department of the treasury employer_identification_number contact person - id number contact telephone number uil internal_revenue_service p o box cincinnati oh number release date date date legend b nominating institutions u number range v number range w dollar_figureamount x dollar_figureamount dollar_figureamount z dear we have considered your request for advance approval of a grant-making program under sec_4945 of the internal_revenue_code received with a postmark date of date our records indicate that you were recognized as exempt from federal_income_tax under sec_501 of the code and that you are classified as a private_foundation defined in sec_509 you indicate that you will operate a grant-making program designed to achieve a specific objective namely to advance research relating to the causes and cure of parkinson's disease you will first identify nonprofit academic medical or research institutions which have demonstrated excellence in neuroscience research and which adhere to nondiscriminatory operational policies collectively the nominating institutions includes a representative sample of the institutions identified qualification of an institution as a nominating institution include the following criteria that determine the b e e e national reputation for excellence in research related to the causes and cures of neurological diseases existence of an established neuroscience department dedicated to the promotion of innovative and original research and the use of cutting-edge technologies and committed to training and retraining exceptional researchers emphasis on multi-disciplinary and collaborative research e overall financial health and robust fiscal practices of the institution generally and financial commitment to funding neurological research from time to time your sole trustee or an advisor to the trustee acting at the request of the trustee will contact some or all of the nominating institutions to inform them of the availability of your individual research grants and to request that each such nominating institution submit to you a nomination of one or more individuals who meet the criteria for selection as qualified nominees the nominating institutions and the qualified nominees will be required to complete various forms in connection with this process you will not entertain unsolicited grant proposals to be eligible to be a qualified nominee individuals must meet the following standards e e e e heorshe must hold or be in the final stages of obtaining a ph d m d or equivalent degree he or she must be a current or incoming postdoctoral fellow or a more experienced researcher at a nonprofit academic medical or research institution and must have been recommended by a nominating institution he or she must demonstrate a specific interest in parkinson's disease research as demonstrated in a suitably documented outline which shall be included in his or her application or of his or her proposed research relating to the disease heorshe may but need not be a u s citizen however grants will be available only for research in a laboratory located in the united_states to apply for the grant a qualified nominee must submit to you the following nomination form v w v w v v v v application form an outline of the proposed parkinson’s disease research program information regarding the nominee including an up-to-date curriculum vitae and information regarding the nominating institution including o o o the institution’s audited financial statements for the most recent two years the current operating budget of the institution school and department at which the nominee will be performing the proposed parkinson’s disease research o a list of the institution’s current board_of directors and o acopy of the institution’s current irs sec_501 exemption_letter to select grant recipients from qualified nominees your trustee will examine various objective criteria including but without limitation academic credential relevant research experience proposed research plan and level of support from the pertinent nominating institution the quustee will select grant recipients without regard to race ethnicity age religion or gender the trustee is obligated to disclose any personal knowledge of and relationship with any potential grantees or grantees under consideration it is not expected that the current trustee or any future trustee will be in a position to derive a private benefit either directly or indirectly if any potential individual grantee is selected over others however in the unlikely event that a circumstance arises in which the trustee could be perceived as having derived or might be likely to derive private benefit if a particular individual receives a grant from you the trustee shall a refrain from participating in any aspect of the selection process relating to that individual and b take such other appropriate measures as are necessary to ensure that an independent party with no standing to derive a private benefit controls whether such individual receives a grant from you under certain circumstances the trustee would designate one or more independent parties to engage in the selection process a party would be deemed to be independent for these purposes if he or she a is not related to the particular grant candidate b is not employed by or otherwise receives financial remuneration from the grant candidate or the relevant nominating institution and c has not derived and is not in a position to derive any private benefit either directly or indirectly if any potential individual grantee is selected over others no grant may be given to a trustee of your foundation your grantor or any other disqualified_person as defined in sec_4946 of the code with respect to your foundation or for a purpose that is inconsistent with the purposes described in sec_170 of the code you will mail an award statement to each grant recipient the grant recipient his or her sponsoring investigator and an institutional representative from the nominating institution must sign an award acceptance form provided by you the award acceptance must be returned to you within ten working days following notification of the award you will pay each grant directly to the nominating institution for_the_use_of the grantee the relevant institutions are required to agree that they will hold the grantee’s funds in a segregated account and will disburse such funds on the terms you have required upon completion of the research for which the grant was made each individual grantee must submit a final report to you which summarizes the research performed during the period of the grant evaluates the results and accounts for the funds received under the grant in addition each grantee is required to submit a detailed progress report to you at least annually the report would summarize the research performed during the year and will provide an evaluation of the results also the financial officer of the nominating institution must maintain a separate_account for the funds held for the grantee such account must be available for audit by your representatives in addition each nominating institution must provide a financial expenditure report to you within days of the end of each award year the award statement provides detailed guidelines regarding the preparation of the report financial summary report forms must be submitted to you at least annually if reports or other information including failure to submit reports indicate that all or any part of a grant is not being used for the purposes intended you will investigate and withhold further payments during the investigation if all or any part of a grant is not being used for the intended purpose you will take all reasonable and appropriate steps including legal action where appropriate to recover the grant funds and or restore diverted funds to the purposes of the grant each year you expect there will be u qualified nominees for foundation grants and you expect to award v individual grants each grant will be for dollar_figurew will be awarded in three annual installment of dollar_figurex each and will not be renewable payments of the second and third installments are contingent upon satisfactory review of the grant recipient's annual progress report in addition to the fellowship a sum of dollar_figurez is to be awarded each year to the laboratory in which the fellow is working and can be used by the fellow for his her educational and scientific expenses with a written request to you from the fellow the expense allowance may be used to defray the cost of health benefits it is not an allowance for institutional overhead postdoctoral scholar registration fees or postdoctoral fellowship taxes institutions may not automatically deduct any fees from the allowance without your fellow’s approval you will periodically conduct a reasonable search of publicly available information including the ofac list to ensure that no individual or organization with whom you are dealing is suspected of activities related to terrorism including terrorist financing or other support or is otherwise subject_to ofac sanctions you agree that you will maintain records indefinitely that include e e e e the information used to evaluate the qualifications of potential grantees including any recommendations the identification of the grantees including the determination as to whether a potential grantee has any relationship to the private_foundation or is a disqualified_person although a disqualified_individual would not be eligible the amount and purpose of each grant and all requirements imposed on the grantee with respect thereto all grantee reports and other follow-up data obtained in administering your grant program sec_4945 and b of the code impose certain excise_taxes on taxable_expenditures made by a private_foundation sec_4945 of the code provides that the term taxable_expenditure means any amount_paid or incurred by a private_foundation as a grant to an individual for travel study or other similar purposes by such individual unless such grant satisfies the requirements of subsection g sec_4945 of the code provides that sec_4945 shall not apply to individual grants awarded on an objective and nondiscriminatory basis pursuant to a procedure approved in advance if it is demonstrated that the grant constitutes a scholarship or fellowship_grant which is subject_to the provisions of sec_117 and is to be used for study at an educational_organization described in sec_170 the grant constitutes a prize or award which is subject_to the provisions of sec_74 if the recipient of such prize or award is selected from the general_public or the purpose of the grant is to achieve a specific objective produce a report or similar product or improve or enhance a literary artistic musical scientific teaching or other similar capacity skill or talent of the grantee sec_53_4945-4 of the regulations provides that to secure approval a private_foundation must demonstrate that i ii its grant procedure includes an objective and nondiscriminatory selection process such procedure is reasonably calculated to result in performance by grantees of the activities that the grants are intended to finance and iii the foundation plans to obtain reports to determine whether the grantees performed activities that the grants are intended to finance based on the information submitted and assuming your award programs will be conducted as proposed with a view to provide objectivity and nondiscrimination in making the awards we have determined that your procedures for granting the awards comply with the requirements contained in sec_4945 of the code and that awards granted in accordance with such procedures will not constitute taxable_expenditures within the meaning of sec_4945 this determination is conditioned on the understanding that there will be no material_change in the facts upon which it is based it is further conditioned on the premise that no grants will be awarded to foundation managers or members of the selection committee or for a purpose that is inconsistent with the purpose described in sec_170 of the code the approval of your award program procedures herein effective date constitutes a one-time approval of your system standards and procedures designed to result in awards which meet the requirements of sec_4945 of the code this determination only covers the grant programs described above thus approval shall apply to subsequent award programs only as long as the standards and procedures under which they are conducted do not differ materially from those described in your request we have not considered whether grants made under your procedures are excludable from the gross_income of recipients under sec_117 of the code any funds you distribute to individuals must be made on a true charitable basis in furtherance of the purposes for which you are organized therefore you should maintain adequate_records and case histories so that any or all award distributions can be substantiated upon request by the internal_revenue_service this determination is directed only to the organization that requested it sec_61 k of the code provides that it may not be used or cited as a precedent you must report any future changes in your grant making procedures please keep a copy of this letter in your permanent records if you have any questions please contact the person whose name and telephone number are shown above sincerely yours lois g lerner director exempt_organizations enclosure notice a redacted copy of this letter


t c memo united_states tax_court scott m langert petitioner v commissioner of internal revenue respondent docket no filed date scott m langert pro_se william j gregg and john d ellis for respondent memorandum findings_of_fact and opinion chiechi judge respondent determined the following deficiencies in and accuracy-related_penalties under sec_6662 on petitioner’s federal_income_tax tax all section references are to the internal_revenue_code code in effect for the years at issue all rule references are to the tax_court rules_of_practice and procedure year deficiency dollar_figure big_number accuracy-related_penalty under sec_6662 dollar_figure dollar_figure the issue remaining for decision is whether petitioner is entitled for his taxable_year to deduct under sec_166 a claimed bad_debt we hold that he is not findings_of_fact the parties stipulated some of the facts and those facts are so found petitioner resided in maryland at the time he filed the petition at the time of the trial in this case petitioner had been involved for approxi- mately years in one or more activities involving real_property petitioner’s real_property activities that included buying selling and or renting certain real prop- erty and providing management services for certain rental real_property during the approximately years that petitioner was involved in petition- er’s real_property activities he made loans on about six different occasions at no time during that period did petitioner advertise himself to be a money lender or keep a separate office or separate books_and_records relating to any of the loans that he had made around early date petitioner borrowed dollar_figure from merrill lynch credit corp merrill lynch loan that he was to repay to that company at dollar_figure percent interest over years petitioner secured his merrill lynch loan with certain rental real_property that he owned pincite quebec street college park maryland on date petitioner transferred dollar_figure of the proceeds of his merrill lynch loan gordon funds in question to christopher gordon mr gordon on the same date mr gordon and his mother martha d gordon ms gordon signed a document titled unsecured note petitioner did not in any way secure the repayment of the gordon funds in question such as by requir- ing that mr gordon or ms gordon provide him with collateral the unsecured gordon note stated as follows for value received christopher gordon and martha d gordon promise to pay to the order of scott m langert the sum of one hundred fifty seven thousand forty five and no dol- lars dollar_figure with interest at the rate of seven per centum per annum we shall refer to the document titled unsecured note that mr gordon and ms gordon signed on date as the unsecured gordon note in resolving the issue presented we accord no substantive significance to the term unsecured gordon note said principal and interest payable in monthly installments of one thousand forty four and dollars with the privilege of making larger payments in any amount the first of said payments to commence on date said payments shall continue on the same day of each and every month thereafter until paid each installment when so paid to be applied first to the payment of the interest on the amount of principal remain- ing unpaid and the balance thereof credited to the principal and it is expressly agreed that if default be made in the pay- ment of any one of the aforesaid installments when and as the same shall become due and payable then and in that event the unpaid balance of the principal sum and accrued interest shall at the option of the holder hereof at once become and be due and payable the entire principal and accrued interest thereon if not sooner paid shall become due and payable on april the makers jointly and severally hereby authorize and em- power any justice of the peace or clerk of any court of record or any attorney-at-law to enter judgement by confession upon the occur- rence of any default hereunder by makers against all makers in favor of the holder hereof for the principal balance and all accrued interest due hereunder plus costs including reasonable attorney’s fees ex- pressly waiving summons or other process and do further consent to the im-mediate execution of said judgement expressly waiving benefit of all exemption laws before petitioner transferred dollar_figure to mr gordon on date petitioner had never transferred any money to mr gordon or ms gordon checked the credit rating of either of them or required either of those individuals to provide him with his or her financial statements showing assets income and any other pertinent financial information nor had petitioner before he transferred dollar_figure to mr gordon on date verified the source of funds from which mr gordon or ms gordon would be able to comply with the terms of the unsecured gordon note that they make the payments to petitioner as set forth in that document mr gordon used the gordon funds in question as part of the financing for his purchase for dollar_figure of certain real_property pincite baltimore avenue college park maryland baltimore avenue property on date mr gordon made the first of the payments to petitioner as set forth in the unsecured gordon note thereafter mr gordon made approxi- mately additional monthly payments to petitioner as set forth in that document in mr gordon stopped making the payments as set forth in the unsecured gordon note mr gordon’s default at the time in when mr gordon stopped making those payments the monthly amounts remaining to be paid as set forth in the unsecured gordon note totaled approximately dollar_figure alleged outstanding debt after mr gordon’s default petitioner asked mr gordon orally on a number of occasions but not in writing to pay him all of the alleged outstanding debt petitioner never asked ms gordon to pay him all or any part of the alleged outstanding debt after mr gordon’s default petitioner did not pursue any legal remedy with respect to that default around date mr gordon filed a petition in bankruptcy mr gordon’s bankruptcy proceedings mr gordon’s bankruptcy proceedings lasted for years after those proceedings were commenced petitioner did not file a proof_of_claim in mr gordon’s bankruptcy proceedings with respect to the alleged out- standing debt sometime during the baltimore avenue property was the subject of a foreclosure auction and was sold as part of that auction petitioner had not se- cured the repayment of the gordon funds in question with the baltimore avenue property and he did not file a proof_of_claim in that foreclosure auction or contact the foreclosure trustee despite the following provision in the unsecured gordon note petitioner did not attempt to obtain a judgment against mr gordon and or ms gordon with respect to mr gordon’s default the makers mr gordon and ms gordon jointly and severally hereby authorize and empower any justice of the peace or clerk of any court of record or any attorney-at-law to enter judgement by confession upon the occurrence of any default hereunder by makers against all makers in favor of the holder hereof for the principal balance and all accrued interest due hereunder plus costs including reasonable attorney’s fees expressly waiving summons or other process and do further consent to the immediate execution of said judgement expressly waiving benefit of all exemption laws petitioner timely filed form_1040 u s individual_income_tax_return for his taxable_year return petitioner attached to his return sched- ule c profit or loss from business schedule c in petitioner’s schedule c petitioner showed his principal business or profession as property management in that schedule petitioner reported gross_receipts or sales of dollar_figure and deducted inter alia other expenses of dollar_figure those claimed other expenses included dollar_figure described in petitioner’s schedule c a sec_4 the langert loss the langert loss was a loss of dollar_figure that petitioner claimed with respect to mr gordon’s default on the unsecured gordon note claimed schedule c gordon business loss on date respondent issued to petitioner a notice_of_deficiency notice with respect to his taxable years and in that notice respon- dent determined inter alia to disallow the deduction that petitioner had claimed for the claimed schedule c gordon business loss of dollar_figure in support of that determination respondent determined in the notice petitioner did not claim a langert loss in schedule c or in any other part of the tax_return that he filed for his taxable_year in petitioner’s schedule c petitioner also claimed as part of other expenses dollar_figure described in that schedule as the butcher loss petitioner conceded at trial that he is not entitled to that loss it was determined that you are not allowed a deduction in the amount s and in the year s shown above since it has not been es- tablished that the deduction was incurred paid or expended for the designated purpose furthermore it has not been established that you are entitled to the deduction under any section of the internal_revenue_code accordingly your taxable_income is increased for the amount s and year s shown above opinion petitioner bears the burden of establishing that the determination in the notice that remains at issue is erroneous see rule a 290_us_111 moreover deductions are a matter of legislative grace and petitioner bears the burden of proving entitlement to any deduction claimed see 503_us_79 the code and the regulations thereunder required petitioner to maintain records sufficient to estab- lish the amount of any deduction claimed see sec_6001 sec_1_6001-1 income_tax regs on brief petitioner takes the position that he is entitled for his taxable_year to deduct the entire amount of the alleged outstanding debt ie approxi- mately dollar_figure as a so-called business_bad_debt in support of that position the record does not establish why petitioner reported only dollar_figure as the amount of the claimed schedule c gordon business loss and claims here the entire amount of the alleged outstanding debt ie approximately dollar_figure as deductible under sec_166 for his taxable_year petitioner argues that he made the loan to mr gordon for the sole pur- pose of obtaining interest_income pursuant to the terms of the loan it is respondent’s position that petitioner is not entitled to a so-called business_bad_debt deduction or to any other deduction for his taxable_year with respect to the alleged outstanding debt in support of that position respon- dent argues that petitioner has failed to carry his burden of establishing that the alleged outstanding debt was a bona_fide debt was a so-called business debt and became partially or wholly worthless during the year for which petitioner is claiming a bad_debt deduction under sec_166 we shall assume arguendo that petitioner has carried his burden of estab- lishing that the alleged outstanding debt is a bona_fide debt within the meaning of sec_166 and the regulations and the caselaw thereunder we address whether as respondent argues petitioner has failed to carry his burden of establishing that the alleged outstanding debt constitutes a so-called business debt resolution of that question resolves whether petitioner is entitled for his taxable_year to the bad_debt deduction that he is claiming under sec_166 for the alleged out- standing debt we address briefly whether as respondent also argues petitioner has satis- fied his burden of establishing that the alleged outstanding debt became partially continued in order for all or a portion of a debt to be deductible as a bad_debt under sec_166 the debt inter alia must constitute a debt created or acquired in connection with a trade_or_business or a debt the loss from the worthlessness of which is incurred in the taxpayer’s trade_or_business sec_166 the mere fact that a taxpayer makes a loan for the sole purpose of obtaining interest_income as petitioner argues on brief does not standing alone lead to a finding that the loan is a debt created or acquired in connection with a trade or busi- ness or a debt the loss from the worthlessness of which is incurred in the tax- payer’s trade_or_business moreover in order for a taxpayer to be entitled to a bad_debt deduction under sec_166 in connection with the trade_or_business of lending money the debt must have been sustained in the course of the taxpayer’s activity of making loans that was so extensive and continuous as to elevate that activity to the status of a separate business 61_tc_318 continued or wholly worthless during the year for which petitioner is claiming a bad_debt deduction under sec_166 see infra note where any nonbusiness_debt becomes worthless within the taxable_year the loss resulting therefrom is considered to be a loss from the sale_or_exchange during the taxable_year of a capital_asset held for not more than one year sec_166 petitioner testified and we have found that he made approximately six loans to certain individuals over the approximately years during which he conducted petitioner’s real_property activities in imel we found that the making of eight or nine loans in the course of a 4-year period did not elevate that activity to the status of a separate business id on the record before us we find that petitioner has failed to carry his bur- den of establishing that he was in the business of making loans at the time in that he transferred the gordon funds in question ie dollar_figure to mr gordon on that record we further find that petitioner has failed to carry his burden of establishing that the transfer of the gordon funds in question to mr gordon con- stituted a debt created or acquired in connection with a trade_or_business of petitioner or a debt the loss from the worthlessness of which was incurred in his trade_or_business based upon our examination of the entire record before us we hold that petitioner has failed to carry his burden of establishing that he is entitled for his petitioner also testified but we have not found that his decision to transfer the gordon funds in question to mr gordon was a business decision petition- er’s use of the word business in his testimony does not control the meaning ac- corded to the word business for tax purposes taxable_year to a deduction under sec_166 for the alleged outstanding debt at issuedollar_figure we have considered all of the parties’ respective contentions and arguments that are not discussed herein and we find them to be without merit irrelevant and or moot to reflect the foregoing and the concessions of the parties decision will be entered under rule assuming arguendo that the alleged outstanding debt constitutes a bona_fide debt under sec_166 and that petitioner had established that it is not a non- business debt for purposes of that section we would find on the record before us that he has failed to carry his burden of establishing that the alleged outstanding debt became either wholly or partially worthless in taxable_year the year for which petitioner is claiming the deduction under sec_166 in this connection petitioner has failed to show any identifiable events that could have formed the basis for his having reasonable grounds as of the end of for his abandoning any hope of recovering the alleged outstanding debt see 77_tc_582


o f f i c e o f t h e c h i e f c o u n s e l department of the treasury i n t e r n a l r e v e n u e s e r v i c e w a s h i n g t o n d c date number info release date conex-116251-10 uil ---------------- -------------------------------- --------------------------------- dear --------------- this letter responds to your letter dated date to president barack obama about your eligibility for the long-term homeowner credit sec_36 of the internal_revenue_code provides a refundable_credit for certain individuals who bought a new principal_residence and who owned a principal_residence in the recent past these long-term homeowners generally qualify for the credit if on the purchase date of the new home the individual and if married the individual's spouse has owned and used the same principal_residence for a consecutive five-year period in the eight years preceding purchase of the new home the long-term homeowner credit is available for residences purchased after date your letter indicates that you purchased your new home prior to date accordingly you may not claim the long-term homeowner credit the statute provides no administrative exceptions the internal_revenue_service has no authority to modify the statutory requirements i hope this information is helpful if you have any additional questions please contact -- ---------------------- or ------------------- at -------------------- sincerely william a jackson chief branch office of associate chief_counsel income_tax accounting


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 plr-122159-09 date date legend x --------------------------------------------------- ----------------------------------------------------------------- d1 d2 country ------------------- -------------------- --------- dear ------------ this is in response to a letter dated date submitted on behalf of x requesting an extension of time under sec_301_9100-3 of the procedure and administration regulations to file an election under sec_301_7701-3 to be treated as a disregarded_entity for federal tax purposes facts according to the information submitted x was formed on d1 under the laws of country x intended to be treated as a disregarded_entity for federal tax purposes effective d2 however x inadvertently failed to timely file form_8832 entity classification election to be treated as a disregarded_entity for federal tax purposes effective d2 plr-122159-09 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 an eligible_entity with a single owner can elect to be classified as an association or to be disregarded as an entity separate from its owner sec_301_7701-3 provides guidance on the classification of a foreign eligible_entity for federal tax purposes generally a foreign eligible_entity is treated as an association if all members have limited_liability unless the entity makes an election to be treated otherwise a foreign eligible_entity with a single owner having limited_liability may elect to be treated as a disregarded_entity pursuant to the rules of sec_301_7701-3 sec_301_7701-3 and iii provides that an entity classification election must be filed on form_8832 and can be effective up to days prior to the date the form is filed or up to months after the date the form is filed sec_301_7701-3 provides that an election under sec_301_7701-3 must be signed by - a each member of the electing entity who is an owner at the time the election is filed or b any officer manager or member of the electing entity who is authorized under local law or the entity’s organizational documents to make the election and who represents to having such authorization under penalties of perjury sec_301_7701-3 provides that if a purchasing_corporation makes an election under sec_338 regarding an acquired subsidiary an election under sec_301 c i for the acquired subsidiary can be effective no earlier than the day after the acquisition_date within the meaning of sec_338 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_9100-1 plr-122159-09 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 days from the date of this letter to file a properly executed form_8832 effective d2 with the appropriate service_center to elect to be classified as a disregarded_entity a copy of this letter should be attached to the form_8832 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


department of the treasury int ernal revenue service washington d c date o f f i c e o f c h i e f c o u n s e l number release date cc pa cbs br1 uilc internal_revenue_service national_office field_service_advice memorandum for los angeles associate area_counsel sbse from subject assistant chief_counsel collection bankruptcy summonses cc pa cbs validity of an assessment made during a bankruptcy case where statutory_notice_of_deficiency was previously issued during the same bankruptcy case this chief_counsel_advice responds to your memorandum dated date in accordance with sec_6110 this chief_counsel_advice should not be cited as precedent legend taxpayer year issue sec_1 is the year assessment valid where the statutory_notice_of_deficiency was issued and assessment was made during the taxpayer’s uninterrupted chapter bankruptcy proceeding if the assessment is invalid on what basis should the case be decided conclusion sec_1 the assessment is invalid because the 90-day period during which the taxpayer could file a petition with the tax_court was suspended by the bankruptcy proceeding therefore when the assessment was made the day period had not expired we should enter into a stipulated decision that the year liability is dollar_figure based on the invalidity of the date assessment facts the taxpayer is challenging the accuracy of her year liability in a tax_court petition seeking review of a notice_of_determination issued by the internal_revenue_service service office of appeals pursuant to sec_6330 the relevant facts are as follows the taxpayer filed a chapter bankruptcy case on date while the case was pending the service sent her a statutory_notice_of_deficiency for the year tax_liability on date an act permitted by the express language of u s c sec_362 however the taxpayer was precluded by the automatic_stay u s c sec_362 from filing a petition with the tax_court based on the statutory notice unless she obtained an order from the bankruptcy court lifting the stay the docket sheets from the chapter proceeding do not show that the taxpayer applied to lift the stay to bring a proceeding in the tax_court on date the service assessed the deficiency against the taxpayer the chapter case was dismissed on date thereby lifting the stay no plan_of_reorganization was ever confirmed by the court on date forty-three days after the dismissal an involuntary chapter case was filed against the taxpayer the chapter case was dismissed on date thereby lifting the stay law and analysis the general_rule is that if a taxpayer does not file a petition within days after the notice_of_deficiency is mailed the deficiency may be assessed sec_6213 however because of u s c sec_362’s prohibition on the filing of a tax_court petition sec_6213 suspends the 90-day period for days plus the period the automatic_stay is in effect 110_tc_271 84_tc_645 douglass v commissioner t c memo tax ct memo lexi sec_332 the first days of the 90-day period ran between the dismissal of the chapter case and the filing of the chapter petition the remaining days plus the days added by sec_6213 began to run after the dismissal of the chapter case on date therefore the taxpayer had until date to petition the tax_court in other words the time for filing a tax_court petition had not expired when the deficiency was assessed on date an assessment made prior to the expiration of time to petition the tax_court is invalid 944_f2d_1063 3d cir 205_f2d_461 5th cir 90_f2d_699 7th cir 86_f2d_149 9th cir cf 990_f2d_41 2nd cir but see 158_fsupp_951 30_fsupp_217 because the time for the taxpayer to file a petition had not expired when the year assessment was made we conclude the assessment is invalid case development hazards and other considerations considering the three year statute_of_limitations for assessment under sec_6501 including the suspension of the statute_of_limitations pursuant to sec_6503 during the bankruptcy cases plus days the time to reassess the deficiency under sec_6501 has passed even if the deficiency can be reassessed under some other provision such as sec_6501 the sec_6330 petition should be conceded in the notice_of_determination the appeals officer determined pursuant to sec_6330 that the taxpayer could not challenge her year liability because she had been given an opportunity to challenge the deficiency when she received the statutory_notice_of_deficiency notwithstanding the correctness of the appeals officer’s determination under sec_6330 he should have determined under sec_6330 that the assessment is invalid because the taxpayer’s sole challenge in her petition is to the year assessment and because the assessment is invalid we should enter into a stipulated decision that the year liability is dollar_figure however care should be taken in drafting the decision document so as not to prevent reassessment of the liability in the event some statutory exception to the three-year statute_of_limitations is applicable please call if you have any further questions gary d gray by alan c levine chief branch cc pa cbs br1


t c memo united_states tax_court jason r henderson petitioner v commissioner of internal revenue respondent docket no 19178-02l filed date jason r henderson pro_se lynette mayfield and caroline r krivacka for respondent memorandum findings_of_fact and opinion goeke judge this case arises from respondent’s issuance of a notice_of_determination concerning collection action s under sec_6320 and or for petitioner’s taxable_year the sole issue for decision is whether respondent’s determination to proceed with collection of petitioner’s assessed tax_liability was an abuse_of_discretion because petitioner has not raised any relevant issues relating to the unpaid tax or the proposed levy we hold that it was not an abuse_of_discretion for respondent to determine to proceed with collection findings_of_fact on date petitioner and his wife filed a joint federal_income_tax return for on the return petitioner reported his total income as zero and his total_tax as zero on date respondent issued petitioner a notice_of_deficiency for determining a deficiency of dollar_figure petitioner did not petition this court with respect to the notice_of_deficiency on date respondent assessed the deficiency along with additions to tax and interest on date respondent sent petitioner a final notice-- notice_of_intent_to_levy and notice of your right to a hearing under sec_6330 with respect to petitioner’s income_tax_liability for on date petitioner submitted a form request for a collection_due_process_hearing to the internal_revenue_service office of appeals requesting a hearing under section hearing although petitioner and his wife filed a joint tax_return for her liability is not at issue in this proceeding unless otherwise indicated all section references are to the internal_revenue_code as amended on august and date respondent’s appeals officer sent letters to petitioner attempting to schedule a hearing the letters notified petitioner that the hearing could be held in person by telephone or through written correspondence in letters to the appeals officer dated september and date petitioner requested an in- person hearing but stated that he would not be available until date on date the appeals officer sent petitioner a letter stating that because of scheduling conflicts a determination would be made on the basis of the administrative case file and the information petitioner had previously provided throughout his correspondence with petitioner the appeals officer also invited petitioner to submit additional information petitioner did not submit any additional information on date the appeals officer issued to petitioner a notice_of_determination concerning collection action s under sec_6320 and or sustaining the issuance of the notice_of_intent_to_levy on date petitioner timely filed a petition with this court at the time petitioner filed his petition he resided in north little rock arkansas petitioner currently resides in cabot arkansas petitioner’s year was dismissed for lack of jurisdiction opinion a hearing issue petitioner’s only argument at trial was that he did not receive a proper hearing petitioner was given an opportunity at trial and on brief to raise any issues that he might have raised at a hearing such as spousal defenses collection alternatives and challenges to the appropriateness of the collection action pursuant to sec_6330 petitioner did not raise any of these issues at trial and he failed to file a posttrial brief with the court petitioner presented various arguments in his form and his petition but all of these arguments are based on legal propositions that this court has previously rejected petitioner has not raised any relevant issues and has not shown that he would raise relevant issues at a hearing consequently even if we were to find that petitioner did not receive a hearing the applicable law would not compel us to hold in his favor see 117_tc_183 therefore we find it unnecessary to address the issue of whether petitioner received a hearing instead we will briefly address each of the arguments petitioner raised in his request for a hearing and in his petition b procedural challenges petitioner claims that he may challenge his underlying liability because he did not receive a valid notice_of_deficiency for petitioner admits that he received the notice_of_deficiency issued to him for but contends that it is invalid because it was not signed by the secretary and no delegation_order was provided to him upon request we reject petitioner’s argument the secretary’s authority to issue notices of deficiency was delegated to the service_center directors del ord rev date sec_301_6212-1 sec_301 b proced admin regs see also 118_tc_162 the notice_of_deficiency petitioner received was signed by the memphis service_center director sec_6212 which requires the secretary to issue notices of deficiency does not require that respondent provide petitioner a copy of the delegation_order see nestor v commissioner supra pincite therefore we conclude that petitioner did receive a valid notice_of_deficiency for sec_6330 provides that a taxpayer may challenge the existence or amount of his underlying tax_liability if he did not receive any statutory_notice_of_deficiency for such tax_liability or did not otherwise have an opportunity to dispute such tax_liability because petitioner received a notice_of_deficiency for he may not challenge his underlying tax_liability for that year in a hearing or in this court see id petitioner next argues that the assessment against him was invalid because he did not file a return showing any_tax due this argument is without merit and has been rejected in the past by this court see nestor v commissioner supra pincite the appeals officer provided petitioner with a copy of form_4340 certificate of assessments payments and other specified matters a computer-generated transcript of petitioner’s account absent a showing by the taxpayer of some irregularity in the assessment procedure that would raise a question about the validity of the assessments a form_4340 is presumptive evidence that a tax has been validly assessed 115_tc_35 petitioner has not shown or even alleged any irregularities in respondent’s assessment procedures that would cast doubt on the accuracy of the form_4340 or the validity of the assessment sec_6203 requires the secretary to provide a record of assessment to a taxpayer upon the taxpayer’s request petitioner claims that the form_4340 provided to him was invalid because it was unsigned however a signed form_4340 for petitioner’s account is part of the record before us and was provided to petitioner before trial the delivery of a signed form_4340 before trial is sufficient to satisfy the requirement of sec_6203 that the secretary provide a record of assessment to the taxpayer upon request nestor v commissioner supra pincite therefore respondent has fulfilled the requirements of sec_6203 petitioner next argues that the appeals officer was required by sec_6330 to provide him with verification from the secretary that the requirements of any applicable law or administrative procedures were met sec_6330 requires the appeals officer to obtain such verification but it does not require the appeals officer to provide the verification to the taxpayer nestor v commissioner supra pincite sec_301_6330-1 proced admin regs as stated above the appeals officer did review form_4340 for petitioner’s account this was sufficient to fulfill the requirement of sec_6330 nestor v commissioner supra pincite petitioner next contends that he did not receive a notice_and_demand for payment for as required by sec_6303 however the form_4340 reviewed by the appeals officer showed that a notice of balance due was sent to petitioner on date and that a notice_of_intent_to_levy was sent to petitioner on date each of these notices fulfills the notice_and_demand for payment requirement of sec_6303 standifird v commissioner tcmemo_2002_245 affd 72_fedappx_729 9th cir see also tornichio v commissioner tcmemo_2002_291 c sec_6673 penalty at trial respondent orally moved that the court impose a penalty under sec_6673 sec_6673 authorizes this court to impose a penalty on a taxpayer who has instituted or maintained a proceeding primarily for delay or whose position is frivolous or groundless we gave petitioner an opportunity to raise legitimate arguments and to abandon his specious legal position but he chose not to pursue this opportunity since petitioner failed to raise any meaningful arguments we conclude that he instituted and maintained this proceeding primarily for delay we shall impose a penalty of dollar_figure d conclusion petitioner was given an opportunity to raise relevant issues at trial and on brief he did not raise any relevant issues at trial and did not file a posttrial brief with the court because petitioner has not shown that he would have raised any relevant issues at a hearing we conclude that it is unnecessary to decide whether he received a hearing accordingly we hold that respondent’s determination to proceed with collection was not an abuse_of_discretion an order and decision will be entered for respondent


fj irs department of the treasury internal_revenue_service p o box cincinnati oh number release date date date employer id number contact person number contact telephone number form you must file tax years uil dear this letter is our final_determination that you don't qualify for tax-exempt status under sec_501 ofthe internal_revenue_code the code recently we sent you a proposed adverse determination in response to your application the proposed adverse determination explained the facts law and basis for our conclusion and it gave you days to file a protest because we didn't receive a protest within the required days the proposed determination is now final you must file federal_income_tax returns for the tax years listed at the top of this letter using the required form also listed at the top of this letter within days of this letter unless you request an extension of time to file we'll make this final adverse determination_letter and the proposed adverse determination_letter available for public inspection as required under sec_6110 of the code after deleting certain identifying information please read the enclosed notice notice of intention to disclose and review the two attached letters that show our proposed deletions if you disagree with our proposed deletions follow the instructions in the notice on how to notify us if you agree with our deletions you don't need to take any further action if you have questions about this letter you can contact the person listed at the top ofthis letter if you have questions about your federal_income_tax status and responsibilities call our customer service number pincite-829-1040 tty for deaf or hard of hearing or customer service for businesses pincite-829-4933 letter4040 rev catalog number 47635z sincerely director exempt_organizations enclosures notice redacted letter proposed adverse determination under sec_501 a other than c redacted letter final adverse determination under sec_501 a other than c - no protest letter4040 rev catalog number 47635z irs department of the treasury internal_revenue_service p o box cincinnati oh legend b product name d franchise name q date s geographic name t dollars dollar amount dear date date employer id number contact person number contact telephone number contact fax number uil we considered your application_for recognition of exemption from federal_income_tax under sec_501 a of the internal_revenue_code the code based on the information provided we determined that you don't qualify for exemption under sec_501 of the code this letter explains the basis for our conclusion please keep it for your records issues do you qualify for exemption under sec_501 of the code no for the reasons explained below facts you were formed on q as an unincorporated association the date your members adopted your bylaws your objectives in your bylaws are to help member stores increase sales and be more successful through the following cooperation joint activities and leveraging in o b brand awareness o promotions o marketing sales letter rev catalog number 47628k o charity sponsorships o best practices o market knowledge cost reductions o material_costs o advertising your membership is open to all b store owners in the s areas who are in good standing with d a corporation of franchisee owners membership is specific to store ownership and when a store owner changes the membership will change to the new owner only member stores will be listed on advertisements websites or other promotional materials membership dues are t dollars monthly the member-elected officers and committee chairs make up the board_of directors the board_of directors has authority to transact all operational business and reports to the general membership at regular meetings the general membership however approves all non-operational matters you spend percent of your time reporting business trends and implementing strategies that grow members' businesses and increase their revenues you conduct monthly member meetings where you identify and exchange ways to produce market and sell the products and services you spend forty percent of your time on planning and conducting workshops that provide best practices on members businesses operations marketing and sales aspects of members' businesses including exchanging information on joint business partners and resources available to members in these workshops and exchanges you compare current practices and identify processes and business efficiencies to improve performance and profits that can be used by all the membership you spend percent of your time on these workshops and exchanges you spend the final of your time addressing and discussing hiring personnel and compensation issues within your members' businesses all of your revenue comes from membership dues you identify all of your expenses as marketing expenses finally upon dissolution of the association the remaining assets and funds will be distributed equally among the current members in good standing that have been in the group at least twelve months law sec_501 c of the internal_revenue_code_of_1986 provides exemption from federal_income_tax for business_leagues not organized for profit and no part of the net_earnings of which inures to the benefit of any private_shareholder_or_individual sec_1_501_c_6_-1 ofthe income_tax regulations states that a business league is an association of persons having some common business interests the purpose of which is to promote such common interest and not to engage in a regular business of a kind ordinarily carried on for profit the regulations further state that the activities of a business league should be directed to the improvement of business conditions of one or more lines of business as distinguished from the performance of particular services for individual members letter rev catalog number 47628k for exemption purposes a line_of_business is a trade or occupation entry into which is not restricted by a patent trademark or similar device which would allow private parties to restrict the right to engage in the business a segment of a line ofbusiness is not considered a line ofbusiness under sec_501 for the code revrul_55_444 1955_2_cb_258 states that an organization formed to promote the business of a particular industry that carries out its purposes primarily by conducting a general advertising campaign to encourage the use of products and services of the industry as a whole is exempt from tax notwithstanding that such advertising to a minor extent constitutes the performance of particular services for its members revrul_58_294 1958_1_cb_244 holds that an association of licensed dealers in a certain type of patented product did not qualify as a business league the association in this ruling owned the controlling_interest in the corporation that held the basic patent of the product it engaged mainly in furthering the business interests of its member dealers and it did not benefit businesses that manufactured competing product of the same type covered by the patent revrul_67_77 1967_1_cb_138 also ruled that an association of dealers selling a particular make of automobile that engaged in financing general advertising campaigns to promote the sale of that particular make was not exempt because it was performing particular services for its members rather than promoting a line_of_business ie the automotive industry as a whole in this ruling membership in the organization was restricted to dealers who held franchises for the sale of the automobiles designated in the area in revrul_68_182 1968_1_cb_263 the service's position was stated that organizations promoting a single brand or product within a line_of_business do not qualify for exemption under sec_50l c of the code in 440_us_472 ct_d 1979_1_cb_198 the court held that an organization of muffler dealers franchised by midas international corporation did not qualify for exemption from federal_income_tax as a business league under sec_501 of the code the organization's purpose was too narrow to satisfy the line_of_business test of sec_1 c -1 of the regulations application of law you are not described in sec_501 ofthe code because you are not organized and operated as a business league you are not described in sec_1 50l c -l ofthe income_tax regulations because your activities are directed to perform services for the benefit of a particular franchise business rather than to the improvement of business conditions of one or more lines of business you are not similar to the organization described in revrul_55_444 because your advertising and promotion campaign is specific to the one patented product and service sold by your members rather than to encourage the use of products and services of the industry as a whole you are similar to the organizations described in revenue rulings and because your activities further the business interests of your member franchisees of a single brand or product you perform particular letter rev catalog number 47628k services for your members that are meant to increase their individual sales and revenues rather than benefit the industry as a whole or improve the business conditions of the entire industry you are like the organizations described in revenue rulings and because your activities are exclusively directed for specific franchisees you were established for member franchisees to increase sales and be more successful through joint activities and leveraging in b brand awareness promotions and marketing and sales because you are only improving business conditions in a segment of line of a business you are precluded from exemption under sec_501 you are similar to the organization described in national muffler dealers association because your activities serve members who are specific franchise owners you provide particular services toward particular franchisees which does not represent one or more line of businesses therefore you are precluded from exemption under sec_501 applicant's position you declined to provide your position during the initial application processing conclusion you do not meet sec_501 because your benefits are directed toward a segment ofline of a business because your members are limited to franchise owners of a particular brand your activities are not directed to the improvement of business conditions of one or more lines of business rather they are providing particular services for your individual members accordingly we conclude that you are not exempt under sec_501 ofthe code lfyou don't agree you have a right to file a protest ifyou don't agree with our proposed adverse determination to do so you must send a statement to us within days of the date of this letter the statement must include your name address employer_identification_number ein and a daytime phone number a copy of this letter highlighting the findings you disagree with an explanation of why you disagree including any supporting documents the law or authority if any you are relying on the signature of an officer director trustee or other official who is authorized to sign for the organization or your authorized representative one of the following declarations for an officer director trustee or other official who is authorized to sign for the organization letter rev catalog number 47628k under penalties of perjury i declare that i examined this protest statement including accompanying documents and to the best of my knowledge and belief the statement contains all relevant facts and such facts are true correct and complete for authorized representatives under penalties of perjury i declare that i prepared this protest statement including accompanying documents and to the best of my knowledge and belief the statement contains all relevant facts and such facts are true correct and complete your representative attorney certified_public_accountant or other individual enrolled to practice_before_the_irs must file a form_2848 power_of_attorney and declaration of representative with us ifhe or she hasn't already done so you can find more information about representation in publication practice_before_the_irs and power_of_attorney we'll review your protest statement and decide if you provided a basis for us to reconsider our determination if so we'll continue to process your case considering the information you provided if you haven't provided a basis for reconsideration we'll forward your case to the office of appeals and notify you you can find more information about the role ofthe appeals_office in publication how to appeal an irs decision on tax exempt status where to send your protest please send your protest statement form_2848 if needed and any supporting documents to the applicable address u s mail street address for delivery service internal_revenue_service eo determinations quality assurance room p o box cincinnati oh internal_revenue_service eo determinations quality assurance main street room cincinnati oh you can also fax your statement and supporting documents to the fax number listed at the top of this letter if you fax your statement please contact the person listed at the top of this letter to confirm that he or she received it ifyou agree if you agree with our proposed adverse determination you don't need to do anything if we don't hear from you within days we'll issue a final adverse determination_letter that letter will provide information on your income_tax filing_requirements letter rev catalog number 47628k you can find all forms and publications mentioned in this letter on our website at www irs gov formspubs if you have questions you can contact the person listed at the top of this letter sincerely director exempt_organizations enclosure publication letter rev -2014 catalog number 47628k


internal_revenue_service department of the treasury number release date index number washington dc person to contact telephone number refer reply to cc psi 3-plr-123989-02 date date company trust a_trust b a b c date year year legend plr-123989-02 this letter responds to a letter dated date submitted on behalf of company requesting inadvertent termination relief under sec_1362 of the internal_revenue_code facts company elected to be an s_corporation effective date year on date year trust a and trust b became shareholders of company it is represented that both trust a and trust b satisfy the requirements of a qualified_subchapter_s_trust qsst under sec_1361 and that they timely filed qsst elections a is the income_beneficiary of trust a and b is the income_beneficiary of trust b under each trust's governing instrument the trustees are not required to distribute annually all of the trust's income within the meaning of sec_643 to each trust's current income_beneficiary when preparing company’s year tax returns company’s new accountants discovered that the trustees had not distributed trust a’s or trust b’s income to a and b respectively for the taxable_year ending year the trustees were unaware that the failure to distribute all the income of a qsst would result in a termination of company's s election upon discovery of the requirement the trustees immediately took corrective action by making the required distributions for year and reporting the distributions on the relevant parties’ year tax returns company and its shareholders trust a_trust b and c represent that they have filed their returns for year consistent with the treatment of company as an s_corporation it is further represented that a and b’s individual income_tax returns for year properly included all of their share of the s_corporation income that they should have received from trust a and trust b respectively company and its shareholders agree to make any adjustments consistent with the treatment of company as an s_corporation as may be required by the secretary company requests that inadvertent termination relief be granted under sec_1362 law and analysis sec_1361 defines an s_corporation as a small_business_corporation for which an election under sec_1362 is in effect for the taxable_year sec_1361 provides that an s_corporation cannot 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 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 for purposes of plr-123989-02 b b sec_1361 provides that a qsst whose beneficiary makes an election under sec_1361 will be treated as a_trust described in sec_1361 sec_1361 defines a qsst as a_trust a the terms of which require that i during the life of the current income_beneficiary there shall be only one income_beneficiary of the trust ii any corpus distributed during the life of the current income_beneficiary may be distributed only to such beneficiary iii the income_interest of the current beneficiary in the trust shall terminate on the earlier of the beneficiary's death or the termination of the trust and iv upon the termination of the trust during the life of the current income_beneficiary the trust shall distribute all of its assets to that beneficiary and b all of the income within the meaning of sec_643 of which is distributed or required to be distributed currently to one individual who is a citizen or resident_of_the_united_states sec_1361 provides that if any qsst ceases to meet any requirement of sec_1361 but continues to meet the requirements of sec_1361 the provisions of sec_1361 shall not apply to the trust as of the first day of the first taxable_year beginning after the first taxable_year for which the trust failed to meet the requirements of sec_1361 sec_1362 provides that except as provided in sec_1362 a small_business_corporation may elect to be an s_corporation sec_1362 provides that an election under sec_1362 shall be terminated whenever at any time on or after the first day of the first taxable_year for which a corporation is an s_corporation such corporation ceases to be a small_business_corporation sec_1362 provides that if an election under sec_1362 by any corporation was terminated under paragraph or of sec_1362 the secretary determines that the circumstances resulting in such termination were inadvertent no later than a reasonable period of time after discovery of the circumstances resulting in such termination steps were taken so that the corporation is a small_business_corporation and the corporation and each person who was a shareholder of the corporation at any time during the period specified pursuant to sec_1362 agrees to make such adjustments consistent with the treatment of the corporation as an s_corporation as may be required by the secretary with respect to such period then notwithstanding the circumstances resulting in such termination the corporation shall be treated as an s_corporation during the period specified by the secretary conclusion based on the facts submitted and the representations made we conclude that company's s_corporation_election terminated on date year because the trustees of trust a and trust b failed to distribute all of the trusts’ income for the taxable_year ending year we also conclude that the termination was inadvertent under sec_1362 plr-123989-02 therefore under sec_1362 company will be treated as continuing to be an s_corporation from date year and thereafter provided that company's s_corporation_election is valid and is not otherwise terminated under sec_1362 if company trust a_trust b or c fail to treat company as described above this ruling will be null and void moreover this ruling is contingent on company and all of its shareholders treating company as having been an s_corporation for the period date year and thereafter and on company and its shareholders making any adjustments necessary for the consistent treatment of company as an s_corporation except for the specific ruling above we express or imply no opinion concerning the federal tax consequences of the facts of this case under any other provision of the code specifically we express or imply no opinion regarding whether company is otherwise qualified to be an s_corporation or whether trust a or trust b is a valid qsst in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to company’s authorized representative this ruling is directed only to the taxpayer requesting it sec_6110 provides that it may not be used or cited as precedent enclosures copy of this letter copy for sec_6110 purposes sincerely s christine ellison chief branch office of the associate chief_counsel passthroughs and special industries


internal_revenue_service department of the treasury number release date index number legend washington dc person to contact telephone number refer reply to cc psi 2-plr-122907-01 date date x a state d1 d2 d3 d4 dear this responds to the letter dated date submitted on behalf of x requesting a ruling under sec_1362 of the internal_revenue_code the represented facts are as follows x was incorporated under state law and filed an election to be treated as an s_corporation under sec_1362 for its first taxable_year beginning d1 on d2 x issued shares of x stock to a a state limited_liability partnership in d3 x’s accountant discovered that x had issued stock to a an ineligible shareholder and that x’s s_corporation_election had terminated on d2 on d4 x and a executed an agreement rescinding the issuance of x stock to a x and its shareholders have agreed to make any adjustments that the commissioner may require consistent with treatment of x as an s_corporation x represents that it did not intend to terminate its s election and that the issuance of stock to a was not motivated by tax_avoidance sec_1361 provides that the term s_corporation means with respect to plr-122907-01 any taxable_year a small_business_corporation for which an election under sec_1362 is in effect for such year sec_1361 defines a small_business_corporation as a domestic_corporation which is not an ineligible_corporation and which does not a have more than shareholders b 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 c have a nonresident_alien as a shareholder and d have more than one class of stock sec_1362 provides that an election under sec_1362 shall be terminated whenever at any time on or after the 1st day of the 1st taxable_year for which the corporation is an s_corporation such corporation ceases to be a small_business_corporation sec_1362 provides that any termination under sec_1362 shall be effective on and after the date of cessation sec_1362 provides in relevant part that if an election under sec_1362 by any corporation was terminated under sec_1362 the secretary determines that the circumstances resulting in such termination were inadvertent no later than a reasonable period of time after discovery of the circumstances resulting in such termination steps were taken so that the corporation is a small_business_corporation and the corporation and each person who was a shareholder in the corporation at any time during the period specified pursuant to sec_1362 agrees to make such adjustments consistent with the treatment of the corporation as an s_corporation as may be required by the secretary with respect to such period then notwithstanding the circumstances resulting in such termination such corporation shall be treated as an s_corporation during the period specified by the secretary based solely on the information submitted and the representations made we conclude that the termination of x’s subchapter_s_election as described above was inadvertent within the meaning of sec_1362 therefore x will be treated as continuing to be an s_corporation from d2 through d4 and thereafter provided that x’s s election was valid and has not otherwise terminated under sec_1362 a will be treated as a shareholder of x for the period from d2 through d4 accordingly a and x’s other shareholders in determining their federal tax_liability for that period must include their pro_rata share of the separately and nonseparately computed items of x as provided in sec_1366 make any adjustments to stock basis as provided in sec_1367 and take into account any distributions made by x to shareholders as provided sec_1368 this ruling shall be null and void if the requirements of this paragraph are not met except as specifically set forth above we express no opinion concerning the federal tax consequences of the above-described facts under any other provision of the code specifically no opinion is expressed on whether x is otherwise eligible to be treated as an s_corporation plr-122907-01 this ruling is directed only to the taxpayer who requested it sec_6110 provides that it may not be used or cited as precedent pursuant to a power_of_attorney on file with this office a copy of this letter is being forwarded to x’s authorized representative sincerely yours shannon cohen assistant to the branch chief branch office of the associate chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes


t c memo united_states tax_court alex malesa petitioner v commissioner of internal revenue respondent docket no filed date alex malesa pro_se j anthony hoefer for respondent memorandum opinion dawson judge this case was assigned to special_trial_judge john f dean pursuant to sec_7443a and rule sec_180 sec_181 and sec_183 the court agrees with and adopts the opinion of the special_trial_judge which is set forth below 1unless otherwise indicated section references are to the internal_revenue_code in effect for the year at issue all rule references are to the tax_court rules_of_practice and procedure opinion of the special_trial_judge dean special_trial_judge for the taxable_year respondent determined a deficiency in petitioner's federal_income_tax in the amount of dollar_figure which included additional tax under sec_72 in the amount of dollar_figure and additions to tax under sec_6651 in the amount of dollar_figure and under sec_6654 in the amount of dollar_figure the parties have resolved all issues resulting from adjustments in the notice_of_deficiency except for the following whether three payments received by petitioner in are taxable to petitioner in the amounts determined by respondent whether petitioner is liable for additional tax on early retirement distributions under sec_72 and whether petitioner is liable for additions to tax under sec_6651 and sec_6654 some of the facts have been stipulated and are so found the stipulation of facts and the attached exhibits are incorporated herein by this reference petitioner resided in omaha nebraska at the time he filed his petition background petitioner did not timely file a federal_income_tax return respondent issued a notice_of_deficiency to petitioner on date respondent had received information returns from several payors indicating that payments had been made to petitioner during respondent used these information returns to determine a deficiency and additions to tax using a married_filing_separately status for petitioner petitioner filed a joint federal_income_tax return with his wife on date on that return petitioner included all of the payments that respondent had determined were taxable in the notice_of_deficiency except for the following payor national home life assurance jackson national life ins co jackson national life ins co reported on form 1099-r 1099-r 1099-int amount dollar_figure big_number the total_distribution by national home life assurance national was dollar_figure but respondent contends that only dollar_figure was taxable based on information reported to respondent by national the dollar_figure payment that petitioner received from jackson national life_insurance_company jackson was his one- third share of the accumulation value dollar_figure of an annuity that had been purchased by petitioner's mother who died in at age upon his mother's death petitioner became entitled to this payment as a beneficiary under the annuity_contract jackson reported the dollar_figure as the gross distribution to petitioner and did not report what portion of the distribution was taxable petitioner's mother acquired the jackson annuity in a sec_1035 exchange for an annuity that she had acquired through united of omaha this exchange took place on date respondent contends that the dollar_figure payment from jackson is taxable to petitioner as interest_income discussion respondent's determinations are presumed correct and petitioner bears the burden of proving otherwise rule a 290_us_111 annuity_payment sec_61 defines gross_income as all income from whatever source derived annuities are specifically included in gross_income sec_61 the burden is on petitioner to demonstrate that the payment in question falls into a specific statutory exclusion 348_us_426 in general sec_72 deals with the income_tax treatment of annuities sec_1_72-1 income_tax regs provides that sec_72 prescribes rules regarding the inclusion in gross_income of amounts received under a life_insurance endowment or annuity_contract except where such amounts are specifically excluded from gross_income under other provisions of chapter of the code these rules provide that in general the amounts subject_to the provisions of sec_72 are includable in the gross_income of the recipient except to the extent that they are considered to represent a reduction or return of premiums or other consideration paid sec_1_72-1 income_tax regs any amount received whether in a single sum or otherwise in full discharge of the obligation under the annuity_contract which payment is in the nature of a refund_of_the_consideration_paid for the contract is taxable only to the extent it exceeds the investment_in_the_contract determined under sec_72 sec_72 e an amount is considered to be in the nature of a refund where it is payable to a beneficiary after the death of the annuitant under a contract for a life_annuity with a minimum number of payments certain or a minimum amount which must be paid in any case sec_1_72-11 income_tax regs the annuity_payment that petitioner received upon his mother's death is thus in the nature of a refund_of_the_consideration_paid for the contract and is taxable to the extent it exceeds the investment_in_the_contract the investment_in_the_contract is the aggregate amount of premiums or other consideration paid for the contract less any amounts previously received under the contract which were excludable from gross_income sec_72 petitioner has offered no evidence regarding the investment_in_the_contract he has therefore failed to carry his burden to show that any portion of the payment he received should be excluded from his gross_income commissioner v glenshaw glass co supra pincite accordingly we sustain respondent's determination that the full dollar_figure payment is includable in petitioner's gross_income interest_income and retirement distribution petitioner admits receiving a dollar_figure payment from jackson and a dollar_figure payment from national of which respondent contends dollar_figure was taxable petitioner offered no evidence demonstrating that any portion of these payments should be excluded from his gross_income and has therefore failed to carry his burden_of_proof id respondent is sustained on these items sec_72 additional tax respondent determined that petitioner is liable for additional tax in the amount of dollar_figure under sec_72 on a premature_distribution of dollar_figure from a qualified_retirement_plan sec_72 imposes an additional tax on any amount received from a qualified_retirement_plan equal to percent of the portion of such amount which is includable in gross_income sec_72 exempts certain distributions from the additional tax petitioner does not deny receiving a dollar_figure distribution from a qualified_retirement_plan nor does he claim to come within one of the exceptions respondent is sustained on this issue sec_6651 failure_to_file timely sec_6651 provides for an addition_to_tax of percent of the tax required to be shown on the return for each month or fraction thereof for which there is a failure_to_file not to exceed percent the addition_to_tax for failure_to_file a return timely will be imposed if a return is not timely filed unless the taxpayer shows that the delay was due to reasonable_cause and not willful neglect sec_6651 petitioner's federal_income_tax return was due on date sec_6072 petitioner filed his federal_income_tax return on date petitioner has not offered any evidence to show that the delay was due to reasonable_cause we therefore sustain respondent's determination that petitioner is liable for the 25-percent addition_to_tax under sec_6651 for sec_6654 failure to pay estimated_tax where payments of tax either through withholding or by making estimated quarterly tax_payments during the course of the year do not equal the amount required under the statute imposition of the addition_to_tax under sec_6654 is automatic unless the taxpayer shows that one of the statutory exceptions applies 99_tc_202 75_tc_1 petitioner bears the burden to show qualification for such an exception 78_tc_304 petitioner has not sustained his burden therefore we hold that he is liable for the addition_to_tax under sec_6654 for the taxable_year to reflect the foregoing decision will be entered under rule