t c no united_states tax_court judith k guerra a k a judith harvey petitioner v commissioner of internal revenue respondent docket no filed date on date p filed a bankruptcy petition under chapter of the bankruptcy code on date r issued a notice_of_deficiency to p for the taxable_year on date the bankruptcy court issued an order dismissing p's case pursuant to u s c sec on date p filed a motion for reconsideration with the bankruptcy court on date the bankruptcy court issued an order granting p's motion for reconsideration and reinstating petitioner's case on date petitioner filed a petition for redetermination with the court r filed a motion to dismiss for lack of jurisdiction on the ground that the petition was filed in violation of the automatic_stay imposed under u s c sec_362 held the bankruptcy court's order dated date dismissing p's bankruptcy case pursuant to u s c sec served to terminate the automatic_stay imposed under u s c sec_362 see u s c sec_362 held further the bankruptcy court's order dated date although vacating the bankruptcy court's order dated date is silent respecting the status of the automatic_stay and thus the automatic_stay was not reinstated see 97_tc_544 held further the petition filed herein was not filed in violation of the automatic_stay and p properly invoked this court's jurisdiction sec_6213 i r c judith k guerra pro_se robert a varra and peter k reilly for respondent opinion dawson judge this case was assigned to chief special_trial_judge peter j panuthos pursuant to the provisions of sec_7443a and rule the court agrees with and adopts the opinion of the special_trial_judge which is set forth below opinion of the special_trial_judge panuthos chief special_trial_judge this matter is before the court on respondent's motion to dismiss for lack of jurisdiction the question to be decided is whether the petition for redetermination was filed with the court in violation of the so-called automatic_stay imposed pursuant to u s c sec_362 background on date petitioner and carlos manuel guerra all section references are to the internal_revenue_code in effect for the year in issue unless otherwise indicated all rule references are to the tax_court rules_of_practice and procedure petitioner's husband filed a voluntary petition for relief under chapter of the bankruptcy code with the u s bankruptcy court for the district of colorado on date respondent mailed a notice_of_deficiency to petitioner determining a deficiency in her federal_income_tax for in the amount of dollar_figure as well as additions to tax in the amounts of dollar_figure and dollar_figure pursuant to sec_6651 and sec_6654 respectively on date the bankruptcy court entered an order granting the bankruptcy trustee's motion to dismiss petitioner's case the bankruptcy court's order states in pertinent part this matter having come before the court upon the motion to dismiss the chapter case filed by the standing chapter trustee it is ordered that the within case be and is hereby dismissed pursuant to the provisions of usc section further ordered that in accordance with usc section b and any transfer avoided under sec_522 sec_544 sec_545 sec_547 or a of title or preserved under section c i or of title is reinstated any lien voided under sec_506 of title is reinstated and any order judgment or transfer ordered under sec_522 sec_542 or of title is vacated further ordered that funds in the hand of the standing chapter trustee in said case if any which are lawfully payable to the creditors will be distributed by said trustee within ninety days from the date of this order it appears that the bankruptcy trustee filed the motion to dismiss on the ground that petitioner had failed to make a payment due under the chapter plan the order does not impose any stay of proceedings and does not mention the status of the automatic_stay imposed under u s c sec_362 on date petitioner and her husband filed a motion to reconsider with the bankruptcy court regarding the dismissal of their case on date the bankruptcy court issued an order granting petitioner's motion to reconsider as follows this matter comes before the court on debtor's motion to reconsider order dismissing chapter case entered date the court having reviewed the file and being advised in the premises hereby orders as follows the motion to reconsider is granted the order entered date dismissing this case is vacated this case is hereby reinstated debtor will be current with the trustee within ten days from the date of this order the order does not mention the status of the automatic_stay imposed under u s c sec_362 on date petitioner filed a petition for redetermination with the court in response respondent filed a motion to dismiss for lack of jurisdiction asserting that the petition was filed in violation of the automatic_stay imposed under u s c sec_362 at the time the petition was filed petitioner resided at denver colorado discussion the tax_court is a court of limited jurisdiction and we may exercise our jurisdiction only to the extent authorized by congress 85_tc_527 our jurisdiction to redetermine a deficiency depends upon the issuance of a valid notice_of_deficiency and a timely filed petition rule a c 93_tc_22 normac inc 90_tc_142 sec_6212 expressly authorizes the commissioner after determining a deficiency to send a notice_of_deficiency to the taxpayer by certified or registered mail the taxpayer in turn generally ha sec_90 days from the date the notice_of_deficiency is mailed to file a petition in this court for a redetermination of the deficiency sec_6213 an exception to the normal 90-day filing period arises where the taxpayer has filed a petition for relief under the bankruptcy code in particular u s c sec_362 provides in pertinent part a except as provided in subsection b of this section a petition filed under sec_301 sec_302 or sec_303 of this title operates as a stay applicable to all entities of-- the commencement or continuation of a proceeding before the united_states tax_court concerning the debtor in short the filing of a bankruptcy petition invokes the automatic_stay which precludes the commencement or continuation of proceedings in this court 105_tc_387 97_tc_544 although respondent is free to issue a notice_of_deficiency to a taxpayer that has filed a bankruptcy petition see u s c sec_362 the normal 90-day period for filing a timely petition with this court is suspended for the period during which the taxpayer is prohibited by reason of the automatic_stay from filing a petition in this court and for days thereafter sec_6213 86_tc_1314 and cases cited therein the period that the automatic_stay remains in effect is prescribed in u s c sec_362 as follows c except as provided in subsections d e and f of this section-- the stay of an act against property of the estate under subsection a of this section continues until such property is no longer property of the estate and u s c sec_362 provides in pertinent part b the filing of a petition under sec_301 sec_302 or sec_303 of this title does not operate as a stay-- under subsection a -- b of the issuance to the debtor of tax_deficiency by a governmental_unit of a notice the stay of any other act under subsection a of this section continues until the earliest of-- a the time the case is closed b the time the case is dismissed or c if the case is a case under chapter of this title concerning an individual or a case under chapter or of this title the time a discharge is granted or denied in sum unless relief from the automatic_stay is granted by order of the bankruptcy court see u s c sec_362 the automatic_stay generally remains in effect until the earliest of the closing of the case dismissal of the case or the grant or denial of a discharge u s c sec_362 see allison v commissioner supra pincite 96_tc_10 94_tc_1 in the instant case respondent issued a notice_of_deficiency to petitioner on date during the pendency of petitioner's bankruptcy case see u s c sec_362 there is no dispute that petitioner was precluded by the automatic_stay imposed under u s c sec_362 from filing a petition with this court at the time the notice_of_deficiency was issued the issue to be decided is whether the automatic_stay remained in effect in this case following the dismissal and subsequent reinstatement of petitioner's bankruptcy case if the automatic_stay remained in effect then the petition filed in this case on date must be dismissed on the other hand if the automatic_stay was terminated it follows that the petition was timely filed pursuant to sec_6213 respondent contends that the automatic_stay remained in effect at all times in this case notwithstanding the dismissal of petitioner's bankruptcy case on date first respondent maintains that by virtue of bankruptcy rule petitioner's motion to reconsider filed with the bankruptcy court within days of the issuance of the dismissal order is treated as a motion under rule of the federal rules of civil procedure respondent contends that under the latter rule the bankruptcy court's dismissal order did not become final bankruptcy rule states rule f_r civ p applies in cases under the code except as provided in rule u s c app pincite fed r civ p states in pertinent part a grounds a new trial may be granted to all or any of the parties and on all or part of the issues in an action tried without a jury for any of the reasons for which rehearings have heretofore been granted in suits in equity in the courts of the united_states on a motion for a new trial in an action tried without a jury the court may open the judgment if one has been entered take additional testimony amend findings_of_fact and conclusions of law or make new findings and conclusions and direct the entry of a new judgment b time for motion a motion for a new trial shall be served not later than days after the entry of the judgment continued respondent reasons that because the dismissal order never became final and consistent with the bankruptcy court's subsequent decision to reinstate petitioner's bankruptcy case the automatic_stay remained in effect at all times in the alternative respondent contends that the bankruptcy court's date order reinstating petitioner's case caused the automatic_stay to be reinstated on that date contrary to respondent's position we conclude that the bankruptcy court's date order of dismissal terminated the automatic_stay under the circumstances we are not satisfied that petitioner's motion for reconsideration precluded the bankruptcy court's order of dismissal from becoming final insofar as that order served to terminate the automatic_stay respondent cites no direct authority for the proposition that the filing of petitioner's motion for reconsideration with the bankruptcy court caused the automatic_stay to remain in effect on the other hand at least one appellate court has held that the automatic_stay terminated immediately upon the dismissal of the debtor's bankruptcy case for failure to properly prosecute notwithstanding that the debtor undertook to file a motion for reconsideration with the bankruptcy court within days of the order of dismissal see in re de jesus saez continued e motion to alter or amend judgment a motion to alter or amend the judgment shall be served not later than days after entry of the judgment f 2d 1st cir applying bankruptcy rule 762--the predecessor to bankruptcy rule see also in re franklin mortgage investment co bankr bankr d c in re barnes bankr s d ohio in re weston bankr bankr e d cal affd without published opinion bankr b a p 9th cir affd without published opinion 967_f2d_596 9th cir in re bluford bankr bankr w d mo respondent has failed to reconcile respondent's interpretation of bankruptcy rule with the interpretation of bankruptcy rule states in pertinent part rule fr civ p applies in adversary proceedings an order granting relief from an automatic_stay provided by sec_362 shall be one of the additional exceptions to rule a fed r civ p provides with exceptions that a judgment generally shall not be enforced until days after its entry norton bankruptcy law and practice sec dollar_figure discusses the effect of bankruptcy rule as follows by the terms of bankruptcy code sec_362 the automatic_stay terminates at the time a bankruptcy case is dismissed a request for dismissal of a bankruptcy case filed by a party other than the debtor will generally be in the form of a motion and will constitute a contested matter under bankruptcy rule as provided in that rule bankruptcy rule applies in contested matters and thus if an order of dismissal is an order granting relief from an automatic_stay as described in bankruptcy rule then it can be argued that an order for dismissal is not subject_to the 10-day stay of proceedings described in rule a of the federal rules of civil procedure given that an order of dismissal has the effect of terminating the automatic_stay it is arguable that a dismissal order falls within the terms of bankruptcy rule and constitutes immediate relief from the stay fn ref omitted bankruptcy rule set forth in the authorities cited above based upon the record presented we hold that the bankruptcy court's date order of dismissal terminated the automatic_stay we likewise reject respondent's alternative argument that the automatic_stay was reinstated at the same time that the bankruptcy court granted petitioner's motion for reconsideration and reinstated petitioner's case as previously discussed the automatic_stay is imposed upon the filing of a bankruptcy petition and generally is terminated when the bankruptcy case is closed or dismissed or a discharge is granted or denied the court has previously considered whether the automatic_stay was reinstated in circumstances analogous to those presented in the instant case in 105_tc_387 the court held that the automatic_stay terminated when the bankruptcy court entered an order granting summary_judgment that the debtors taxpayers were not entitled to a discharge of their debts the court further held that the automatic_stay was not reinstated when the bankruptcy court vacated its earlier order similarly in 97_tc_544 the court held that the automatic_stay terminated when the bankruptcy court granted the debtor taxpayer a discharge_of_indebtedness and that the automatic_stay was not reinstated when the bankruptcy court subsequently reopened the case see 95_tc_655 automatic_stay terminated upon bankruptcy court's confirmation of a chapter plan and automatic_stay was not reinstated despite the bankruptcy court's decision to retain jurisdiction over the case respondent argues that the above-referenced cases and particularly kieu v commissioner supra can be factually distinguished from the present case insofar as petitioner's bankruptcy case was reinstated before petitioner filed her petition for redetermination with the court respondent relies on in re diviney bankr bankr n d okla for the proposition that the bankruptcy court's reinstatement of petitioners' bankruptcy case caused the automatic_stay to be reinstated although we agree that in re diviney supra stands for the proposition cited by respondent we are not persuaded that we are obliged to find that the automatic_stay was reinstated in this case to the contrary we adhere to allison v commissioner supra pincite and specifically kieu v commissioner supra pincite in which we held while an argument might be made that the bankruptcy court's intent to reinstate the automatic_stay in the present case may be inferred from the fact that the bankruptcy court vacated its order granting the creditors' motion for summary_judgment we decline to decide the issue presented in this case on such an assumption we are mindful that the automatic_stay respecting the commencement or continuation of proceedings in this court was adopted in part to avert duplicative and inconsistent litigation over tax issues 96_tc_895 given the consequences however that follow from a determination respecting the status of the automatic_stay the soundest approach is to adhere to the reasoning in allison v commissioner supra simply stated where a bankruptcy court has taken action that serves to terminate the automatic_stay under u s c sec_362 the automatic_stay remains terminated absent an express indication from the bankruptcy court to the contrary certainly if a bankruptcy court intends to exercise its jurisdiction to resolve the issues surrounding petitioners' tax_liability that court has the means to bring about a stay of the proceedings in this court see allison v commissioner supra pincite referring to u s c sec_105 which permits the bankruptcy court to issue any order necessary to carry out title in accordance with the foregoing we hold that the automatic_stay was terminated as of date the date that the bankruptcy court issued its order dismissing petitioner's case further we hold that the automatic_stay was not revived when the bankruptcy court reinstated petitioner's case on date because the automatic_stay was not in effect on the date that petitioner filed her petition for redetermination with the court we conclude that petitioner properly invoked the court's jurisdiction and we will deny respondent's motion to dismiss for lack of jurisdiction to reflect the foregoing an order denying respondent's motion to dismiss for lack of jurisdiction will be issued


internal_revenue_service department of the treasury number release date index number washington dc person to contact telephone number refer reply to cc corp b02-plr-109315-00 date date legend foreign parent distributing distributing controlled controlled subsidiary controlled subsidiary state t state u country v country w country x country y industry z business a business b business c business d business e business f plr-109315-00 dear this letter responds to your authorized representatives’ letter dated date in which you requested rulings under sec_355 of the internal_revenue_code additional information regarding your request has been submitted in letters dated july august august august september september and date the material information submitted for consideration is summarized below foreign parent is a country v corporation engaged in industry z distributing a wholly-owned subsidiary of foreign parent is a state u corporation distributing is a holding_company for operations located in countries w x and y and is the common parent for the u s affiliated_group distributing is engaged in businesses a b c d e and f indirectly through its subsidiaries each of these businesses has been conducted for more than five years distributing a state u corporation is a wholly-owned subsidiary of distributing distributing is actively engaged in businesses a b c d e and f each of these businesses has been conducted for more than five years controlled is to be a state u corporation and will be formed for the purpose of restructuring business f after the proposed transaction controlled will be engaged in business f through its wholly- owned subsidiaries controlled subsidiary a state u corporation is a wholly-owned subsidiary of distributing controlled subsidiary has been directly engaged in business f for each of the past five years controlled subsidiary a state t corporation is a wholly- owned subsidiary of distributing controlled subsidiary has been directly engaged in business f for each of the past five years the taxpayer has supplied financial information which indicates that distributing distributing controlled subsidiary and controlled subsidiary have been conducting businesses that have had gross_receipts and operating_expenses representative of the active_conduct of such businesses for each of the past five years the management of distributing has determined that businesses a and f cannot achieve their full potential as part of the distributing affiliated_group due to management and systemic problems arising in their operation since business a represents a larger share of distributing 1's overall sales management has been heavily influenced by the business model appropriate to business a as a result the current structure impedes the investment in research_and_development necessary to succeed in business f and the ability to make and implement decisions essential to the business f operations accordingly in order to resolve these problems the taxpayer has proposed the following transaction plr-109315-00 distributing will contribute all of the issued and outstanding_stock of controlled subsidiary and controlled subsidiary to controlled in exchange for all of the issued and outstanding_stock of controlled distributing will then distribute all of the issued and outstanding_stock of controlled to distributing distribution distributing will then distribute all of the issued and outstanding_stock of controlled to foreign parent distribution the following additional representations have been made in connection with step of the proposed transaction a b c d the five years of financial information submitted on behalf of distributing controlled subsidiary and controlled subsidiary is representative of their present operations and with regard to such corporations there have been no substantial operational changes since the date of the last financial statements submitted the proposed transaction does not involve the vertical division of a single business or the separation of two or more businesses there is no planned or intended substantial reduction in the business activity of distributing or controlled the total adjusted gross bases and the fair_market_value of the assets to be transferred to controlled by distributing each equals or exceeds the sum of the liabilities assumed by controlled plus any liabilities to which the transferred assets are subject the liabilities assumed in step of the transaction and the liabilities to which the transferred assets are subject were incurred in the ordinary course of business and are associated with the assets being transferred the following additional representations have been made in connection with step of the proposed transaction e f no part of the consideration to be distributed by distributing will be received by the shareholder of distributing as a creditor employee or in any capacity other than that of a shareholder of distributing there is no plan or intention on the part of the shareholders of distributing to sell exchange transfer by gift or otherwise dispose_of any of their stock in either distributing or controlled after the proposed transaction except i foreign parent will contribute controlled to its wholly-owned plr-109315-00 g h i j k l subsidiary foreign holdco and then possibly to a wholly-owned subsidiary of foreign holdco and ii distributing will contribute distributing to its wholly-owned u s subsidiary new capco immediately after the distribution at least ninety percent of the fair_market_value of the gross assets of controlled will consist of the stock and securities of controlled corporations that are engaged in the active_conduct_of_a_trade_or_business as defined in sec_355 immediately after the distribution at least ninety percent of the fair_market_value of the gross assets of distributing will consist of the stock and securities of controlled corporations that are engaged in the active_conduct_of_a_trade_or_business as defined in sec_355 the proposed transaction does not involve the vertical division of a single business or the separation of two or more businesses there is no planned or intended substantial reduction in the business activity of distributing the distribution of the stock of controlled is being undertaken for the following corporate business_purpose to enhance the success of the business by enabling the corporations to resolve management and systemic problems that arise by the taxpayer’s operation of different businesses within a single corporation or affiliated_group the distribution of the stock of controlled is motivated in whole or substantial part by such corporate business_purpose there is no plan or intention to issue redeem or dispose_of any of the controlled stock except as described above at paragraph f there is no plan or intention by distributing distributing or controlled directly or through any subsidiary_corporation to purchase any of its outstanding_stock after the transaction other than through stock purchases meeting the requirements of sec_4 b of revproc_96_30 m there is no plan or intention to liquidate distributing distributing or controlled to merge any of these corporations with any other corporation or to sell or otherwise dispose_of any of the assets of these corporations except i in the ordinary course of business and ii as described above at paragraph f n neither distributing nor distributing accumulated its receivables nor made extraordinary payment of its payables in anticipation of the plr-109315-00 proposed transaction o p q r s t no shareholder of distributing or distributing will hold immediately after the distribution disqualified_stock within the meaning of sec_355 which constitutes a or greater interest in distributing distributing or controlled the distribution is not part of a plan or series of related transactions within the meaning of sec_355 pursuant to which one or more persons will acquire directly or indirectly stock possessing or more of the combined voting power of all classes of stock entitled to vote of either distributing distributing or controlled or stock possessing or more of the total value of all classes of stock of either distributing distributing or controlled no intercorporate debt will exist between distributing distributing and controlled at the time of or subsequent to the distribution of the controlled stock except as may arise from the shared treasury function operated out of distributing any such intercorporate debt will not constitute stock_or_securities immediately before the distribution items of income gain loss deduction and credit will be taken into account as required by the applicable intercompany_transaction regulations further distributing 1's and distributing 2's excess_loss_account if any with respect to the controlled stock will be included in income immediately before the distribution see sec_1_1502-19 payments made in connection with all continuing transactions if any between distributing distributing and controlled will be for fair_market_value based on terms and conditions arrived at by the parties bargaining at arm’s length none of the parties to the transaction is an investment_company as defined in sec_368 and iv the following additional representations have been made in connection with step of the proposed transaction u no part of the consideration to be distributed by distributing will be received by the shareholder of distributing as a creditor employee or in any capacity other than that of a shareholder of distributing v there is no plan or intention on the part of the shareholders of distributing plr-109315-00 to sell exchange transfer by gift or otherwise dispose_of any of their stock in either distributing distributing or controlled after the proposed transaction except as described above at paragraph f w neither distributing nor controlled has been or will be a united_states_real_property_holding_corporation usrphc as defined in sec_897 at any time during the five-year period ending on the date of distribution and neither distributing nor controlled will be a usrphc immediately after distribution based solely upon the information submitted and the representations made we rule as follows a b c d e f the transfer by distributing to controlled of the stock of controlled subsidiary and controlled subsidiary solely in exchange for all of the issued and outstanding_stock of controlled followed by the distribution of all of the controlled stock to distributing will be a reorganization within the meaning of sec_368 of the code distributing and controlled will each be a party to the reorganization within the meaning of sec_368 distributing will recognize no gain_or_loss upon the transfer of the stock of controlled subsidiary and controlled subsidiary to controlled in exchange for the stock of controlled sec_361 controlled will recognize no gain_or_loss upon the receipt of the stock of controlled subsidiary and controlled subsidiary in exchange for the stock of controlled sec_1032 the basis of the stock of controlled subsidiary and controlled subsidiary received by controlled in the transaction will be the same as the basis of such property in the hands of distributing immediately prior to their transfer to controlled sec_362 the holding_period of the stock of controlled subsidiary and controlled subsidiary received by controlled in the transaction will include the period during which such property was held by distributing sec_1223 distributing will recognize no gain_or_loss and no amount will be included in the income of distributing upon the receipt of the controlled stock sec_355 g distributing will recognize no gain_or_loss upon the distribution of the plr-109315-00 h i j k l m n controlled stock to distributing sec_361 the aggregate basis of the controlled stock and the distributing stock in the hands of distributing immediately after the distribution to distributing will be the same as the basis of the distributing stock in the hands of distributing immediately prior to the distribution sec_358 and sec_1_358-1 such aggregate basis will be allocated between the distributing stock and the controlled stock in proportion to the relative fair_market_value of each corporation’s stock in accordance with sec_1_358-2 of the income_tax regulations sec_358 the holding_period of the controlled stock received by distributing will include the holding_period of the distributing stock held by distributing with respect to which the distribution will be made provided that the distributing stock is held as a capital_asset on the date of the distribution sec_1223 as provided in sec_312 proper allocation of earnings_and_profits between distributing and controlled will be made under sec_1 a and of the income_tax regulations foreign parent will recognize no gain_or_loss and no amount will be included in the income of foreign parent upon the receipt of the controlled stock sec_355 distributing will recognize no gain_or_loss upon the distribution of the controlled stock to foreign parent sec_355 the aggregate basis of the controlled stock and the distributing stock in the hands of foreign parent immediately after the distribution to foreign parent will be the same as the basis of the distributing stock in the hands of foreign parent immediately prior to the distribution sec_358 and sec_1_358-1 such aggregate basis will be allocated between the distributing stock and the controlled stock in proportion to the relative fair_market_value of each corporation’s stock in accordance with sec_1_358-2 of the income_tax regulations sec_358 the holding_period of the controlled stock received by foreign parent will include the holding_period of the distributing stock held by foreign parent with respect to which the distribution will be made provided that the distributing stock is held as a capital_asset on the date of the distribution sec_1223 o as provided in sec_312 proper allocation of earnings_and_profits plr-109315-00 between distributing and controlled will be made under sec_1 a and of the income_tax regulations p distributing will not recognize gain_or_loss under sec_367 on the distribution of controlled stock to foreign parent sec_1_367_e_-1 no opinion is expressed or implied about the tax treatment of the proposed transaction under other provisions of the code and regulations or about the tax treatment of any conditions existing at the time of or effects resulting from the proposed transaction that are not specifically covered by the above rulings the rulings contained in this letter are predicated upon the facts and representations submitted by the taxpayer and accompanied by a penalties of perjury statement executed by an appropriate party this office has not verified any of the materials submitted in support of the request for a ruling verification of the information representations and other data may be required as part of the audit process this ruling letter is directed only to the taxpayer s requesting it sec_6110 of the code provides that it may not be used or cited as precedent a copy of this letter should be attached to the federal_income_tax return s of the taxpayer s involved for the taxable_year in which the transaction covered by this ruling letter is consummated in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to the taxpayer sincerely associate chief_counsel corporate by lewis k brickates assistant to the branch chief branch


id office uilc cca_2010042113225164 ------------- number release date from ------------------ sent wednesday date pm to --------------------- cc --------------------------------------------------------------------------------------------------------------------------- ----------------- subject fw 6707a two things i am forwarding this to --------------------in ----- because ----- has jurisdiction over the regs on reportable_transactions ----- can respond to how the regs require disclosure by both s_corporations and s corp shareholders you are mistaken is stating that the penalty is not subject_to judicial review there is no judicial review of the commissioner's decision regarding whether to rescind the penalty on failure to disclose reportable_transactions other than listed transactions see sec_6707a however the penalty is subject_to review in a refund action or possibly cdp proceeding in which a court could consider whether all elements necessary for the penalty to apply are satisfied including whether there was a disclosure obligation in the first place


t c memo united_states tax_court estate of margot stewart deceased brandon stewart executor commissioner of internal revenue respondent petitioner v estate of margot stewart deceased donor brandon stewart executor petitioner v commissioner of internal revenue respondent docket nos filed date kirk h o’ferrall kathleen m citera and robert callagy specially recognized for petitioners shawna a early and lydia a branche for respondent memorandum findings_of_fact and opinion foley judge the issues for decision are whether decedent made a completed_gift of a 49-percent interest_in_real_property whether the value of that property should be included in decedent’s estate pursuant to sec_2036 and whether decedent’s estate is entitled to deductions relating to property taxes and claims against the estate findings_of_fact on date margot stewart decedent executed a deed that transferred to brandon stewart her son real_property located in east hampton new york the east hampton property as a result of the transfer decedent and mr stewart owned the east hampton property as joint_tenants with rights of survivorship decedent and mr stewart agreed to share the income and expenses relating to the east hampton property decedent also owned real_property located pincite east 61st street new york new york the 61st street property decedent and mr stewart resided on the first two floors of the 61st street property beginning on date decedent leased the remaining three floors of the 61st street property to financial solutions ltd an unrelated third party for dollar_figure per month on date decedent executed a deed that transferred to mr stewart a 49-percent interest in the 61st street property unless otherwise indicated all section references are to the internal_revenue_code in effect for the year in issue and all rule references are to the tax_court rules_of_practice and procedure as a result of the transfer decedent and mr stewart owned the property as tenants in common on date robert goldie mr stewart’s attorney delivered the deed to choice abstract corp choice abstract for the purpose of recording the deed the deed however was misplaced by choice abstract and was not recorded until date decedent who was a resident of new york died on date after the date transfer and until the time of her death decedent continued to receive all of the rental payments from financial solutions ltd prior to her death decedent also paid most of the expenses relating to the 61st street property ie decedent paid expenses of dollar_figure while mr stewart paid dollar_figure mr stewart and barbara weisl were appointed executors of decedent’s estate on date decedent’s executors filed a form_709 united_states gift and generation-skipping_transfer_tax return relating to the transfer of the 61st street property on date mr stewart obtained a mortgage on the 61st street property on date decedent’s executors filed a form_706 united_states estate and generation- skipping transfer_tax return relating to decedent’s estate ms weisl died on date and the estate did not appoint another executor on date respondent issued separate statutory notices of deficiency relating to the estate and gift_tax returns on date mr stewart while residing in new york new york timely filed separate petitions on behalf of the estate relating to the estate and gift_tax returns opinion i the transfer to mr stewart was a completed_gift the estate contends that the transfer from decedent to mr stewart of the 49-percent interest in the 61st street property was a completed_gift pursuant to new york law a gift is complete only if donative_intent delivery and acceptance are established gruen v gruen n e 2d n y the parties agree that decedent intended to transfer the property and mr stewart accepted the property respondent however contends that there was not a valid delivery of the gift until date ie the date the deed was recorded we disagree pursuant to new york law the recording of a deed is irrelevant in determining whether there is a completed_gift n y real prop law sec_244 mckinney see whalen v harvey n y s 2d app div the estate has established that decedent intended to and did indeed relinquish dominion and control of a 49-percent interest in the 61st street property on date see gruen v gruen supra pincite thus the transfer of the interest in the 61st street property was a completed_gift ii the property is includable pursuant to sec_2036 the estate acknowledges that decedent’s 51-percent interest in the 61st street property is includable in her estate but contends that the remaining percent of the property is owned by mr stewart ie as a tenant in common respondent contends that pursuant to sec_2036 percent of the 61st street property’s value is includable in the estate because decedent continued to live there and received all of the rental income after the date transfer sec_2036 provides that a decedent's gross_estate includes the value of all property interests transferred other than for full_and_adequate_consideration_in_money_or_money's_worth by a decedent during her life where she has retained for life the possession or enjoyment of the property or the right to the income from the property the term enjoyment refers to the economic benefits from the property 65_tc_296 affd 547_f2d_32 2d cir in general the commissioner's determinations set forth in a notice_of_deficiency are presumed correct and the taxpayer bears the burden of showing that the determinations are erroneous rule a 290_us_111 our conclusions however are based on a preponderance_of_the_evidence and thus the allocation of the burden_of_proof is immaterial see 110_tc_189 ndollar_figure thus enjoyment as used in the death_tax statute is not a term of art but is synonymous with substantial present economic benefit 265_f2d_667 3d cir affg 29_tc_1179 retained enjoyment may exist where there is an express or implied understanding at the time of the transfer that the transferor will retain the economic benefits of the property 437_f2d_1148 4th cir 73_tc_82 decedent’s retention of the property’s income stream after the property was transferred is very clear evidence that the decedent did indeed retain ‘possession or enjoyment ’ 62_tc_861 decedent continued to receive the dollar_figure monthly rent payments from financial solutions ltd and enjoy the economic benefits of the 61st street property mr stewart contends that he and decedent agreed they would share the income and expenses in a manner reflective of their ownership interests relating to the 61st street property ie mr stewart would receive percent of the income and pay percent of the expenses and the east hampton property ie mr stewart would receive percent of the income and pay percent of the expenses at the end of according to mr stewart he and decedent intended to perform a financial reconciliation to ensure that the proper amount of income and expenses was allocated to decedent’s and mr stewart’s interest in both properties the parties did not sign a written_agreement to reconcile the income and expenses and mr stewart’s testimony relating to an oral agreement was not credible indeed mr stewart’s accountant testified that he did not recall being informed about an agreement to reconcile the income and expenses we do however conclude that mr stewart and decedent had an implied agreement that decedent would retain the economic benefits of the 61st street property decedent certainly met the terms of that agreement thus the full value of the 61st street property must be included in decedent’s estate sec_2036 estate of hendry v commissioner supra pincite iii property_tax deduction is disallowed after decedent’s death mr stewart paid dollar_figure in property taxes relating to decedent’s 51-percent interest in the 61st street property the estate contends that the estate is entitled to a deduction relating to property taxes paid_by mr stewart at the time of her death decedent did not have an outstanding property_tax obligation relating to her 51-percent interest in the 61st street property pursuant to sec_2053 property taxes are not deductible by an estate unless the taxes are an enforceable obligation of the decedent at the time of her death see also sec_20_2053-6 estate_tax regs accordingly no deduction is allowed sec_2053 sec_20_2053-6 estate_tax regs iv deduction of debt owed to mr stewart is not allowed the estate contends that it is entitled pursuant to sec_2053 to deduct a debt owed to mr stewart relating to the purported reconciliation agreement between mr stewart and decedent to share the income and expenses relating to both properties an estate may deduct the value of a claim based on a decedent’s promise to pay only if the liability was contracted bona_fide and for adequate_and_full_consideration in money or money’s worth sec_2053 see 88_tc_1265 there was no reconciliation agreement accordingly no deduction is allowed contentions we have not addressed are irrelevant moot or meritless to reflect the foregoing decisions will be entered under rule


internal_revenue_service significant index no department of the treasury washington dc os person to contact telephone number refer reply to t ep ra t a1 _ date oct in re company this letter constitutes notice that with respect to the above-named defined benefit pension_plan we have granted a conditional waiver of the minimum_funding_standard for the plan_year ending date this letter also constitutes notice that we have modified the condition set forth in our letter of date for the waiver of the minimum_funding_standard for the plan_year ending date the conditional waiver for the plan_year ending date has been granted in accordance with sec_412 of the internal_revenue_code the code and sec_303 of the employee_retirement_income_security_act_of_1974 erisa the waived amount is the contribution which would otherwise be required to reduce the balance in the funding_standard_account to zero as of the end of the plan_year for which this conditional waiver has been granted after the payment of at least the amount required under sec_412 of the code to amortize the waivers for prior plan years the company has struggled financially from its inception through a management led buyout generally earning marginal profits and barely achieving required bank loan covenants in after posting a large net_loss the company applied for and received a waiver from the internal_revenue_service of the minimum_funding_standard for the plan_year subject_to the conditions that the minimum_funding_standard was met for the plan_year and that an arrangement between the company and the pension_benefit_guaranty_corporation pbgc was reached allowing for the continuation of the plan 3o on date the company the union representing the company's labor force and the pbgc entered into a long term agreement the pbgc agreement’ to provide for continuation of the plan under this agreement the company was required to contribute dollar_figure million to the plan in dollar_figure million in and to continue this pattern of contributions increasing by dollar_figure per year through the annual amounts that the company agreed to contribute to the plan in the pbgc agreement the agreed contributions were less than the annual amounts necessary without sec_412 relief to meet the minimum_funding standards for the plan thus the company took steps to increase profitability and available cash_flow in the company froze benefit accruals under the plan for the employees of its larger operation location approximately of all its employees in the company froze benefit accruals for its remaining employees at its smaller operation location other cost cutting measures were taken as well so that in and the company was able to post net gains and in was able to contribute to the plan an amount that was approximately more than the agreed contribution for that year for and later years the company projects continuing profitability although with cash flows insufficient for the company to contribute to the plan amounts substantially in excess of the amounts in the pbgc agreement thus the company foresees several years where the minimum_funding_standard is not met for the plan and therefore is subject_to excise_taxes however the company also projects that due to the dual effects of the freezing of the benefit accruals and the increasing amounts in the pbgc agreement extended as necessary the plan will be fully funded by or because of the shortfall between the annual agreed contributions and the annual pian year minimum_funding standards it was necessary for the company to apply for a waiver for the plan_year less the amount required for the amortization of the waiver for the plan_year this waiver was granted by letter of date subject_to the - condition that the minimum_funding_standard was met for the plan_year however when the schedule b for the plan_year was filed the plan's actuary incorrectly treated the amount required for amortization of the waiver for the plan_year as waived along with the balance of the minimum_funding_standard for the plan_year correction of this error will result in the failure to satisfy the minimum_funding_standard for the plan_year thus without modification of the condition in the letter of date the waiver for the plan_year would be retroactively null and void because the company has made significant efforts to reduce costs and improve its financial outlook and the company has made the required contributions under the pbgc agreement it has been determined to be in the participants’ best interest to remove the condition to which the waiver for the plan_year was subject and to grant a waiver for the plan_year ending date subject_to the following condition the pbgc agreement is extended past until such time as the plan no longer has a funding deficiency that is if necessary revere shall contribute dollar_figure million to the plan in dollar_figure million to the plan in and to continue this pattern of contributions increasing by dollar_figure per year until such time as the plan no longer has a funding deficiency if this condition is not satisfied the waiver for the plan_year is retroactively null and void you agreed to this condition in a letter dated date your attention is called to sec_412 of the code and sec_304 of erisa which describe the consequences that would result in the event the plan is amended to increase benefits change the rate in the accrual_of_benefits or to change the rate of vesting while any portion of the waived_funding_deficiency remains unamortized please note that any amendment to other retirement plans maintained by the company or to the company's profit sharing plan to increase the liabilities of those plans would be considered an amendment for purposes of sec_412 of the code and sec_304 of erisa please also note that sec_412 of the code and sec_303 of erisa provide that the minimum_funding_standard with respect to a plan shall not be waived for more than of any consecutive plan years thus no further waivers can be granted for the plan for pian years earlier than the plan_year in the event there is a funding deficiency under sec_412 of the code sec_4971 a of the code imposes a tax of percent on the amount of the accumulated_funding_deficiency if the funding deficiency is not corrected sec_4971 of the code imposes a tax equal to percent of such accumulated deficiency section b of erisa provides that the secretary_of_the_treasury may waive the tax imposed under section b of the code in appropriate cases there is no provision in either the code or erisa for a waiver of the percent tax imposed under sec_4971 a piease note that an application_for a waiver of the excise_tax imposed under sec_4971 must be made each year for which there is an uncorrected funding deficiency revproc_81_44 1981_2_cb_618 provides procedures for requesting a waiver of the excise_tax imposed under section b this ruling is directed only to the taxpayer that requested it sec_61 k of the code provides that it may not be used or cited by others as precedent when filing amended forms for the plan years ending date and date the date of this letter should be entered on the schedules b actuarial information when filing form_5500 for the plan_year ended date the date of this letter should be entered on schedule b actuarial information a copy of this letter is being sent to your authorized representative in accordance with a form_2848 power_of_attorney on file a copy of this letter has also been sent to the manager employee_plans classification in a copy of this letter should be furnished to the enrolled_actuary for the plan sincerely carol gold director employee_plans tax_exempt_and_government_entities_division zp


internal_revenue_service department of the treasury index no washington dc number info release date dear person to contact elliot m rogers id no telephone number refer reply to cc tege eoeg et1- cor-123893-01 date date this is in response to your letter dated date in which you requested a private_letter_ruling concerning the employment status of your workers as employees or independent contractors it is not clear to us whether you are asking that we determine the prospective or current employment status of these workers sec_3 of revproc_2001_3 2001_1_irb_111 provides that the internal_revenue_service will not issue rulings or determination letters for purposes of determining prospective employment status as to whether an individual will be an employee or an independent_contractor however a firm or a worker may file a form ss-8 to request a determination of the current status of a worker for purposes of federal employment_taxes and income_tax_withholding we have enclosed a form ss-8 in case that you would like to file a request for such a determination i hope this information is helpful please call elliot rogers pincite-6040 not a toll- free number if you have any questions sincerely michael a swim chief employment_tax branch office of the division counsel associate chief_counsel tax exempt and government entities enclosure


department of the treasury internal_revenue_service commerce street dallas tx tax_exempt_and_government_entities_division number release date uil date date legend org organization name xx date address address org address person to contact badge number contact telephone number contact address last date for filing petition june 20xx certified mail and return reciept dear this is a final revocation letter as to your exempt status under sec_501 of the internal_revenue_code the recognition of your exemption under internal_revenue_code sec_501 is revoked beginning january 20xx for the following reason s you have not been operated exclusively for an exempt_purpose as required by internal_revenue_code sec_501 you have not demonstrated that you engage primarily in activities which accomplish one or more exempt purposes specified in sec_501 and as required by sec_1_501_c_3_-1 contributions to your organization are no longer deductible effective january 20xx if you decide to contest this determination in court you must initiate a suit for declaratory_judgment in the united_states tax_court the united_states claims_court or the district_court of the united_states for the district of columbia before the ninety- first 91st day after the date that this determination was mailed to you contact the clerk of the appropriate court for rules for initiating suits for declaratory_judgment by referring to the enclosed publication you may write to the united_states tax_court at the following address united_states tax_court second street nw washington dc you also have the right to contact the office_of_the_taxpayer_advocate however you should first contact the person whose name and telephone number are shown above since this person can access you tax information and can help you get answers you can call and ask for the taxpayer_advocate assistance or you can contact the advocate from the site where this issue was determined by writing to taxpayer_advocate assistance cannot be used as substitute for established irs procedures formal appeals processes etc the taxpayer_advocate is not able to reverse legal or technically correct_tax determination nor extend the time fixed by law that you have to file a petition in court the taxpayer_advocate can however see that a tax matter that may not have been resolved through normal channels gets prompt and proper handling as a result of this revocation of tax-exempt status your organization is required to file form_1120 annually with the appropriate campus identified in the instructions this letter is a final revocation letter and should be kept within your permanent records if you have any questions please contact the person whose name and telephone number are shown above sincerely marsha ramirez director eo examinations enclosures publication tax_exempt_and_government_entities_division org address department of the treasury internal_revenue_service commerce street dallas tx date taxpayer_identification_number form tax_year s ended person to contact id number contact numbers telephone fax certified mail - return receipt requested dear we have enciosed a copy of our report of examination explaining why we believe revocation of your exempt status under sec_501 of the internal_revenue_code code is necessary if you accept our findings take no further action we will issue a final revocation letter if you do not agree with our proposed revocation you must submit to us a written request for appeals_office consideration within days from the date of this letter to protest our decision your protest should include a statement of the facts the applicable law and arguments in support of your position an appeals officer will review your case the appeals_office is independent of the director eo examinations the appeals_office resolves most disputes informally and promptly the enclosed publication the examination process and publication exempt_organizations appeal procedures for unagreed issues explain how to appeal an internal_revenue_service irs decision publication also includes information on your rights as a taxpayer and the irs collection process you may also request that we refer this matter for technical_advice as explained in publication if we issue a determination_letter to you based on technical_advice no further administrative appeal is available to you within the irs regarding the issue that was the subject of the technical_advice letter catalog number 34809f if we do not hear from you within days from the date of this letter we will process your case based on the recommendations shown in the report of examination if you do not protest this proposed determination within days from the date of this letter the irs will consider it to be a failure to exhaust your available administrative remedies sec_7428 of the code provides in part a declaratory_judgment or decree under this section shall not be issued in any proceeding unless the tax_court the claims_court or the district_court of the united_states for the district of columbia determines that the organization involved has exhausted its administrative remedies within the internal_revenue_service we will then issue a final revocation letter we will also notify the appropriate state officials of the revocation in accordance with sec_6104 of the code you have the right to contact the office_of_the_taxpayer_advocate taxpayer_advocate assistance is not a substitute for established irs procedures such as the formal appeals process the taxpayer_advocate cannot reverse a legally correct_tax determination or extend the time fixed by law that you have to file a petition in a united_states court the taxpayer_advocate can however see that a tax matter that may not have been resolved through normal channels gets prompt and proper handling you may cail toll-free and ask for taxpayer_advocate assistance if you prefer you may contact your local taxpayer_advocate at if you have any questions please call the contact person at the telephone number shown in the heading of this letter the most convenient time to call if we need to contact you if you write please provide a telephone number and thank you for your cooperation enclosures publication publication report of examination sincerely marsha ramirez director eo examinations letter catalog number 34809f schedute number or exhibit form 886-a rev date explanations of items exhibit name of taxpayer tax identification_number year period ended org 20xx legend org organization name co-1 company housing housing co-2 company address address xx date president president city city agent agent xyz state issues does org an organization recognized as exempt under sec_501 of the internal_revenue_code code continue to qualify for exemption where the funds of the organization are used for private purposes facts org was incorporated in the state of xyz on may 19xx as a nonprofit public benefit corporation president is the incorporator and a board member of org the determination_letter was issued to the organization as a 501_c_3_organization by the city office dated october 19xx president had control of the daily operations of org the following facts are excerpts from the documents noted below a activities in the part il of form_1023 it stated that org’s primary exempt_activities are mentorship acting as role models for the children job search finding jobs for the children both by going to state agencies and to private agencies and word of mouth teaches the children respect for themselves and others extracurricular activities including sports taking the children to events and games to turn their attentions away from negative activities good samaritens program children assist in providing a variety of services for the community ie assistance to the elderly and low-income with house painting mowing lawns making minor repairs and more the purpose is to teach the children about virtues and give them a sense of giving back to the community spiritual guidance offers a means to measure a child’s progress in the program where they came from and where they have come to e e e president stated in the letter dated on september 20xx that i stopped foster care in 20xx believe co-1' was a adult drug alcohol program started in 20xx no application was sent to internal_revenue_service for amending or expanding exempt_activities for org b financial activities no donations were received for org for the year 20xx ‘ co-1 was registered in state of xyz under assumed business name of org on may 20xx president was the officer of co-1 form 886-a department of the treasury-internal revenue service catalog number 20810w publish no irs gov -page_1 schedule number or exhibit explanations of items exhibit tax identification_number form 886-a rev date name of taxpayer org year period ended 20xx the employer_identification_number ein of org was used by co-1 and co-2 for the year 20xx no ein was found in the data base of internal_revenue_service for co-1 or co-2 co-2 there were dollar_figure in contributions made to co-1 and dollar_figure in contributions made to co-2 those contributions were deposited into the co-2’s account the tax identification_number for co-2’s account was see the bank signature card of co-2 at exhibit president wrote checks to cash from the co-2 account without any documentation or explanation the checks written to cash totaled dollar_figure see exhibit for detailed information regarding withdraws a check of dollar_figure was issued on may 20xx to u s treasury by president the check paid president's personal taxes form_1040 for the year 20xx see exhibit for detailed information regarding the check co-1 there were dollar_figure in contributions made to co-1 that were deposited to co-1’s in addition dollar_figure in unidentified contributions were deposited into co-1’s account a same account the tax identification_number for co-1 and org’s account co-1 and org shared account was see the bank signature card for org and co-1 at exhibit on november 20xx during the interview agent asked president whether president wrote checks to cash from the co-1 account no documentation or explanation was provided in response to interview or idr the checks written to cash totaled dollar_figure see exhibit for detailed information regarding withdraws expenditure information of org was requested in information_document_request president is currently in state prison and has no access to any records agent conducted an interview with president in housing he kept any records for any of the expenses of org co-1 or co-2 president replied that he did not remember if there was any recordkeeping for those three organizations also if there were any records kept for those organizations he did not know where those records would be now agent informed president that she had copies of the bank statements and cancelled checks from org co-1 and co-2 bank statements and cancelled checks for org co-1 and co-2 were included in the case referral information by department of justice of xyz agent offered to bring the copies of these bank statements and cancelled checks to a second meeting with president so he would have an opportunity to provide an explanation regarding his questionable withdraws president refused the requested second interview with agent in the initial information_document_request mailed on march 20xx the meeting minutes from january 20xx through december 20xx were requested according to the president of org co-2 was registered in state of xyz on june 19xx as a religious_organization president was the pastor registered agent president and secretary for co-2 department of the treasury-internal revenue service c meeting minutes catalog number 20810w form 886-a publish no irs gov page_2 form 886-a rev date name of taxpayer org explanations of items tax identification_number schedule number or exhibit exhibit year period ended 20xx president no meetings were held under the year of audit president explained during the initial interview conducted on november 20xx by agent that he was the only officer for org co-1 and co-2 for the year 20xx through 20xx org has been administratively dissolved with the xyz secretary of state since july 20xx co-2 was incorporated as a religious corporation in xyz but was administratively dissolved on august 20xx president was the pastor of this church president who was the executive director president and board director of the org has been incarcerated since fall 20xx in the xyz state prison system for felony sex abuse convictions he is currently lodged at housing address city xyz law internal_revenue_code irc sec_501 provides exemption from federal_income_tax to corporations and any community chest fund or foundation organized and operated exclusively for religious charitable scientific testing for public safety literary or educational_purposes or to foster national or international amateur sports competition but only if no part of its activities involve the provision of athletic_facilities or equipment or for the prevention of cruelty to children or animals no part of the net_earnings of which inures to the benefit of any private_shareholder_or_individual no substantial part of the activities of which is carrying on propaganda or otherwise attempting to influence legislation except as otherwise provided in subsection h and which does not participate in or intervene in including the publishing or distributing of statements any political campaign on behalf of or in opposition to any candidate for public_office sec_1_501_c_3_-1 holds that an organization will be regarded as operated exclusively for one or more exempt purposes only if it engages primarily in activities which accomplish one or more of such exempt purposes specified in sec_501 an organization will not be so regarded if more than an insubstantial part of its activities is not in furtherance of an exempt_purpose sec_1_501_c_3_-1 holds that an organization is not operated exclusively for one or more exempt purposes if its net_earnings inure in whole or in part to the benefit of private shareholders or individuals the sec_1_501_a_-1 definition of private shareholder or individuals is that persons having a personal and private interest in the activities of the organization sec_1_501_c_3_-1 holds that an organization is not organized or operated exclusively for one or more of the purposes specified in subdivision i of this subparagraph unless it serves a public rather than a private interest thus to meet the requirement of this subdivision it is necessary for an organization to 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 the tax_court held in 74_tc_531 that the administrative record does not establish that no part of petitioner's net_earnings inure to the benefit of private individuals in violation of sec_501 i r c government’s position form 886-a department of the treasury-internal revenue service catalog number 20810w publish no irs gov page_3 form 886-a rev date explanations of items name of taxpayer tax identification_number year period ended schedule number or exhibit exhibit org 20xx it is the government's position that org did not meet the requirements of sec_501 and reg sec_1_501_c_3_-1 in that it did not operate exclusively for exempt purposes only and did not engage primarily in activities which accomplish one or more exempt purposes an organization will not be so regarded if more than an insubstantial part of its activities is not in furtherance of an exempt_purpose it also did not operate exclusively for exempt purposes because it did not serve a public rather than a private interest reg c -1 d ii the website of co-1 stated that co-1 was an adult residential rehabilitation facility president explained to agent during the interview conducted on november 20xx that co-1 co-1 2's ministries was part of co- the original application_for org provided that the organization’s primary activities were running a group home for trouble youth there was no group home activity for org under the year of examination this is based on the responses to the information_document_request dated september 20xx and initial examination interview conducted on november 20xx examination of bank records of org revealed that its’ employer_identification_number ein and bank accounts were shared with co-1 and co-2 president wrote checks to cash from org co-1 and co-2 the checks written to cash totaled dollar_figure addition president sent a cashier's check from the account to the united_states treasury in the amount of dollar_figure to pay his personal income taxes form_1040 for the year 20xx president refused to explain these questionable expenditures in the total contributions made to co-1 and co-2 were dollar_figure for the year 20xx president wrote checks that constituted a substantial portion of the total deposits dollar_figure to cash his refusal to provide explanations demonstrates that a substantial portion of net_earnings of org house inured to the benefit of president the case of 74_tc_531 is like org president the president of org cashed org’s funds and he refused to provide explanations it demonstrates that the administrative record of org does not establish that no part of its net_earnings inure to the benefit of private individuals in violation of sec_501 ilr c org and its president president failed to operate in accordance with sec_501 and sec_1_501_c_3_-1 sec_1_501_c_3_-1 provides that an organization will not be regarded as charitable if more than an insubstantial part of its activities is not in furtherance of an exempt_purpose sec_1_501_c_3_-1 holds that an organization is not operated exclusively for one or more exempt purposes if its net_earnings inure in whole or in part to the benefit of private shareholders or individuals co-1 website stated that co-1 was established june 20xx by founder pastor president of co-2 and this is why their was a need for a program such as co-1 website was taken down in the year 20xx drug and alcohol treatment center for the adult men and women who deserve better the form 886-a catalog number 20810w page publish no irs gov department of the treasury-internal revenue service schedule number or exhibit explanations of items exhibit tax identification_number form 886-a rev date name of taxpayer org year period ended 20xx the substantial portion of the funds donated to co-1 d b a org were deposited and subsequently were cashed by president for unknown purposes agent requested the income and expenditures documentation in the information documentation request the response to information documentation request dated on september 20xx president stated being in prison inmate family have a tendency of staying out of contact with you so what am saying do not know were my information is you are requesting and can not get in touch with family members who might know were all my belongings are agent requested explanations regarding the organization’s expenditures during the initial interview president replied that he did not have access to the records agent explained to president that she has the bank statements and cancelled checks for org co-1 and co-2 these bank statements and cancelled checks were provided by department of justice of xyz agent offered to bring the copies of these bank statements and cancelled checks to a second meeting with president so he would have an opportunity to provide an explanation regarding these checks written to cash president replied that no it is too stressful org is no longer in existence because the organization has been administratively dissolved with the xyz secretary of state since july 20xx based on the review of bank records corporation records from the xyz secretary of state and the interview with the organization’s only officer president we concluded that org does not meet the operational_test under sec_501 therefore revocation of the exempt status is proposed effective january 20xx exhibit exhibit exhibit exhibit form 886-a department of the treasury-internal revenue service catalog number 20810w publish no irs gov page_5


department of the treasury internal_revenue_service washington d c o f f ic e o f c h ief c o u n sel number info release date uil cc intl br02 kyh cor-140387-01 dear this letter responds to your letter received by our office on date requesting a ruling for the reinstatement of your foreign_earned_income_exclusion for tax_year your request does not include the necessary information or user_fee required to issue a ruling however after a review of your letter we are providing the following general information sec_911 of the code allows qualified citizens or residents of the united_states living abroad to elect to exclude from gross_income the foreign_earned_income and housing cost amounts of such individuals sec_911 provides that a taxpayer who has made the sec_911 election may not deduct or credit foreign taxes paid_or_accrued with respect to the excluded amounts sec_911 provides that the election applies to the taxable_year for which made and to all subsequent taxable years unless the taxpayer revokes them sec_911 of the code permits such a revocation but provides that without the consent of the secretary the taxpayer may not make another election before the sixth taxable_year after the taxable_year for which the revocation was effective sec_1_911-7 sets forth a procedure for revoking a sec_911 election an election may be revoked by filing a statement with the income_tax return or amended income_tax return for the taxable_year for which the revocation is to take effect the revocation is effective for that year and all subsequent years although the regulations under sec_911 of the code prescribe a method by which a taxpayer may revoke an election to exclude foreign_earned_income they do not purport to provide the exclusive method for revoking such an election for example an election may also be revoked by claiming a foreign_tax_credit for foreign taxes paid on foreign_earned_income see rev_rul 1990_2_cb_183 date from your submission it appears that you made a valid sec_911 revocation by claiming a foreign_tax_credit for foreign taxes paid on your canadian earned_income for tax_year however you are permitted to file for a claim of refund to amend your erroneous claim of foreign tax_credits and reinstate your sec_911 election for year provided that the statute_of_limitations for filing the claim has not expired for tax_year generally you must file your claim for a refund within years after the date you filed your original return or within years after the date you paid the tax whichever is later see sec_6402 and sec_6511 and the treasury regulations thereunder you may use form 1040x amended u s individual_income_tax_return to correct the return that you have already filed for tax_year see sec_301_6402-3 and irs publication if after considering the above general information you still desire a ruling you must comply with the administrative procedures set forth in revproc_2001_1 i r b date generally your ruling_request must include the following a complete statement of facts and other information a statement of supporting authorities a statement about whether the issue is under audit a statement identifying information to be deleted from a copy of the letter_ruling for public inspection penalties of perjury statement user_fee see sec_15 and appendix a of revproc_2001_1 for the fee schedule if you have any questions please call kate y hwa at sincerely phyllis e marcus branch chief branch office of the associate chief_counsel international


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 corp b04 plr-118723-05 date august ------------------------------------------- ------------------------------ legend parent -------------------------------------------------------------------- subsidiaries -------------------------------------------------------------------- ----------------------------------------------------------------------------- -------------------------------------------------------------------- --------------------------------------------------------------------- -------------------------------------------------------------------- ------------------------------------------------------------------------------------- -------------------------------------------------------------------- -------------------------------------------------------------------------- -------------------------------------------------------------------- --------------------------------------------------------------------------- -------------------------------------------------------------------- --------------------------------------------------------------- -------------------------------------------------------------------- ------------------------------------ ------------------------------------------------------------------------ -------------------------------------------------------------------- -------------------------------------------------------------------------- -------------------------------------------------------------------- plr-118723-05 ------------------------------------------------------------------------------- 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----------------------------- -------------------------------- -------------------------------------------------------------------- ------------------------ -------------------------------------------------------------------- --------------------------------------------------------------------------- -------------------------------------------------------------------- ----------------------------------------------------------------- -------------------------------------------------------------------- first acquirer second acquirer ----------------------------------------------------------- year ------- -------------------------------- ------------------------------------------------------------------------ ------- ----------------- ------------------------ plr-118723-05 year date a date b date c x company official ----------------------------------------------------------------------------- ----------------------------------------------------------------------- tax professional ------------------------------------------------------------- ------------------------------------------------------------------------------------- dear ----------------- --------------------------------- --------------------------- ------------------------ --- this letter responds to a letter dated date submitted on behalf of parent requesting an extension of time under sec_301_9100-3 of the procedure and administration regulations to file an election parent as common parent of an affiliated_group is requesting an extension of time to file a request for a waiver pursuant to revproc_2002_32 2002_1_cb_959 of the application of sec_1504 of the code for the year tax_year the request for an extension to file for a waiver of the application of sec_1504 is hereinafter sometimes referred to as the election additional information was received in letters dated date and date the material information is summarized below parent was the common parent of an affiliated_group that included subsidiaries parent and subsidiaries the former group filed a consolidated federal_income_tax return beginning in year on date a first acquirer purchased all outstanding shares in parent the former group thus ceased to exist parent and subsidiaries each filed separate federal_income_tax returns for the tax years between date a the date that the former group ceased to exist and date b on date b a date less than sixty months following the year the former group ceased to exist second acquirer purchased x of the outstanding shares of parent parent thus again became the common parent of an affiliated_group the new group with the new group including members of the former group sec_1504 of the internal_revenue_code provides that if a corporation is included or required to be included in a consolidated_return filed by an affiliated plr-118723-05 group for a taxable_year which includes any period after date and such corporation ceases to be a member of such group in a taxable_year beginning after date then with respect to periods after such cessation such corporation and any successor of such corporation may not be included in any consolidated_return filed by the affiliated_group or by another affiliated_group with the same common parent or successor of such common parent before the sixty-first month beginning after the first taxable_year in which it ceased to be a member of such affiliated_group sec_1504 authorizes the secretary to waive the application of sec_1504 to any corporation for any period subject_to such conditions as the secretary may prescribe sec_3 of revproc_2002_32 grants a waiver under sec_1504 to any corporation described in dollar_figure of the revenue_procedure that requests an automatic waiver by complying with the requirements of the revenue_procedure including a requirement that a statement containing certain information be attached to the timely filed including extensions consolidated_return for the taxable_year that includes the date on which the corporation most recently became a member of the affiliated_group and a requirement that the corporation be included in that consolidated_return section of revproc_2002_32 provides that if a deconsolidated corporation cannot qualify for an automatic waiver under dollar_figure of the revenue_procedure a waiver under sec_1504 may only be obtained through a letter_ruling request filed by the common parent in accordance with revproc_2002_1 or the similar revenue_procedure applicable to a later year the letter_ruling request must be submitted by the common parent of the affiliated_group of which the deconsolidated corporation becomes a member before the due_date including extensions of the consolidated_return for the tax_year with respect to which the waiver is requested the election was due on date c the due_date including extensions of the year consolidated federal_income_tax return however for various reasons a valid election was not filed after the due_date for the election parent learned that such an election had not been properly filed subsequently this request was submitted under sec_301_9100-3 for an extension of time to file the election the period of limitations on assessment under sec_6501 has not expired for the new group’s year or any future year’s federal_income_tax returns that would have been affected by the election had it been timely filed 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 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_9100-1 defines a regulatory plr-118723-05 election as an election whose due_date is prescribed by a regulation published in the federal_register or a revenue_ruling revenue_procedure notice or announcement published in the internal_revenue_bulletin sec_301_9100-2 provides automatic extensions of time for making certain elections 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_9100-3 in this case the time for filing the election is fixed by revproc_2002_32 therefore the commissioner has discretionary authority under sec_301_9100-3 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 company official and tax professional explain the circumstances that resulted in the failure to timely file a valid election the information establishes that parent reasonably relied on a qualified_tax professional who failed to make or advise parent to make the election that the interests of the government will not be prejudiced if the letter_ruling request is granted and that the taxpayers requested this relief before the irs discovered the failure to make the regulatory election see sec_301_9100-3 and v based on the facts and information submitted including the representations made we conclude that parent has shown that 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 accordingly an extension of time is granted under sec_301_9100-3 until days from the date on this letter for parent to file a letter_ruling request under revproc_2002_32 requesting a waiver of application of sec_1504 a copy of this letter must be attached to that request we express no opinion as to whether any corporation qualifies for a waiver of the application of sec_1504 in addition we express no opinion 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_9100-3 we relied on certain statements and representations made by the taxpayers however the director should verify all essential facts 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 in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative plr-118723-05 sincerely ________________ ken cohen senior technician reviewer branch office of associate chief_counsel corporate