of the thompson and cravens cases were appealed to the u s court_of_appeals for the ninth circuit in 26_f3d_105 9th cir the court_of_appeals vacated and remanded the decisions entered in the test cases that had been appealed and instructed the tax_court to conduct an evidentiary hearing to determine the full extent of the admitted wrong done by the government trial lawyers in connection with the contingent settlements entered into with thompson and cravens id pincite the court_of_appeals citing 499_us_279 directed this court to consider whether the extent of misconduct rises to the level of a structural defect voiding the judgment as fundamentally unfair or whether despite the government's misconduct the judgment can be upheld as harmless error id in carrying out this mandate we also were directed to consider on the merits all motions of intervention filed by parties affected by the dixon case id the appellate panel in 26_f3d_105 9th cir vacating and remanding dixon v commissioner tcmemo_1991_614 issued an order stating that the panel would retain jurisdiction over any subsequent appeal upon remand the court gave effect to the direction of the court_of_appeals regarding intervention by allowing a number of non-test-case taxpayers who had previously signed stipulations to be bound by the decision in the test cases to participate in the evidentiary hearing initially the case of william d and karen s booth docket no in which declan j o'donnell esq mr o'donnell had entered his appearance was consolidated with other cases of non-test-case taxpayers for purposes of allowing mr o'donnell to participate in the evidentiary hearing however at the start of the evidentiary hearing the court granted mr o'donnell's motion to sever the booths' case from the cases consolidated for the evidentiary hearingdollar_figure mr o'donnell argued that in light of the theory being asserted in the booths' case there was no need for the booths to participate in the evidentiary hearing petitioners contend that they are entitled to summary_judgment and entry of decision consistent with the decision of no deficiency and no additions to tax entered in the thompson case assigned docket no in particular petitioners the evidentiary hearing was held at a special trial session of the court in los angeles in may through date the filing of various posthearing motions and as yet unresolved disagreements among the participants over posthearing stipulations of fact have delayed the setting of a schedule for the filing of briefs on the various issues raised by the mandate of the court_of_appeals in dufresne v commissioner supra maintain that the piggyback agreements that they executed provide for entry of decision in their cases once there is a final_decision in the test cases petitioners assert that they are entitled to entry of decision in their cases consistent with the decision entered in the thompson case assigned docket no on the grounds that the latter decision is final and represents the most favorable of the decisions entered in the thompson and cravens cases respondent objects to petitioners' motions for summary_judgment on the ground that petitioners misinterpret the piggyback agreements specifically respondent asserts that the piggyback agreements reflect the parties' agreement to be bound by the court's opinion in the test cases as opposed to the decision entered in a particular test case discussion summary_judgment is intended to expedite litigation and avoid unnecessary and expensive trials 90_tc_678 summary_judgment upon all or any part of the legal issues in controversy is appropriate if the pleadings answers to interrogatories depositions admissions and any other acceptable materials together with the affidavits if any show that there is no genuine issue as to any material fact and that a decision may be rendered as a matter of law rule b 98_tc_518 affd 17_f3d_965 7th cir 90_tc_753 85_tc_527 the moving party bears the burden of proving that there is no genuine issue of material fact and factual inferences will be read in a manner most favorable to the party opposing summary_judgment 85_tc_812 79_tc_340 the court has often relied upon the test case process as an expedient means for resolving tax_shelter projects comprising large numbers of cases presenting common questions of law and fact see ryback v commissioner 91_tc_524 90_tc_656 83_tc_898 affd without published opinion 846_f2d_76 10th cir 69_tc_694 as a practical matter the effectiveness of the test case process depends in large part upon the agreement of the affected parties to be bound by the outcome in the test case a settlement stipulation such as a stipulation to be bound to a test case is in all essential characteristics a mutual contract that is entitled to all of the sanctity of any other contract 26_tc_171 see fisher v commissioner tcmemo_1994_434 estate of satin v commissioner tcmemo_1994_435 in this regard general principles of contract law are applied in construing such agreements 52_tc_420 fisher v commissioner supra estate of satin v commissioner supra generally we look within the four corners of the agreement to ascertain the intent of the parties 100_tc_319 affd 47_f3d_168 6th cir where an agreement is ambiguous the court may look to extrinsic evidence to determine the parties' intentions 92_tc_776 consistent with basic principles of contract law we begin our analysis with the plain language of the two piggyback agreements the operative terms of the two piggyback agreements are virtually identical paragraph of the piggyback_agreement and paragraph of the piggyback_agreement state that all issues involving kersting-related interest deductions will be redetermined on the same basis that the same tax_shelter adjustments are resolved with respect to the tried cases equally important paragraph of the piggyback_agreement and paragraph of the piggyback_agreement which state that petitioners waive the restrictions on assessment and collection following entry of decisions in their cases include the statement that any deficiencies in petitioners' cases will be formulated by reference to the tax court's opinion based upon the plain meaning of the language of the piggyback agreements we hold that the parties agreed to be bound by the court's redetermination with respect to kersting-related interest deductions as set forth in the court's opinion in the test cases because it is now evident that the decisions entered in the thompson cases are not based upon the court's opinion in the test cases we conclude that the thompson cases do not provide a basis for entry of decision in petitioners' cases petitioners assert that the language in the piggyback agreements referring to the court's opinion in the test cases is merely a secondary formula for arriving at a decision in their cases and that the controlling language is set forth in paragraph of the piggyback_agreement which states a decision shall be submitted in this case when the decision in the tried case becomes final under sec_7481 petitioners' argument is summarized in the following excerpt wording in the standard form stipulation in these cases refers to making adjustments in petitioner's cases as described in an opinion in the tried cases this wording appears to have been a secondary formula for extending a decision it appears to provide the basis for clarifying any ambiguity about how to extend it is submitted as a matter of contract construction there is no ambiguity in this case which could be aided by reference to any opinion that opinion has become irrelevant furthermore the dixon et al opinion has been vacated by the ninth circuit_court of appeals a remand has been made for the purpose of fact finding and recommending whether or not that opinion should be reinstated it is predictable that any decision of this court one way or the other will be appealed back to the ninth circuit panel so a final_decision herein is far away there is no opinion in the tried cases and probably won't be one for a period of years the wording in the standard form stipulation should be discarded not only as not applicable for a lack of ambiguity but also because the opinion has been vacated these petitioner s want out of the hunt they assert that their stipulation is time-sensitive and now is the time to assert it there is no ambiguity about paragraph of the stipulation thompson has become final and it fairly represents the net favorable settlement although petitioners recognize that paragraph provides the timing for entry of decision in the piggyback cases they mistakenly conclude that the final_decision in the thompson case provides the substantive basis for computations for entry of decision in their cases to the contrary as indicated above the piggyback agreements clearly state that the court's opinion in the test cases will provide the substantive basis for computations for entry of decision in the piggyback cases under the circumstances presented paragraph of the piggyback_agreement requires entry of decision in the piggyback cases once final decisions are obtained in the test cases that currently are on remand to the court by virtue of the court of appeals’ opinion and mandate in 26_f3d_105 9th cir to this point we have limited our discussion to paragraph of the piggyback_agreement however petitioners' reliance on paragraph of the piggyback_agreement highlights the one material difference between the piggyback_agreement and the piggyback_agreement unlike the piggyback_agreement the piggyback_agreement does not require a final_decision in the test cases as a prerequisite for entry of decision in the piggyback cases specifically paragraph of the piggyback_agreement provides for entry of decision in the piggyback cases when the decision in the tried case is entered with this distinction in mind we note that petitioners' theory for extension of the thompson decision on the ground that the thompson decision is a final_decision is inapposite with respect to cases governed by the piggyback_agreement in any event as previously stated whether we focus on the piggyback_agreement or on the piggyback_agreement our analysis of the plain language of both agreements leads to the conclusion that it is the court's opinion in the test cases as opposed to the decision entered in any particular test case that establishes the standard for computations for entry of decision in the piggyback cases par of the piggyback_agreement is akin to the provision governing entry of decision at issue in 86_tc_1319 affd 859_f2d_115 9th cir in this regard the parties could have moved for entry of decision in the cases subject_to the piggyback_agreement when decisions were first entered in the test cases in however in light of the subsequent decision of the court_of_appeals for the ninth circuit in 26_f3d_105 9th cir entry of decision in cases subject_to the piggyback_agreement now must await entry of decision in the test cases following this court's resolution of the issues raised by the court_of_appeals in its remand of the test cases petitioners' position in these cases is somewhat similar to that taken by the taxpayers in fisher v commissioner tcmemo_1994_434 and estate of satin v commissioner tcmemo_1994_ in the latter cases the taxpayers executed piggyback agreements in which they agreed to be bound to the resolution of tax_shelter adjustments whether by litigation or settlement in three test cases of the three test cases two cases were resolved by way of settlement prior to trial the settled cases in which the taxpayers conceded the deficiencies while the commissioner conceded the additions to tax in contrast the remaining test case subsequently was tried on the merits the tried case resulting in a decision sustaining the commissioner's determinations with respect to both the deficiency and additions to tax following the conclusion of the tried case and upon learning for the first time about the settled cases the taxpayers filed and the court granted motions for entry of decision consistent with the terms of the settled cases specifically the court found the piggyback agreements to be ambiguous insofar as the agreements bound the taxpayers to cases the settled cases and the tried case with divergent results in holding for the taxpayers the court concluded that in advance of the trial of the tried case the taxpayers should have been given an opportunity to agree to the terms offered in the settled cases because the commissioner failed to advise the taxpayers of the settlement prior to the resolution of the tried case the taxpayers were entitled to entry of decision in their cases consistent with the terms offered in the settled cases although the present cases share some of the characteristics of the fisher and estate of satin cases there is at least one significant difference specifically the piggyback agreements in the fisher and estate of satin cases expressly stated that the taxpayers agreed to be bound by the resolution of the test cases whether by litigation or settlement in contrast the piggyback agreements in the present cases do not mention the settlement of a test case as a basis for decision in the piggyback cases it follows that the settlement of some or all of the test cases unlike the settlements on which the taxpayers relied in fisher and estate of satin would not provide a basis for entry of decision in any of the kersting group cases in which the parties had entered into a piggyback_agreement finally we turn to petitioners' alternative argument that public policy concerns dictate that the commissioner maintain consistency in settling cases with taxpayers in cases involving common questions of law and fact petitioners cite section c which provides for consistency in the settlement of cases that are subject_to the unified partnership audit and litigation procedures sec_6221 through enacted by congress as part of the tax equity and fiscal responsibility act of tefra publaw_97_248 96_stat_324 and contend that respondent should be estopped to deny the applicability of section c in these cases petitioners have cited no authority for the application of section c in cases other than tefra partnership proceedings and we are aware of none moreover the public policy concerns expressed by petitioners provide no basis for disregarding the piggyback agreements which bind the parties to the court's redetermination with respect to kersting-related interest deductions as set forth in the court's opinion in the test cases petitioners are required to remain in the hunt with all the other taxpayers in the kersting group cases and abide the outcome of the evidentiary hearing and resolution of the various issues raised by the court_of_appeals for the ninth circuit in its remand of the test cases in sum in the absence of any language in either of the piggyback agreements that reasonably can be interpreted as allowing petitioners to select a particular test case decision as the basis for the decision to be entered in their cases we will deny petitioners' motions for summary_judgment to reflect the foregoing orders will be issued denying petitioners' motions for summary_judgment


internal_revenue_service department of the treasury index number washington dc number release date person to contact telephone number refer reply to cc dom corp 1-plr-117944-99 date date legend purchaser sub sub llc target company official tax professional date a date b date c date d country plr-117944-99 a b this letter responds to your authorized representative’s letter dated date on behalf of the above taxpayers requesting an extension of time under sec_301_9100-1 through of the procedure and administration regulations to file an election additional information was submitted in letters dated date and date the extension is being requested for purchaser as common parent of the consolidated_group of which sub is a member to file an election under sec_338 of the internal_revenue_code and sec_1_338-1 and sec_1_338-1 of the income_tax regulations all citations in this letter to regulations under sec_338 are to the regulations as in effect for date a purchaser is the common parent of a consolidated_group that has a calendar taxable_year and uses the accrual_method of accounting purchaser wholly owns sub a u s_corporation which wholly owns llc a u s limited_liability corporation that has elected to be disregarded for u s federal_income_tax purposes and a of sub a country corporation that has elected to be disregarded for u s federal_income_tax purposes llc owns the remaining stock of sub in the amount of b target is a country corporation on date a sub acquired solely for cash in a fully taxable_acquisition of the stock of target from two individual residents of country purchaser represents that neither of the sellers are united_states persons within the meaning of sec_7701 nor are the sellers subject_to tax on the sale of the stock pursuant to sec_871 because sub and llc are disregarded for u s federal_income_tax purposes sub is deemed as the purchaser of target it is represented that the acquisition of target constituted a qualified_stock_purchase within the meaning of sec_338 and that neither purchaser sub llc nor sub were related to the sellers within the meaning of sec_338 the stock acquisition of target was made with the intention of electing to characterize the acquisition as an asset acquisition pursuant to sec_338 the election the period of limitations on assessments under sec_6501 has not expired for purchaser's or sub 1's taxable_year s in which the acquisition occurred the taxable_year in which the election should have been filed or any taxable years that would have been affected by the election had it been timely filed plr-117944-99 purchaser also represents that target did not own a u s real_property interest within the meaning of sec_897 immediately prior to sub 2's acquisition of all of the outstanding common_stock of target and target will not be required under sec_1_6012-2 to file a u s income_tax return for its date d short_year in connection with the deemed sale of all of its assets at the close of the acquisition_date under sec_338 the election was due on date b however for various reasons the election was not made on date c which is shortly after the due_date for the election company official and tax professional discovered that the election had not been filed subsequently this request was submitted under sec_301_9100-1 for an extension of time to file the election purchaser represents that foreign_income_taxes attributable to the foreign taxable_income earned by target during the foreign taxable_year will be allocated to old target and new target in accordance with the principles of sec_1_338-5 sec_338 permits certain stock purchases to be treated as asset purchases if the purchasing_corporation makes or is treated as having made a sec_338 election under sec_338 and the acquisition is a qualified_stock_purchase sec_338 defines a qualified_stock_purchase as any transaction or series of transactions in which stock meeting the requirements of sec_1504 of one corporation is acquired by another corporation by purchase during the month acquisition period sec_338 provides that the term purchase means any acquisition of stock but only if i the basis of the stock in the hands of the purchasing_corporation is not determined in whole or in part by reference to the adjusted_basis of such stock in the hands of the person from whom acquired or under sec_1014 relating to property_acquired_from_a_decedent ii the stock is not acquired in an exchange to which sec_351 sec_354 sec_355 or sec_356 applies and is not acquired in any other transaction described in regulations in which the transferor does not recognize the entire amount of the gain_or_loss realized on the transaction and iii the stock is not acquired from a person the ownership of whose stock would under sec_318 be attributed to the person acquiring such stock sec_1_338-1 provides that a purchasing_corporation makes a sec_338 election for a target by filing a statement of sec_338 election on form_8023 in accordance with the instructions on the form the sec_338 election must be filed not later than the 15th day of the ninth month beginning after the month in which the acquisition_date occurs a sec_338 election is irrevocable sec_1_338-2 provides that if an election under sec_338 is made for target old target is deemed to sell target’s assets and new target is deemed to acquire those plr-117944-99 assets sec_1_1502-77 provides that the common parent for all purposes other than for several purposes not relevant here shall be the sole agent for each subsidiary in the group duly authorized to act in its own name in all matters relating to the tax_liability of the consolidated_return_year see also form_8023 and the instructions thereto under sec_301_9100-1 the commissioner has discretion to 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 internal_revenue_code except subtitles e g h and i sec_301_9100-1 defines the term regulatory election as including an election whose due_date is prescribed by a regulation revenue_ruling revenue_procedure notice or announcement sec_301_9100-1 through provide the standards the commissioner will use to determine whether to grant an extension of time to make a regulatory election see sec_301_9100-1 sec_301_9100-2 provides automatic extensions of time for making certain elections sec_301_9100-3 provides extensions of time for making regulatory 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 see sec_301_9100-3 in this case the time for filing the election was fixed by the regulations ie sec_1_338-1 therefore the commissioner has discretionary authority under sec_301_9100-1 to grant an extension of time for purchaser as common parent of the consolidated_group of which sub is a member to file the election provided purchaser shows that sub acted reasonably and in good_faith the requirements of sec_301_9100-1 and sec_301_9100-3 are satisfied and granting relief will not prejudice the interests of the government information affidavits and representations submitted by company official and tax professional explain the circumstances that resulted in the failure_to_file the election the information establishes that purchaser reasonably relied on a qualified_tax professional and that relief was requested before the failure to make the election was discovered by the service see sec_301_9100-3 and v based on the facts and information submitted including the representations that have been made we conclude that purchaser and sub acted reasonably and in good_faith in failing to timely file the election the requirements of sec_301_9100-1 and sec_301_9100-3 are satisfied and granting relief will not prejudice the interests of the government accordingly subject_to the below conditions we grant an extension of plr-117944-99 time under sec_301_9100-1 until days from the date_of_issuance of this letter for purchaser as common parent of the consolidated_group of which sub is a member to file the election with respect to the acquisition of the stock of target as described above the above extension of time to file the election is conditioned on the taxpayers' purchaser and its subsidiaries and target and the sellers’ to the extent they have any u s tax_liability tax_liability not being lower in the aggregate for all years to which the election applies than it would have been if the election had been timely made taking into account the time_value_of_money no opinion is expressed as to the taxpayers' tax_liability for the years involved a determination thereof will be made by the district director's office upon audit of the federal_income_tax returns involved further no opinion is expressed as to the federal_income_tax effect if any if it is determined that the taxpayers' liability is lower sec_301_9100-3 purchaser as common parent of the consolidated_group of which sub is a member should file the election in accordance with sec_1_338-1 and sec_1_338-1 that is a new election on form_8023 must be executed on or after the date of this letter which grants an extension and filed in accordance with the instructions on the election form a copy of this letter should be attached to the election form purchaser must file and amend its return and target must file a final return if and as applicable to report the stock acquisition sale as a sec_338 transaction and attach thereto a copy of this letter and a copy of the election form also see sec_1_338-1 and sec_1_338-5 that is the old target must file a separate final return if and as applicable and the new target must be included in purchaser’s return by being listed on form for the first year following the acquisition see sec_1_338-1 and1 g and announcement 1998_1_cb_282 no opinion is expressed as to whether the acquisition of target’s stock qualifies as a qualified_stock_purchase whether the acquisition of target’s stock qualifies for sec_338 treatment if the acquisition of target’s stock qualifies for sec_338 treatment as to the amount of gain_or_loss recognized if any by target on the deemed asset sale furthermore no opinion is expressed as to the validity of sub 2' election to be treated as a disregarded_entity for u s federal_income_tax purposes no opinion is expressed about the tax treatment of any conditions existing at the time of or effects resulting from the purchase of the stock of target not specifically covered by the above rulings specifically no opinion is expressed as to the validity of llc’s or sub 2's election to be treated as disregarded entities for u s federal_income_tax purposes no opinion is expressed as to the tax effects or consequences of filing the plr-117944-99 election late under the provisions of any other section of the code and regulations or as to the tax treatment of any conditions existing at the time of or resulting from filing the election late that are not specifically set forth in the above ruling for purposes of granting relief under sec_301_9100-1 we relied on certain statements and representations made by the taxpayer its employees and representatives however the district_director should verify all essential facts in addition notwithstanding that an extension is granted under sec_301_9100-1 to file the election penalties and interest that would otherwise be applicable if any continue to apply a copy of this letter is being sent to the authorized representatives designated on your power_of_attorney this letter is directed only to the taxpayer who requested it sec_6110 provides that it may not be used or cited as precedent sincerely yours philip j levine assistant chief_counsel corporate


id office uilc cca_2012042613145247 ---------------- number release date from ---------------------- sent thursday date pm to --------------- cc -------------------------- subject fw lien priority question ------ hi ----------- as noted below under the facts provided it appears that the bank would have a superpriority under sec_6323 for deposit-secured loans there is not much out there on b a lexis search pulled up only cases and i have not come across anything specifically addressing ucc in this context but the below excerpt from the gl training materials is useful article of the ucc allows a bank to obtain a security_interest in a deposit account specifically section of article allows a security_interest to be created in personal_property section d however excludes consumer loans from the scope of article so a security_interest may be created in only business loans section a provides that a security_interest in a deposit account may be perfected by control under section a a bank automatically has control when the bank maintains the deposit account section b provides that the bank still maintains control even if the depositor is allowed to withdraw funds from the account there is no requirement that the bank file a ucc statement with the state in effect in most situations the bank will automatically and secretly have perfected a security_interest in the depositor's account a bank’s claim to a sec_6323 superpriority however is not a defense to a levy revrul_2006_42 2006_2_cb_337 the rev_rul cited also provides that we will generally release a levy once a bank establishes its superpriority interest see also irs cca regarding application of b to taxpayer checking accounts from the facts provided i don't see an argument here that there are any grounds to dispute the bank's superpriority claim unless the bank did not loan a fixed and determinable sum i have never seen a case where we have disputed a bank's security_interest in a deposit account based upon lack of perfection by control please let me know if i can be of further assistance