t c memo united_states tax_court denis j faris and carolyn m faris petitioners v commissioner of internal revenue respondent docket no 9542-05l filed date denis j faris and carolyn m faris pro sese kelley a blaine for respondent memorandum findings_of_fact and opinion vasquez judge pursuant to sec_6330 petitioners seek review of respondent’s determination to proceed with collection of their and income_tax liabilities the unless otherwise indicated all section references are to the internal_revenue_code in effect for the years in issue and all rule references are to the tax_court rules_of_practice and procedure issues for decision are whether respondent may proceed with collection of petitioners’ and income_tax liabilities and whether petitioners are liable for a penalty pursuant to sec_6673 findings_of_fact none of the facts have been stipulated at the time they filed the petition petitioners resided in portland oregon petitioners timely filed federal_income_tax returns for and respondent sent notices of deficiency for and to petitioners petitioners did not petition the court for a redetermination of the or deficiencies on january and date respondent assessed the and deficiencies respectively on date respondent sent petitioners a final notice_of_intent_to_levy and notice of your right to a hearing collection notice with respect to petitioners’ and taxable years the collection notice showed unpaid taxes interest and penalties for and of dollar_figure on date petitioners timely filed a form request for a collection_due_process_hearing the notice_of_deficiency for was issued on date at trial respondent was unable to produce a copy of the notice_of_deficiency for however petitioners admitted that they received a document entitled ‘notice of deficiency’ from the internal_revenue_service regarding petitioners attached to their form an affidavit of material facts containing frivolous and groundless arguments questions and statements regarding inter alia their underlying liability for income taxes the legality of imposing income taxes on individuals and respondent’s authority to collect income taxes settlement officer john malone was assigned to petitioners’ case in a letter dated date the settlement officer acknowledged receipt of petitioners’ form and other materials in that letter the settlement officer informed petitioners that the arguments they advanced were frivolous groundless or arguments that appeals_office employees may not consider the letter also informed petitioners of the appeals_office policy of not granting face-to-face hearings if the only items a taxpayer wishes to discuss are frivolous groundless or arguments that appeals_office employees may not consider in the letter the settlement officer scheduled a phone conference with petitioners for date on date petitioners mailed a letter to the settlement officer again requesting a face-to-face hearing and stating that they would not be available for a phone conference on date on the same day and on date petitioners submitted several freedom of information request s asking for extensive and in many cases irrelevant documentation relating to their and tax years on date petitioners mailed another letter to the settlement officer in that letter petitioners again advanced frivolous and groundless arguments petitioners argued inter alia that they are not required to file a tax_return without having been personally served with notice of such requirement by the secretary_of_the_treasury that there is no statute that makes us liable for income_tax that the income_tax applies only to federal government employees and that respondent lacks authority to assess or collect income taxes on date the settlement officer mailed a letter to petitioners he noted that petitioners had not called him for the date hearing and that petitioners at that point still had failed to raise an issue that could be considered by the appeals_office the letter advised petitioners to contact the settlement officer by date if they wished to submit additional materials for his consideration or to reschedule the phone conference the letter informed petitioners that if the appeals_office did not receive any further information from petitioners their case would be reviewed based on the information in petitioners’ file petitioners replied in a letter dated date in this letter petitioners made several demands they demanded that the settlement officer grant them a face-to-face hearing that at the hearing the settlement officer produce a multitude of documents many of which were once again irrelevant to the sec_6330 hearing and that the settlement officer be prepared to discuss at the hearing petitioners’ frivolous and groundless arguments petitioners did not offer a collection alternative at any point in their correspondence with the settlement officer on date respondent issued a notice_of_determination concerning collection action s under sec_6320 and or notice_of_determination regarding petitioners’ unpaid and income_tax liabilities in the notice_of_determination respondent determined that the proposed levy should be sustained because petitioners had failed to provide respondent with an alternative collection that satisfies petitioners’ liabilities on date petitioners timely filed a petition for lien or levy action under sec_6320 or sec_6330 appealing respondent’s determination to proceed with collection of petitioners’ and tax_liabilities petitioners asserted that they had been denied a sec_6330 hearing and repeated several frivolous and groundless arguments they had raised in their correspondence with the settlement officer opinion i determination to proceed with collection sec_6330 provides that the secretary shall furnish taxpayers with written notice of their right to a hearing before any property is levied upon sec_6330 further provides that the taxpayer may request administrative review of the matter in the form of a hearing within a prescribed 30-day period sec_6330 and b pursuant to sec_6330 a taxpayer may raise at the sec_6330 hearing any relevant issue with regard to the commissioner’s collection activities including spousal defenses challenges to the appropriateness of the commissioner’s intended collection action and alternative means of collection 114_tc_604 114_tc_176 if a taxpayer received a statutory_notice_of_deficiency for the year in issue or otherwise had the opportunity to dispute the underlying tax_liability the taxpayer is precluded from challenging the existence or amount of the underlying tax_liability sec_6330 sego v commissioner supra pincite goza v commissioner supra pincite aside from raising frivolous arguments regarding the validity of the notices they received petitioners admit that they received notices of deficiency for and thus petitioners are precluded from challenging the existence or amount of the underlying tax_liabilities for and see sec_6330 sego v commissioner supra goza v commissioner supra we review respondent’s determination for abuse_of_discretion see sego v commissioner supra pincite petitioners state in their petition that they were denied their right to a face-to-face hearing as provided in sec_6330 we have held that it would be unproductive and thus unnecessary to remand a case for a face-to-face hearing if petitioners merely want to advance frivolous arguments see 117_tc_183 stephens v commissioner tcmemo_2005_183 balice v commissioner tcmemo_2005_161 in numerous letters to respondent in their petition and in their briefs petitioners advanced shopworn arguments characteristic of tax-protester rhetoric that has been universally rejected by this and other courts 848_f2d_1007 9th cir affg tcmemo_1987_225 784_f2d_1006 9th cir 771_f2d_471 10th cir affg tcmemo_1983_433 michael v commissioner tcmemo_2003_26 knelman v commissioner tcmemo_2000_268 affd 33_fedappx_346 9th cir we shall not painstakingly address petitioners’ assertions with somber reasoning and copious citation of precedent to do so might suggest that these arguments have some colorable merit 737_f2d_1417 5th cir petitioners have failed to make a valid challenge to the appropriateness of respondent’s intended collection action offer alternative means of collection or offer any spousal defenses these issues are now deemed conceded rule b accordingly we conclude that respondent did not abuse his discretion and we sustain respondent’s determination to proceed with collection for and ii sec_6673 sec_6673 authorizes this court to require a taxpayer to pay to the united_states a penalty not to exceed dollar_figure if the taxpayer took frivolous positions in the proceedings or instituted the proceedings primarily for delay a position maintained by the taxpayer is frivolous if it is contrary to established law and unsupported by a reasoned colorable argument for change in the law 791_f2d_68 7th cir in his correspondence with petitioners the settlement officer advised petitioners to read an irs publication entitled the truth about frivolous tax arguments which explains the defects in several of petitioners’ arguments the settlement officer also sent petitioners a copy of 115_tc_576 in which this court issued an unequivocal warning to taxpayers concerning the imposition of penalties pursuant to sec_6673 on those taxpayers who abuse the protections afforded by sec_6320 and sec_6330 by instituting or maintaining actions under those sections primarily for delay or by taking frivolous or groundless positions in such actions at trial the court advised petitioners that the arguments they were advancing had been universally rejected by the courts that have considered them petitioners’ positions based on stale and meritless contentions are manifestly frivolous and groundless this has caused the court to waste limited resources accordingly we shall impose a penalty of dollar_figure pursuant to sec_6673 to reflect the foregoing decision will be entered for respondent


internal_revenue_service department of the treasury index number washington dc number release date person to contact telephone number refer reply to plr-106221-99 cc dom p si date date legend company state settlor trust d1 a b dear this letter responds to your letter dated date written on behalf of company requesting a ruling that trust will be a permissible shareholder of a subchapter_s_corporation under sec_1361 of the internal_revenue_code facts according to the information submitted company a state limited_liability_company classified as a corporation for federal tax purposes has elected under sec_1362 to be taxed as an s_corporation settlor a company shareholder established trust an irrevocable_trust in state on d1 settlor has gifted a shares of class a voting and b shares of class b nonvoting company stock to trust plr-106221-99 sec_1 of the trust agreement provides that the gift which was made pursuant to state law was conditioned on company receiving a ruling that the trust is an eligible s_corporation shareholder under sec_1361 section of the trust agreement provides that the trustees shall have the authority to loan to the settlor and the settlor shall have the authority to borrow from the trust all or any part of corpus and or income of the trust without adequate security in exchange for the settlor's promissory note of equal value to the amount lent company and settlor represent that it is their intention that this section allows settlor to exercise this power unconditionally without the approval of the trustees or any other party section of the trust agreement provides that the settlor during his lifetime shall have the right and power at any time acting in a nonfiduciary capacity and without consent of the trustees to withdraw any asset of the trust if the settlor shall simultaneously substitute therefor other_property of an equivalent value no fiduciary duty imposed on the trustees or any other person my be asserted as a defense to the exercise of this power granted to the settlor law and analysis sec_1362 provides that except as provided in sec_1362 a small_business_corporation may elect to be an s_corporation sec_1361 provides that the term small_business_corporation means a domestic_corporation which is not an ineligible_corporation and which does not have as a shareholder a person other than an estate a_trust described in sec_1361 or an organization described in sec_1361 who is not an individual sec_1361 provides that for the purposes of sec_1361 a_trust all of which is treated under subpart e of part i of subchapter_j of chapter as owned by an individual who is a citizen or resident_of_the_united_states may be a shareholder of an s_corporation sec_1361 provides that for the purposes of sec_1361 in the case of a_trust described in sec_1361 the deemed owner shall be treated as the shareholder of the corporation subpart e of part i of subchapter_j of chapter of the code includes sec_671 through sec_679 sec_671 provides in part that where it is specified in subpart e that the grantor is treated as the owner of any portion of a_trust there must then be included in computing the taxable_income and credits of the grantor those items of income deductions and credits against tax of the trust that are attributable to that portion of the trust to the extent that the items would be taken into account under chapter in computing taxable_income or credits against the tax of an individual plr-106221-99 sec_675 provides that the grantor shall be treated as the owner of any portion of a_trust in respect of which a power exercisable by the grantor or a nonadverse_party or both enables the grantor to borrow the corpus or income directly or indirectly without adequate interest or without adequate security except where a trustee other than the grantor is authorized under a general lending power to make loans to any person without regard to interest or security sec_675 provides that the grantor will be treated as the owner of any portion of a_trust in which a power_of_administration is exercisable in a nonfiduciary capacity by any person without the approval or consent of any person in a fiduciary capacity for the purposes of sec_675 the term power_of_administration includes the power to reacquire the trust corpus by substituting other_property of an equivalent value sec_1_675-1 of the income_tax regulations provides in part that if a power is not exercisable by a person as trustee the determination of whether the power is exercisable in a fiduciary or a nonfiduciary capacity depends on all of the terms of the trust and the circumstances surrounding its creation and administration conclusion based on the facts submitted and the representations made we conclude that settlor will be treated as the owner of the entirety of trust because settlor retained the powers listed in sec_675 furthermore settlor may also be treated as the owner of the entirety of trust under sec_675 however the circumstances surrounding the administration of trust will determine whether the power_of_administration is exercisable in a fiduciary or nonfiduciary capacity this is a question of fact the determination of which must be deferred until the federal_income_tax returns of the parties involved have been examined by the office of the district_director where the returns are filed therefore we cannot determine at this time whether taxpayer will be treated as the owner of trust under sec_675 of the code provided that the circumstances indicate that the power_of_administration is exercisable in a nonfiduciary capacity taxpayer will be treated as the complete owner of trust under sec_675 because trust will be treated under subpart e of part i of subchapter_j of chapter as owned by settlor an individual who is a citizen or resident_of_the_united_states trust is an eligible shareholder of an s_corporation under sec_1361 we express no opinion of the tax consequences of the above mentioned transactions under the estate and gift sections of the code pursuant to a power_of_attorney on file with this office a copy of this letter is being sent to the taxpayer this ruling is directed only to the taxpayer who requested it sec_6110 provides that it may not be used or cited as precedent plr-106221-99 sincerely yours william p o’shea chief branch office of the assistant chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes


internal_revenue_service number release date index number - ------------------------------------- ------------------------------------------------- --------------------------------------------- ---------- --------------------- -------------------------- - department of the treasury washington dc person to contact -------------------- id no -------------- telephone number --------------------- refer reply to cc psi b02 - plr-139931-03 date date ---------------------- a -------------------------------------------- b ---------------------------------- ----------------------------------------------------- -------------------------- ------------------ --------- country d1 dear ----------------- this letter responds to a letter dated date and subsequent correspondence submitted on behalf of b by its authorized representative requesting a ruling that b be given an extension of time to elect under ' c of the procedure and administration regulations to be classified as a disregarded_entity for federal tax purposes the information submitted states that a is a us partnership for federal tax purposes b a limited_company was formed on d1 pursuant to the laws of country b is wholly owned by a b represents that pursuant to ' a b is a foreign eligible_entity that is not required to be classified as a corporation for federal tax purposes b has single owner that has limited_liability as defined in sec_301_7701-3 b intended to disregarded for federal tax purposes effective d1 however b inadvertently failed to timely file a form_8832 entity classification election sec_301_7701-3 provides that a business_entity that is not classified as a corporation under ' b or an eligible_entity can elect its classification for federal tax purposes a business_entity is any entity recognized for federal tax purposes that is not properly classified as a_trust under sec_301_7701-4 or otherwise subject_to special treatment under the internal_revenue_code sec_301_7701-2 sec_301_7701-3 provides that unless a foreign eligible_entity elects otherwise the entity is a a partnership if it has two or more members and at least one member does not have limited_liability b an association if all members have limited_liability or c disregarded as an entity separate from its owners if it has a single owner that does not have limited_liability sec_301_7701-3 provides that for purposes of ' b i a member of a foreign eligible_entity has limited_liability if the member has no personal liability for the debts of or claims against the entity by reason of being a member sec_301_7701-3 provides that to elect to be classified other than as provided in ' b an eligible_entity must file form_8832 entity classification election with the designated service_center sec_301_7701-3 provides that an election will be effective on the date specified on the form_8832 or on the date filed if no such date is specified the effective date specified on the form_8832 cannot be more than days prior to the date the election is filed under c the commissioner may grant a reasonable extension of time to make a regulatory election or a statutory election but no more than six months except in the case of a taxpayer who is abroad under all subtitles of the code except subtitles e g h and i sec_301_9100-1 defines the term regulatory election as an election whose due_date is prescribed by a regulation published in the federal_register or a revenue_ruling revenue_procedure notice or an announcement published in the internal_revenue_bulletin use to determine whether to grant an extension of time to make an election sec_301_9100-2 provides automatic extensions of time for making certain elections sec_301_9100-3 provides extensions of time for making elections that do not meet the requirements of ' granted when the taxpayer provides evidence to establish that the taxpayer acted sec_301_9100-3 provides that requests for relief under ' will be sec_301_9100-1 and sec_301_9100-3 provide the standards the commissioner will based solely on the facts submitted and representations made we conclude that reasonably and in good_faith and that granting relief will not prejudice the interests of the government sec_301_9100-3 provides that a taxpayer is deemed to have acted reasonably and in good_faith if the taxpayer failed to make the election because after exercising reasonable diligence taking into account the taxpayer's experience and the complexity of the return or issue the taxpayer was unaware of the necessity for the election the requirements of ' have been satisfied as a result b is granted an extension of time of days from the date of this letter to file a form_8832 with the appropriate service_center and elect under ' c to be classified as a disregarded_entity for federal tax purposes effective for d1 a copy of this letter should be attached to the form_8832 a copy is included for that purpose federal tax consequences of the facts described above under any other provision of the code the internal_revenue_code provides that it may not be used or cited as precedent sent to b’s authorized representatives except as specifically set forth above no opinion is expressed concerning the pursuant to a power_of_attorney on file with this office a copy of this letter is being this ruling is directed only to the taxpayer who requested it sec_6110 of sincerely heather c maloy associate chief_counsel passthroughs and special industries enclosures copy of this letter copy for ' purposes


department of the treasury washington dc person to contact telephone number refer reply to plr-152866-01 cc intl b1 date date internal_revenue_service number release date index no a date b date c country d date e year f dear this is in response to a letter dated b by a’s authorized representative requesting a ruling under sec_877 of the internal_revenue_code_of_1986 code that a’s loss of long-term_resident status did not have for one of its principal purposes the avoidance of u s taxes under subtitle a or subtitle b of the code the ruling contained in this letter is based upon information and representations submitted by the taxpayer and accompanied by penalty of perjury statements executed by an appropriate party while this office has not verified any of the material submitted in support of the request_for_ruling it is subject_to verification on examination the information submitted for consideration is substantially as set forth below a a long-term_resident of the united_states within the meaning of sec_877 relinquished his u s lawful permanent resident status expatriated on date c by returning his green card to the u s immigration and naturalization service a has been a citizen of country d during his entire life by reason of his birth on date e in country d a and his parents were born in country d a became a permanent resident_of_the_united_states and obtained his green card in year f on the date of a’s expatriation his net_worth exceeded the threshold required under sec_877 sec_877 generally provides that a citizen who loses u s citizenship or a u s plr-152866-01 page long-term_resident who ceases to be taxed as a lawful permanent resident individuals who expatriate within the 10-year period immediately preceding the close of the taxable_year will be taxed under sec_877 and sec_877 for such taxable_year unless such loss did not have for one of its principal purposes the avoidance of u s taxes sec_2107 and sec_2501 provide special estate and gift_tax regimes respectively for individuals who expatriate with a principal purpose to avoid u s taxes a former citizen or former long-term_resident will be treated as having expatriated with a principal purpose to avoid u s taxes for purposes of sec_877 sec_2107 and sec_2501 if the individual’s average income_tax_liability or the individual’s net_worth on the date of expatriation exceeds certain thresholds see sec_877 sec_2107 and sec_2501 under notice_98_34 1998_2_cb_29 modifying notice_97_19 1997_1_cb_394 a former u s citizen or former long-term_resident whose net_worth or average tax_liability exceeds the applicable_threshold will not be presumed to have a principal purpose of tax_avoidance if that former resident is described within certain categories and submits a complete and good_faith request for a ruling as to whether such loss had for one of its principal purposes the avoidance of u s taxes a is eligible to request a ruling pursuant to notice_98_34 because a will become a resident and fully liable to income_tax in country d the country where a was born within a reasonable period following the date of expatriation notice_98_34 requires that certain information be submitted with a request for a ruling that an individual’s expatriation did not have for one of its principal purposes the avoidance of u s taxes a submitted all the information required by notice_98_34 including any additional information requested by the service after review of the submission based solely on the information submitted and the representations made we conclude that a has made a complete and good_faith submission in accordance with sec_877 and notice_98_34 therefore a will not be presumed under sec_877 to have as one of his principal purposes for expatriating the avoidance of u s taxes it is further concluded that a will not be treated under sec_877 as having as one of his principal purposes of expatriating the avoidance of u s taxes except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter in addition no opinion is expressed as to a’s u s tax_liability for taxable periods prior to his loss of permanent residence status or for taxable periods after his loss of permanent residence status under sections of the code other than sec_877 sec_2107 and sec_2501 a copy of this letter must be attached to a’s u s income_tax return for the year in which a obtained the ruling plr-152866-01 page 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 a’s representative sincerely yours edward w williams jr senior technical reviewer branch office of associate chief_counsel international


internal_revenue_service number release date index numbers --------------------------- ------------------------------ ------------------------------------- ------------------------------- -------------------------- - - 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 b06 plr-142201-04 date date ------------------ ---------------------------------- ------------------------------------- legend purchaser ------------------------------------------------------------------ ----------------------------------------------------------- target ----------------------------------------------------------- seller ------------------------------------------------------------- date a date b date c tax professionals ---------------------------------------------- ---------------------------------------------------------------------------- ---------------------------------------------- ---------------------------------------------------------------------------- company official --------------------------- -------------------------- ---------------------- --------------------- -------------------- ------------- plr-142201-04 ------------------------------------------------------------------ ------------------------------------------------------------------------- dear ------------- this letter responds to a letter dated date submitted on behalf of purchaser and seller requesting an extension of time under ' of the procedure and administration regulations to file an election purchaser and seller are requesting an extension to file a a' h election under g and h of the internal_revenue_code and ' h -1 d of the income_tax regulations with respect to purchaser s acquisition of the stock of target sometimes hereinafter referred to as the aelection on date a all citations in this letter to regulations under ' are to regulations in effect on date a the material information is summarized below purchaser is a corporation that is the common parent of an affiliated_group_of_corporations filing a consolidated federal_income_tax return prior to purchaser s acquisition of all of the stock of target target was an as corporation and seller owned all of the stock of target on date a purchaser acquired all of the stock of target from seller pursuant to a stock purchase agreement signed on that day it is represented that purchaser s acquisition of the stock of target qualified as a qualified_stock_purchase as defined in ' d the election was due on date b but for various reasons a valid election was not filed after the due_date for the election it was discovered that the election had not been filed subsequently this request was submitted under ' for an extension of time to file the election the period of limitations on assessment under ' a for purchaser s consolidated_group s taxable_year in which the acquisition occurred and subsequent years will not expire until at least date c although the taxable_year for the year of the sale for seller has expired the gain resulting from treating the sale of the target stock under ' h has been taken into account by seller and target sec_338 permits certain stock purchases to be treated as asset acquisitions if the purchasing_corporation makes or is treated as having made a a' election or a a' h election and the acquisition is a qualified_stock_purchase sec_338 permits the purchasing_corporation and the selling shareholders of the target_corporation to elect jointly to treat the target_corporation as deemed to sell all of its assets and distribute the proceeds in complete_liquidation a ' h election may be made for target only if purchaser acquires stock meeting plr-142201-04 the requirements of ' a from a selling_consolidated_group a selling affiliate or the s_corporation shareholders in a qualified_stock_purchase sec_1_338_h_10_-1 under ' c 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_9100-2 provides automatic extensions of time for making certain elections requests for relief under ' 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 the regulations ie ' h -1 d therefore the commissioner has discretionary authority under ' to grant an extension of time for purchaser and seller to file the election provided purchaser and seller show they acted reasonably and in good_faith the requirements of and are satisfied and granting relief will not prejudice the interests of the government information affidavits and representations submitted by purchaser seller company official and tax professionals explain the circumstances that resulted in the failure to timely file a valid election the information establishes that purchaser reasonably relied on a qualified_tax professional who failed to make or advise purchaser to make the election the request for relief was filed before the failure to make the election was discovered by the internal_revenue_service and that the government will not be prejudiced if relief is granted see b i and v based on the facts and information submitted including the representations made we conclude that purchaser and seller have shown they acted reasonably and in good_faith the requirements of and are satisfied and granting relief will not prejudice the interests of the government accordingly an extension of time is granted under ' until days from the date on this letter for purchaser and seller to file the election with respect to the acquisition of the stock of target as described above within days of the date on this letter purchaser and seller must file the election on form_8023 the election must comply with the simultaneous joint election requirement of ' h -1 d a copy of this letter must be attached to form_8023 plr-142201-04 also within days of the date on this letter purchaser must file or amend as applicable all returns and amended returns if any necessary to report the transaction as a ' h transaction for the taxable_year in which the transaction was consummated and for any other affected_taxable_year a copy of this letter and a copy of form_8023 or form_8883 if applicable must be attached to the returns the above extension of time is conditioned on the taxpayers' purchaser's consolidated_group s seller s and target s tax_liability if any 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 applicable 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 tax_liability is lower sec_301_9100-3 we express no opinion as to whether the aacquisition sale of the target stock qualifies as a qualified_stock_purchase under ' d whether the aacquisition sale of target stock qualifies for ' h treatment or any other tax consequences arising from the election in addition we express no opinion as to the tax 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 ' we relied on certain statements and representations made by the taxpayers however the director should verify all essential facts in addition notwithstanding that an extension is granted under ' to file the election penalties and interest that would otherwise be applicable if any continue to apply purchaser must provide seller with a copy of this letter this ruling is directed only to the taxpayers requesting it sec_6110 of the code provides that it may not be used or cited as precedent plr-142201-04 in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative sincerely ken cohen______________________________ ken cohen senior technician reviewer branch office of associate chief_counsel corporate cc --------------------- ---------------------------------------- ------------------------------------------- --------------------------------- ---------------------------------- ------------------------------------------------------- ------------------------------------------ ---------------------------------------- --------------------------


internal_revenue_service number release date index numbers ------------------------------ ------------------------------------- -------------------- -------------------------------------------------------- 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-126197-09 date date legend x -------------------------------------------------- -------------------------------- date date country ----------------------- --------------------- ---------- dear ------------------ this letter responds to a letter dated date submitted on behalf of x requesting an extension of time under sec_301_9100-1 and sec_301_9100-3 of the procedure and administration regulations to file an election under sec_301_7701-3 to be treated as an association_taxable_as_a_corporation for federal tax purposes facts the information submitted states that x was a foreign eligible_entity formed on date under the laws of country x has one member that does not have limited_liability x failed to timely file an election to be treated as an association_taxable_as_a_corporation for federal tax purposes effective date law and analysis sec_301_7701-3 provides that a business_entity that is not classified as a corporation under sec_301_7701-2 or an eligible_entity can plr-126197-09 elect its classification for federal tax purposes elections are necessary only when an eligible_entity does not want to be classified under the default classification or when an eligible_entity chooses to change its classification sec_301_7701-3 provides that except for certain existing entities described in sec_301_7701-3 unless a foreign eligible_entity elects otherwise the entity is a a partnership if it has two or more members and at least one member does not have limited_liability b an association if all members have limited_liability or c disregarded as an entity separate from its owner if it has a single member that does not have limited_liability sec_301_7701-3 provides that an eligible_entity may elect to be classified other than as provided under sec_301_7701-3 by filing form_8832 with the appropriate service_center under sec_301_7701-3 this election will be effective on the date specified by the entity on form_8832 or on the date filed if no such date is specified the date specified on form_8832 cannot be more than days prior to the date on which the election is filed under sec_301_9100-1 the commissioner may grant a reasonable extension of time to make a regulatory election or a statutory election but no more than six months except in the case of a taxpayer who is abroad under all subtitles of the internal_revenue_code except subtitles e g h and i section b defines the term regulatory election as including an election whose due_date is prescribed by a regulation published in the federal_register sec_301_9100-1 through provide the standards that the commissioner will use to determine whether to grant an extension of time to make an election sec_301_9100-2 provides automatic extensions of time for making certain elections sec_301_9100-3 provides rules for requesting extensions of time for 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 conclusion based solely on the facts submitted and the representations made we conclude that the requirements of sec_301_9100-3 have been satisfied as a result x is granted an extension of time of sixty days from the date of this letter to file a form_8832 to elect to be classified as an association_taxable_as_a_corporation for federal tax purposes effective date a copy of this letter should be attached to the form plr-126197-09 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 requesting it sec_6110 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 sincerely curt g wilson curt g wilson associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes


internal_revenue_service number release date index number ------------------------- --------------------------------- ------------------------------- ---------------------------- - department of the treasury washington dc third party communication none date of communication not applicable_person to contact ------------------ id no ------------- telephone number --------------------- refer reply to cc corp b02 plr-114710-05 date june ------ -------- --------------- --------------------------------- ------------------------------------ distributing ------------------------------------------------------------------------------------------------ ----------------------------------------------------------- controlled ------------------------------------------------------------------------------------------------ --------------------------------------------------------- state w state x state y state z date business a business b product c product d product e product f ----------------------------------------------------------------------------------------------------------------- --------------------------------------- ------------------------ ---------------------- ---------------------- --------------------- ------------------- -------------- --------------------------------------------------------------------------------- -------------------------------------------------------------------------------- plr-114710-05 g services -------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------- h i dear ---------------- ----- ---- this letter responds to your date request for rulings on certain federal_income_tax consequences of a proposed transaction the information submitted is summarized below the rulings contained in this letter are based on facts and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party this office has not verified any of the materials submitted in support of the request for rulings verification of the information representations and other data may be required as part of the audit process in particular this office has not reviewed any information pertaining to and has made no determination regarding whether the distribution defined below in ruling i satisfies the business_purpose requirement of sec_1_355-2 of the income_tax regulations ii is used principally as a device for the distribution of the earnings_and_profits of distributing or controlled or both see sec_355 of the internal_revenue_code and sec_1_355-2 or iii is part of a plan or series of related transactions pursuant to which one or more persons will acquire directly or indirectly stock representing a 50-percent_or_greater_interest in distributing or controlled see sec_355 and sec_1_355-7 summary of facts distributing is a state w member-owned non-stock agricultural_cooperative association organized under the state w agricultural co-operative act and tax-exempt under sec_521 distributing conducts business a and business b the proprietary interest of each member of distributing is evidenced by a membership certificate a membership interest plus one or more of the following non- membership items a capital retain certificate a revolving fund certificate or a letter of advice each a patronage interest a member’s membership interest and patronage interest s together are referred to as an equity_interest a member may have an equity_interest in business a and an equity_interest in business b but holding an equity_interest in one business does not necessarily plr-114710-05 mean the member holds an equity_interest in the other business there are h current members and i former members of distributing that hold equity interests in both business a and business b these members and former members cumula- tively constitute less than five percent of the total equity of business a and business b business a markets processes and distributes product c within state w state x state y and state z and product d and product e nationwide business b markets and distributes product f and provides g services within state x distributing wholly owns controlled a stock agricultural_cooperative association organized under the state w agricultural co-operative act and tax- exempt under sec_521 controlled was formed on date to participate in the separation of business a from business b described below to eliminate management systemic and other problems within distributing and to allow business a members and business b members to concentrate on their respective businesses distributing proposes to separate business b from business a proposed transaction the most direct method of separating the businesses would have distributing transfer business b to controlled for controlled equity interests and then exchange these interests for the distributing equity interests held by business b members under state w law however a direct transfer of business b by distributing to controlled would give rise to dissenter’s rights and if a significant number of members exercised these rights a considerable amount of controlled’s equity would be withdrawn impairing controlled’s ability to operate as a going concern after the transaction to prevent this possibility distributing proposes to separate the two businesses in the following manner the transaction i business a and business b each will pay off any interdivisional liabilities it owes ii controlled will cancel distributing’s single share of controlled stock leaving distributing with no interest in controlled iii distributing will transfer business b to controlled iv under the state w agricultural co-operative act a business b members will be treated as transferring their outstanding business b membership interests to controlled each business b member who has a fully paid business b membership interest will receive in return a fully paid share of controlled common_stock each business b member who has plr-114710-05 a partially paid business b membership interest will be deemed to receive in return a subscription for a controlled share the member will also be deemed to have paid the same amount for the subscription as the member had paid toward the business b membership interest b each member and former member will be treated as transferring its his or her patronage interest s to controlled in exchange for proportionate patronage interest s in controlled the dollar amount of the controlled patronage interest s that each business b member receives will be allocated by controlled in the same way that distributing allocated this amount c controlled will be treated as transferring the business b equity interests to distributing in exchange for business b and in cancellation of the equity interests representations distributing has made the following representations concerning the contribution and the distribution as defined in ruling below a the fair_market_value of the controlled equity_interest to be received by each business b member will approximately equal the fair_market_value of the business b equity_interest surrendered by the business b member in the exchange b no part of the consideration distributed by distributing will be received by a member as a creditor employee or in any capacity other than that of a member of distributing c the five years of financial information submitted on behalf of business a and business b represent the present operation of each business and regarding each business there have been no substantial operational changes since the date of the last financial statements submitted d following the distribution distributing and controlled will each continue the active_conduct of its business independently and with its separate employees e the distribution is carried out to eliminate management systemic and other problems within distributing and to allow the business a members and the business b members to concentrate on their respective businesses the distribution is motivated in whole or substantial part by these corporate business purposes f the distribution is not used principally as a device for the distribution of earnings_and_profits of distributing or controlled or both plr-114710-05 g the total adjusted_basis and the fair_market_value of the assets transferred to controlled each will equal or exceed the sum of any liabilities assumed as determined under sec_357 by controlled any liabilities assumed within the meaning of sec_357 by controlled were incurred in the ordinary course of business and are associated with the assets being transferred h there is no plan or intention to liquidate distributing or controlled to merge either corporation with any other corporation or to sell or otherwise dispose_of the assets of either corporation after the distribution except in the ordinary course of business i the distribution is not part of a plan or series of related transactions within the meaning of sec_1_355-7t pursuant to which one or more persons will acquire directly or indirectly equity interests representing a 50-percent_or_greater_interest as defined in sec_355 in distributing or controlled including any predecessor or successor of any such corporation j the distribution will not be a disqualified_distribution as defined in l payments made in connection with any continuing transactions between k no intercorporate debt will exist between distributing and controlled at the sec_355 because immediately after the distribution i no person determined after applying sec_355 will hold disqualified_stock defined in sec_355 in distributing that will constitute a 50-percent_or_greater_interest defined in sec_355 d in distributing and ii no person determined after applying sec_355 will hold disqualified_stock defined in sec_355 in controlled that will constitute a 50-percent_or_greater_interest defined in sec_355 in controlled time of or after the distribution distributing and controlled will be for fair_market_value based on terms and conditions arrived at by the parties bargaining at arm’s length sec_368 and iv distributing will exceed the sum of a the amount of liabilities assumed within the meaning of sec_357 by controlled in connection with the exchange b the amount of liabilities owed to controlled by distributing that are discharged or extinguished in connection with the exchange and c the amount of any money and the fair_market_value of any other_property other than stock permitted to be received under sec_361 without the recognition of gain received by distributing in connection with the exchange the fair_market_value of the assets of controlled will exceed the amount of its liabilities immediately_after_the_exchange m neither distributing nor controlled is an investment_company as defined in n the total fair_market_value of the assets transferred to controlled by plr-114710-05 o 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 see sec_1_1502-13 and sec_1 as in effect before the publication of t d 1995_2_cb_147 and as currently in effect sec_1_1502-13 as published by t d further any excess_loss_account distributing may have in the controlled stock will be included in income immediately before the distribution to the extent required by regulations see sec_1_1502-19 rulings based solely on the information submitted and the representations set forth above we rule as follows for federal_income_tax purposes the steps described above in paragraphs ii through iv will be disregarded and the transaction will instead be treated as if a distributing had transferred business b to controlled in exchange for controlled equity interests representing control within the meaning of sec_368 of controlled the contribution and b distributing had then transferred the controlled equity interests to the business b members in exchange for their business b equity interests in distributing the distribution the contribution followed by the distribution will qualify as a reorganization under sec_368 distributing and controlled will each be a party to the reorganization within the meaning of sec_368 no gain_or_loss will be recognized by distributing on the contribution sec_361 and sec_357 no gain_or_loss will be recognized by controlled on the contribution sec_1032 the basis of each asset received by controlled will equal the basis of that asset in the hands of distributing immediately before the contribution sec_362 the holding_period of each asset received by controlled will include the period during which distributing held that asset sec_1223 no gain_or_loss will be recognized by distributing on the distribution sec_361 no gain_or_loss will be recognized by and no amount will otherwise be included in the income of any member of distributing on the distribution sec_355 plr-114710-05 the aggregate basis of the controlled equity_interest in the hands of each controlled member immediately after the distribution will equal the aggregate basis of the member's business b equity_interest immediately before the distribution sec_358 and sec_358 the holding_period of the controlled equity_interest received by each controlled member will include the holding_period of the distributing equity_interest exchanged therefor sec_1223 earnings_and_profits will be allocated between distributing and controlled in accordance with sec_312 and sec_1_312-10 caveats we express no opinion about the tax treatment of the transaction under other provisions of the code and regulations or the tax treatment of any conditions existing at the time of or effects resulting from the transaction that are not specifically covered by the above rulings procedural statements this ruling letter is directed only to the taxpayer requesting it sec_6110 provides that it may not be used or cited as precedent a copy of this ruling letter must be attached to the federal_income_tax return of in accordance with the power_of_attorney on file with this office a copy of this each taxpayer involved in the transaction for the taxable_year in which the transaction is completed letter is being sent to your authorized representative associate chief_counsel corporate sincerely by __________________________ wayne t murray acting deputy associate chief_counsel corporate cc


t c summary opinion united_states tax_court zane d and debbie l worman petitioners v commissioner of internal revenue respondent docket no 4500-06s filed date zane d and debbie l worman pro sese michael w lloyd for respondent armen special_trial_judge this case was heard pursuant to the provisions of sec_7463 of the internal_revenue_code in effect when the petition was filed pursuant to sec_7463 the decision to be entered is not reviewable by any unless otherwise indicated all subsequent section references are to the internal_revenue_code as amended and all rule references are to the tax_court rules_of_practice and procedure other court and this opinion shall not be treated as precedent for any other case this matter is before the court on respondent’s motion to dismiss for lack of jurisdiction filed date and supplemented date in his motion respondent moves to dismiss this case for lack of jurisdiction principally on the ground that no notice_of_determination concerning collection actions under sec_6320 and or sec_6330 as authorized by sec_6320 and required by sec_6330 to form the basis for a petition to this court has been sent to petitioners with respect to taxable years and respondent also moves to dismiss on the ground that as to the irs filed notice_of_federal_tax_lien which is attached to the petition said lien was released on date and the liability fully paid for reasons discussed hereinafter we shall grant respondent’s motion as supplemented in that we shall dismiss this case for lack of jurisdiction on the ground that no notice_of_determination was sent to petitioners by respondent’s office of appeals for any of the taxable years in issue background at the time that the petition was filed zane d worman and debbie l worman petitioners resided in gillette wyoming for and the taxable years in issue petitioners filed federal_income_tax returns although petitioners reported tax on those returns petitioners did not enclose full payment with any of their returns upon receipt of petitioners’ returns respondent assessed the tax reported thereon as well as applicable penalties and statutory interest and sent petitioners so-called statutory notices of balance due ie notice_and_demand for payment see sec_6303 petitioners did not immediately pay the outstanding liabilities by letter dated date respondent sent to petitioners a notice_of_federal_tax_lien filing and your right to a hearing under sec_6320 lien notice the lien notice referenced a notice_of_federal_tax_lien filed by respondent with the campbell county clerk in gillette wyoming regarding petitioners’ outstanding liabilities for and the lien notice included the following statements you have a right to request a hearing with us to appeal this collection action and to discuss your payment method options to explain the different collection appeal procedures available to you we’ve enclosed publication collection appeal rights if you want to request a hearing please complete the enclosed form request for a collection_due_process_hearing and mail it to subsequently for respondent determined a modest deficiency in and addition for late filing to petitioners’ income_tax upon default of the notice_of_deficiency respondent assessed the determined liability internal_revenue_service dp s-661a p o box bensalem pa you must request your hearing by we’ll issue a certificate of release of the federal_tax_lien within days after you pay the full amount owed petitioners received the lien notice however they did not file with respondent a form request for a collection_due_process_hearing or a written equivalent rather petitioners filed with this court on date a petition disagreeing with the determination contained in the notice issued by the internal_revenue_service for the year s or period s and as set forth in such notice dated as an exhibit to the petition petitioners attached a copy of the lien notice as well as a copy of the notice_of_federal_tax_lien filed with the campbell county clerk in gillette wyoming by notice dated date this case was calendared for trial at the court’s trial session scheduled for date in cheyenne wyoming on date respondent filed a certificate of release of federal_tax_lien with the campbell county clerk in gillette wyoming the certificate of release recites that petitioners have satisfied the taxes and all statutory addition sec_3 the petition arrived at the court by priority mail in an envelope bearing a u s postal service postmark dated date for and and that as a consequence the lien provided by code sec_6321 has been released on date respondent filed his motion to dismiss for lack of jurisdiction by order dated date the court calendared the motion for hearing at the date cheyenne wyoming trial session on date respondent filed a supplement to his motion discussion the tax_court is a court of limited jurisdiction see sec_7442 accordingly we may exercise jurisdiction only to the extent expressly authorized by statute 66_tc_61 in addition jurisdiction must be proven affirmatively and a party invoking our jurisdiction bears the burden of proving that we have jurisdiction over the party’s case see 65_tc_346 35_tc_177 27_tc_837 in order to meet this burden the party must establish affirmatively all facts giving rise to our jurisdiction see wheeler’s peachtree pharmacy inc v commissioner supra pincite 15_bta_645 telephone conference calls with the parties were conducted prior to the scheduled hearing the internal_revenue_service restructuring and reform act of rra publaw_105_206 112_stat_685 was enacted into law on date rra sec_3401 112_stat_746 grants this court jurisdiction to review the commissioner’s determination as to the propriety of filing a notice_of_federal_tax_lien under sec_6320 or a proposed levy on property under sec_6330 in a collection review action this court’s jurisdiction under sec_6320 and sec_6330 depends in part on the issuance of a notice_of_determination by the commissioner office of appeals after the taxpayer has requested an administrative hearing following the issuance by the commissioner’s collection_division of either a final notice_of_intent_to_levy see sec_6330 or a notice of filing of federal_tax_lien see sec_6320 see 117_tc_122 116_tc_263 114_tc_492 see also rule b petitioners received the lien notice in date but they never requested an administrative hearing by filing with respondent a form or an equivalent written request instead they responded to the lien notice by filing a petition with this court thus because petitioners never requested an administrative hearing as mandated by sec_6320 respondent’s office of appeals had no occasion to and therefore did not issue a notice_of_determination in short the petition in this case was filed in response to the lien notice and not in response to a notice_of_determination as mandated by statute therefore we may not as we lack jurisdiction address the propriety of the filing of the lien in this case the foregoing is dispositive of the matter before us however even if petitioners had filed with the court a petition appealing from a notice_of_determination issued by respondent’s office of appeals following a timely request for an administrative hearing we would still be obliged to grant respondent’s motion as supplemented and dismiss this case thus in 126_tc_1 the court held the taxpayer’s challenges to the commissioner’s collection action a proposed levy were moot because there was no unpaid tax_liability upon which a levy could be based and the commissioner would not take any further collection action this court lacks jurisdiction in a lien or levy case collection review case to determine an overpayment or to order a refund_or_credit of taxes and the taxpayer’s case should be dismissed as moot in the present case petitioners’ unpaid assessed liability is zero for each of the years in issue although a few cents of accrued interest may remain for and respondent’s counsel has represented that respondent has as a matter of policy written off such amounts as de_minimis and does not seek to collect them this representation is confirmed by the fact that in date respondent filed with the campbell county clerk in gillette wyoming a certificate of release of federal_tax_lien reciting that petitioners had satisfied the taxes and all statutory additions for and finally we note that if petitioners think that they have overpaid their liability for any of the years in issue then petitioners may have a judicial remedy in the form of a civil_action for refund in the appropriate u s district_court or the u s court of federal claims see sec_7422 see also u s c sec_1346 sec_1402 because such actions are governed by strict procedural rules petitioners may care to consult a competent tax professional familiar with such matters civil actions for refund under sec_7422 are not cognizable in the tax_court indeed our jurisdiction to even determine overpayments is narrowly circumscribed e g sec_6512 to give effect to the foregoing an order granting respondent’s motion as supplemented will be entered dismissing this case for lack of jurisdiction on the ground that no notice_of_determination was sent to petitioners by respondent’s office of appeals for any of the taxable years in issue


internal_revenue_service number release date index number ------------------------------- -------------------------- ------------------------------------------------------------ -- ------------------------------- ------------------------------ department of the treasury washington dc third party communication none date of communication not applicable_person to contact ----------------------- id no ------------------- --------------------------------------------------- telephone number -------------------- refer reply to cc tege eoeg eo1 plr-119813-17 date date legend v ------------------------------------------------ w ---------------------------------------- x -------------------------------------------------------------- y ------------------------------------ z date --------------------------- date ----------------------- date ------------------------ ------------------------- dear ---------------- this letter responds to x’s date request for a ruling permitting an extension of time to revoke an election under sec_501 of the internal_revenue_code code facts according to the information provided by x each of x formerly known as y v and w is a charitable_organization with the purpose to promote health and each is recognized as exempt from federal_income_tax under sec_501 and as a public charity under sec_509 v and w are separate corporations with overlapping directors sec_501 of the internal_revenue_code_of_1986 as amended to which all subsequent section references are made unless otherwise stated plr-119813-17 v conducts direct operations in some states and has several tax-exempt operating subsidiaries in other states following ongoing discussions between v and y on date v formally affiliated with y in order to effectuate the affiliation z an organization of which v is the sole member became the sole member of y y changed its name to x shortly thereafter prior to its affiliation with y v retained a professional services firm to perform due diligence on the operations and financial state of y despite this process the issue of y revoking its election under sec_501 by date so that it would not be in effect for the taxable_year beginning date was not raised or pursued as such when y officially affiliated with v on date v and its affiliated organizations were not aware of any known or foreseeable tax impact of y's existing h election despite acting in good_faith within a few weeks following v's affiliation with y on date it was discovered that a sec_501 lobbying_expenditure test election lobbying election had been made many years ago by y and that the forms for y have been filed referencing the sec_501 election further it was discovered that y's sec_501 election was still in effect given the amount of the lobbying_expenses made by v and its affiliates and the potential risk to x in being viewed as affiliated with v w and the other affiliates for purposes of applying the lobbying tests and limitations x immediately consulted with its tax advisors to assist in its preparation for a request for discretionary relief with the internal_revenue_service irs under sec_301 x has yet to file a form_990 return that covers a period on or after date x’s ruling_request includes the representations and affidavits required under sec_301_9100-3 ruling requested x requests a ruling that having acted reasonably and in good_faith x shall be granted discretionary relief under sec_301_9100-3 of the procedure and administration regulations and is hereby granted an extension of time of days from the letter_ruling date to file a revocation of its sec_501 lobbying election to be effective for all tax years beginning after date law sec_501 exempts from federal_income_tax an organization organized and operated exclusively for charitable purposes no substantial part of the activities of which is carrying on propaganda or otherwise attempting to influence legislation except as otherwise provided in sec_501 sec_501 sets out an alternative to the no substantial part limitation on expenditures made for the purposes of influencing_legislation based on expenditures_for lobbying during the taxable_year plr-119813-17 sec_501 provides that sec_501 shall apply to certain organizations that elect in such manner and at such time as the secretary may prescribe to have the provisions of sec_501 apply sec_501 provides that an organization's sec_501 election is effective for all taxable years that end after the date the election is made and begin before the date the election is revoked by the organization under regulations prescribed by the secretary sec_1_501_h_-2 provides that a sec_501 election is made by filing a completed form_5768 with the appropriate internal_revenue_service center and remains in effect for each succeeding taxable_year for which the organization is an eligible_organization and which begins before a notice of revocation is filed under sec_1_501_h_-2 sec_1_501_h_-2 provides that an organization may voluntarily revoke a sec_501 lobbying election by filing form_5768 sec_4911 provides that when two or more organizations are affiliated and at least one has made a sec_501 election the determination as to whether excess_lobbying_expenditures have been made and the expenditure limits of sec_501 have been exceeded shall be made as though the affiliated organizations are one organization sec_4911 provides that if an affiliated_group has excess_lobbying_expenditures each such organization as to which an election under sec_501 is effective for such year shall be treated as an organization which has excess_lobbying_expenditures in an amount which equals such organization's proportionate share of such group's excess_lobbying_expenditures sec_4911 defines two organizations as members of an affiliated_group if the governing instrument of one organization requires it to be bound by the decisions of another on legislative issues or if the governing board_of one organization includes persons who are either specifically designated representatives or members of the governing board officers or paid executive staff of another organization and who by aggregating their votes have sufficient power to cause or prevent action on legislative issues by the first organization sec_301_9100-1 provides that the regulations under sec_301_9100-1 -2 and -3 provide the standards the commissioner will use to determine whether to grant an extension of time to make a regulatory election the regulations under sec_301_9100-1 and -2 also provide an automatic_extension of time to make certain statutory elections sec_301_9100-2 provides automatic extensions of time for plr-119813-17 making regulatory and statutory elections when the deadline for making the election is the due_date of the return or the due_date of the return including extensions sec_301_9100-3 provides extensions of time for making regulatory elections that do not meet the requirements of sec_301_9100-2 sec_301_9100-1 defines a regulatory election as an election whose due_date is prescribed by a regulation published in the federal_register revenue_ruling revenue_procedure notice or announcement published in the internal_revenue_bulletin and a statutory election as an election whose due_date is prescribed by statute sec_301_9100-1 provides that the commissioner in exercising the commissioner's discretion may grant a reasonable extension of time under the rules set forth in sec_301_9100-2 and -3 to make a regulatory election or a statutory election but no more than months except in the case of a taxpayer who is abroad under all subtitles of the internal_revenue_code except subtitles e g h and i sec_301_9100-3 allows a request for an extension of time to file a regulatory election to be granted when the taxpayer provides the evidence to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and the grant of relief will not prejudice the interests of the government sec_301_9100-3 provides generally that the taxpayer will be deemed to have acted reasonably and in good_faith if the taxpayer requests relief before the failure to make the regulatory election is discovered by the irs sec_301_9100-3 provides that a taxpayer will not be considered to have acted reasonably and in good_faith if the taxpayer i seeks to alter a return position for which an accuracy related penalty could be imposed under sec_6662 at the time the taxpayer requests relief and the new position requires a regulatory election for which relief is requested ii chooses not to make the election being fully informed of the required election and related consequences or iii uses hindsight in requesting relief if specific facts have changed since the original deadline that makes the election advantageous to a taxpayer the irs will not ordinarily grant relief sec_301_9100-3 provides that the interests of the government are prejudiced when i granting relief would result in a taxpayer having a lower tax_liability in the aggregate for all taxable years affected by the election than the taxpayer would have had if the election had been timely made similarly if the tax plr-119813-17 consequences of more than one taxpayer are affected by the election the government's interests are prejudiced if there may be a resulting decrease in the aggregate tax_liability for all affected taxpayers ii the taxable_year in which the regulatory election should have been made or any taxable years that would have been affected by the election had it been timely made are closed by the period of limitations on assessment under sec_6501 before the taxpayer's receipt of a ruling granting relief the government's interests are ordinarily prejudiced in such case sec_301_9100-3 provides that the taxpayer or the individual who acts on behalf of the taxpayer with respect to tax matters must submit a detailed affidavit describing the events that led to the failure to make a valid regulatory election and to the discovery of the failure when the taxpayer relied on a qualified_tax professional for advice the taxpayer's affidavit must describe the engagement and responsibilities of the professional as well as the extent to which the taxpayer relied on the professional the affidavit must be accompanied by a dated declaration signed by the taxpayer which states under penalties of perjury i declare that i have examined this request including accompanying documents and to the best of my knowledge and belief the request contains all the relevant facts relating to the request and such facts are true correct and complete the individual who signs for an entity must have personal knowledge of the facts and circumstances at issue sec_301_9100-3 provides that the taxpayer must submit detailed affidavits from the individuals having knowledge or information about the events that led to the failure to make a valid regulatory election and to the discovery of the failure these individuals must include the taxpayer's return preparer any individual including an employee of the taxpayer who made a substantial contribution to the preparation of the return and any accountant or attorney knowledgeable in tax matters who advised the taxpayer with regard to the election an affidavit must describe the engagement and responsibilities of the individual as well as the advice that the individual provided to the taxpayer each affidavit must include the name current address and taxpayer_identification_number of the individual and be accompanied by a dated declaration signed by the individual which states under penalties of perjury i declare that i have examined this request including accompanying documents and to the best of my knowledge and belief the request contains all the relevant facts relating to the request and such facts are true correct and complete sec_301_9100-3 provides that the request for relief must also contain the following information - i the taxpayer must state whether the taxpayer's return s for the taxable_year in which the regulatory election should have been made or any taxable years that would have been affected by the election had it been timely made is being examined by a district_director or is being considered by an appeals plr-119813-17 office or a federal court the taxpayer must notify the irs office considering the request for relief if the irs starts an examination of any such return while the taxpayer's request for relief is pending ii the taxpayer must state when the applicable return form or statement used to make the election was required to be filed and when it was actually filed iii the taxpayer must submit a copy of any documents that refer to the election iv when requested the taxpayer must submit a copy of the taxpayer's return for any taxable_year for which the taxpayer requests an extension of time to make the election and any return affected by the election and v when applicable the taxpayer must submit a copy of the returns of other taxpayers affected by the election revrul_83_74 1983_1_cb_112 granted relief under sec_1 to a homeowner's association seeking to revoke its sec_528 election reasoning that the situation of a taxpayer seeking relief to revoke an election is analogous to one where a taxpayer is seeking relief to make an election sec_5 of revproc_2017_1 2017_1_irb_1 provides that a sec_301 request must include an affidavit and declaration from the taxpayer and other parties having knowledge or information about the events that led to the failure to make a valid regulatory election and to the discovery of the failure see sec_301_9100-3 and e in addition a sec_301 request must include the information required by sec_301_9100-3 analysis a taxpayer may seek relief under sec_301_9100-1 through -3 for an extension of time to file a regulatory election a taxpayer seeking relief to revoke an election is in a position analogous to one seeking relief to make an election as discussed in revrul_83_74 and thus the provisions of sec_301_9100-1 through -3 apply to the same extent we have determined that the sec_501 election at issue is a regulatory election subject_to relief under sec_301_9100-3 for a late election or revocation of election while sec_501 appears to prescribe the due_date for the election and revocation sec_501 expressly provides that sec_501 applies to an organization which has elected in such manner and at such time as the secretary may prescribe to have the provisions of sec_501 apply and sec_501 similarly plr-119813-17 provides that a sec_501 election is effective for taxable years which begin before the date the election is revoked under regulations prescribed by the secretary thus we consider the regulations rather than the statute to prescribe the due_date for a sec_501 election or revocation furthermore based solely on the information submitted and the representations made we conclude that the requirements of sec_301_9100-1 and sec_301_9100-3 have been satisfied including reasonable action good_faith and lack of prejudice to the interests of the government as a result x is granted an extension of time of days from the date of this letter to file a form_5768 with the appropriate service_center to revoke it sec_501 election effective date a copy of this letter should be attached to the form_5768 a copy is enclosed for that purpose ruling based solely on the facts and representations submitted by x we rule that having acted reasonably and in good_faith x shall be granted discretionary relief under sec_301_9100-3 of the procedure and administration regulations and is hereby granted an extension of time of days from the letter_ruling date to file a revocation of its sec_501 lobbying election to be effective for all tax years beginning after date the ruling contained in this letter is based upon information and representations submitted by or on behalf of x and accompanied by a penalty of perjury statement executed by an appropriate party as specified in revproc_2017_1 2017_1_irb_1 section b this office has not verified any of the material submitted in support of the request_for_ruling and such material is subject_to verification on examination this letter does not address the applicability of the code or regulations to the facts submitted other than with respect to the sections specifically described the associate office will revoke or modify a letter_ruling and apply the revocation retroactively if there has been a misstatement or omission of controlling facts the facts at the time of the transaction are materially different from the controlling facts on which the ruling is based or the transaction involves a continuing action or series of actions and the controlling facts change during the course of the transaction see revproc_2017_1 sec_11 no ruling is granted as to whether x qualifies as an organization described in sec_501 and or sec_509 or except as expressly provided in this letter no opinion is expressed or implied concerning the federal_income_tax consequences of any aspects of any transaction or item_of_income referenced in this letter_ruling additionally this letter is directed only to x sec_6110 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 each of x’s authorized representatives plr-119813-17 if you have any questions about this ruling please contact the person whose name and telephone number are shown in the heading of this letter sincerely david l marshall assistant branch chief exempt_organizations branch tax exempt government entities


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-119533-12 date october x --------------------------------------------------- -------------------------------------- member --------------------------------------------------- ------------------------------ member --------------------------------------------------- ---------------------------------------- a d1 -------------------------------------------------------------- ---------------------- dear ---------------------- this letter responds to a letter dated date submitted on behalf of x by its authorized representative requesting a ruling under sec_301_9100-1 and sec_301_9100-3 of the procedure and administration regulations that x be granted an extension of time to file an election to be classified as a disregarded_entity under sec_301_7701-3 effective d1 facts the information submitted states that x is a a that became relevant for u s tax purposes on d1 x was wholly owned by member which was wholly owned by member member and member intended that x be treated as a disregarded_entity plr-119533-12 for federal tax purposes effective d1 however due to inadvertence x failed to file a timely form_8832 entity classification election law and analysis sec_301_7701-3 provides that a business_entity that is not classified as a corporation under sec_301_7701-2 or an eligible_entity can elect its classification for federal tax purposes as provided in sec_301_7701-3 an eligible_entity with a single owner can elect to be classified as an association and thus a corporation under sec_301_7701-2 or to be disregarded as an entity separate from its owner sec_301_7701-3 provides that unless it elects otherwise a foreign eligible_entity is a a partnership if it has two or more members and at least one member does not have limited_liability b an association if all members have limited_liability or c disregarded as an entity separate from its owner if it has a single owner that does not have limited_liability sec_301_7701-3 provides that an eligible_entity may elect to be classified other than as provided in sec_301_7701-3 or to change its classification by filing form_8832 with the service_center designated on form_8832 sec_301_7701-3 provides that an election made under sec_301 c i will be effective on the date specified by the entity on form_8832 or on the date filed if no date is specified on the election form the effective date specified on form_8832 cannot be more than days prior to the date on which the election is filed and cannot be more than months after the date on which the election is filed sec_301_9100-1 provides that the commissioner has discretion to grant a reasonable extension of time under the rules set forth in sec_301_9100-2 and sec_301_9100-3 to make a regulatory election or a statutory election but no more than six months except in the case of a taxpayer who is abroad under all subtitles of the code except subtitles e g h and i sec_301_9100-1 defines a regulatory election to include an election whose due_date is prescribed by a regulation published in the federal_register sec_301_9100-2 provides the rules governing automatic extensions of time for making certain elections sec_301_9100-3 sets forth the standards the commissioner will use to determine whether to grant an extension of time for regulatory elections that do not meet the requirements of sec_301_9100-2 sec_301_9100-3 provides that requests for relief subject_to sec_301_9100-3 will be granted when the taxpayer provides evidence including affidavits described in sec_301_9100-3 to establish to the satisfaction of the commissioner that the plr-119533-12 taxpayer acted reasonably and in good_faith and granting relief will not prejudice the interests of the government conclusion based on the facts submitted and the representations made we conclude that the requirements of sec_301_9100-1 and sec_301_9100-3 have been satisfied as a result x is granted an extension of time of days from the date of this letter to file form_8832 with the appropriate service_center and to elect to be classified as a disregarded_entity for federal tax purposes effective d1 a copy of this letter should be attached to the form_8832 a copy is enclosed for that purpose except as expressly set forth above we express or imply no opinion concerning the federal tax consequences of the facts discussed above under any other provision of the code this ruling is directed only to the taxpayer requesting it sec_6110 provides that it may not be used or cited as precedent in accordance with a power_of_attorney on file with this office we are sending a copy of this letter to x’s authorized representative sincerely associate chief_counsel passthroughs special industries by joy c spies joy c spies senior technician reviewer branch office of the associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes


internal_revenue_service department of the treasury number info release date index number washington dc person to contact telephone number refer reply to cc tege eb qp2-conex-138128-02 date date dear this responds to your letter to charles rossotti commissioner of internal revenue regarding sec_457 of the internal_revenue_code the code your letter requests information concerning the status of irs efforts to publish regulations concerning the provisions in the economic_growth_and_tax_relief_reconciliation_act_of_2001 egtrra pub_l_no that may permit some changes to ongoing distributions from sec_457 deferred_compensation plans effective earlier this year we do not have sufficient information regarding your employer’s sec_457 plan including a copy of the plan to discuss your case and options under that plan however we are providing some general information below you referred to the need for guidance on the revised distributions provisions applicable to sec_457 plans enacted in the economic_growth_and_tax_relief_reconciliation_act_of_2001 egtrra pub_l_no and effective for distributions made after date this new law provides that after distributions from a state or local governmental sec_457 plan are included in income when paid rather than when paid or made available that would authorize but not require sec_457 plans sponsored by state or local governmental entities to provide more flexible distribution provisions if the plans are revised to permit such flexibility however since egtrra did not change the previous laws that make distributions from an eligible_plan of a tax-exempt_organization includible in income when paid or made available a participant in a sec_457 plan of a non-governmental tax-exempt_entity still cannot revise a previous irrevocable election concerning regulations to implement this and other revisions made by egtrra the irs recently published proposed_regulations that provide guidance regarding numerous issues affecting plans including the revised distribution provisions we have enclosed a copy of these proposed_regulations in a process legally required under the administrative_procedure_act the internal_revenue_service is now receiving public comment concerning these proposed_regulations and will be holding a public hearing regarding them on august after reviewing the comments received before and at this hearing the irs will promulgate final regulations implementing the egtrra changes conex-138128-02 section a of the preamble to the attached proposed_regulations notes egtrra substantially altered the taxation of distributions from an eligible governmental_plan by providing that amounts held under such an eligible_plan are not included in a participant’s or beneficiary’s gross_income until distributed the proposed_regulations would interpret this egtrra change as applying to all participants in an eligible governmental_plan thus an eligible governmental_plan may permit participants who are currently entitled to be paid after to change their previously irrevocable payment elections however as noted above egtrra does not require a governmental_plan to permit its participants to make such changes we hope the enclosed proposed sec_457 regulations will be helpful to you if you need further information please contact of my staff at enclosure sincerely robert d patchell branch chief qualified_plans branch office of associate chief_counsel tax exempt and government entities