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 foundation c llc d grant program e religion f dollar amount g dollar amount h dollar amount j dollar amount k dollar amount m dollar amount dear you asked for advance approval of your educational grant procedures under internal_revenue_code sec_4945 this approval is required because you are a private_foundation that is exempt from federal_income_tax our determination we approved your procedures for awarding educational grants based on the information you submitted and assuming you will conduct your program as proposed we determined that your procedures for awarding educational grants meet the requirements of code sec_4945 as a result expenditures you make under these procedures won't be taxable description of your request b a foundation and the sole member of c operates an educational grant program called d the purpose of dis to deepen and enrich the e educational learning opportunities of students and where relevant or desired their families by offering grants to organizations for use in such programs while b will primarily fund d b may request that other donors enter into their original grant agreement with the recipient in providing additional funding you plan on operating in connection with b to become an additional donor party to the grant agreement in doing so you will provide grants to the original recipient and funds would be administered and monitored under the procedures established by b described below the duration and amounts of the grants awarded to educational organizations will vary but most are expected to be in the form of three year grants in amounts ranging between f and g dollars per annum you will fund each grantee's program in the first year thereafter grantee organizations are expected to obtain increasing amounts of donor commitments to cover the costs of their programs you expect to mail informational materials to individual educators who are working at organizations that provide e educational programming to students in grades kindergarten through twelfth grade and college the educators who have received or will receive the solicitation materials and application package have been or will be pre-selected by nominators engaged by you to identify and recruit potential applicant organizations with outstanding educators at their organizations since you do not have educational staff with e educational experience you developed relationships with individual consultants who have experience with formal and informal programming to help identify an appropriate applicant pool and to ensure high quality among the applicant pool you have engaged individuals to serve as nominators in connection with d you requested that the nominators identify a group of outstanding innovative educators working with educational organizations who you could invite to apply for funding nominators were asked to identify individuals with a reputation for implementing high quality programming and a proven track record for achieving educational results additionally you requested that nominators identify educators who the nominators believe can propose new programs that could be implemented by the educational organizations where such educators are employed that would deepen and enrich the knowledge and identity of the students of such organizations and educators and if relevant the families of these students while the objective is to have innovative educators design d programs you will also consider the nature of the organization where the educator is employed as the organization will be responsible for supporting sustaining and implementing the educational programming if the organization is awarded ad grant the class of eligible grantees is limited to educational organizations at which educators identified by the nominators are employed although the invitations are intended to be non-transferable and personal to the identified educators you are committed to building educational programming at the grantee organization under the supervision of either the nominated educator or another qualified educator at the organization that is selected by the grantee organization in making their initial nominations the nominators will take into account the experience of the organization in implementing high quality educational programming letter catalog number 58222y you will review the submitted applications based upon a number of criteria including experience and track record of the applicant organization in executing effective e educational programming the clarity of the plan and budget readiness of the organization to implement the proposed project and goals of the proposal and the probability of the organization achieving the stated goals of the proposal you expect to commit funds to din its first year sufficient to enable between ten to twenty grantee organizations to begin developing programs with the nominated educators thereafter the extent to which you will commit to funding programs and new grantees will be determined after an assessment regarding the success of the first grantees' programs and available_resources each grantee may request a different amount for each of the three years as it builds its program in the first year grantees may request between f and g dollars in the second year grantees may request between f and h dollars in the third year grantees may request between f and j dollars in years two and three the grantee organization is expected to also raise program funds from other sources during the third year of the grant you will evaluate the impact of the program and effectiveness of grantee organizations for achieving proposal objectives based upon implementation feedback such as increases in the program participants or quantity of time participants spend engaged in programming supported by d or increased depth or measure of learning as determined by valid educational measures you will invite a number of grantees to apply for an additional two years of grant funding if awarded an extension grant each grantee organization would be eligible to receive a maximum of k dollars in year four and m dollars in year five as with the standard three year grants such extension grant will be made with the expectation that the grantees secure increasing amounts of donor commitments to offset program_costs you will fund each grant in installments with an initial payment up front to fund the first eight months of programming in year one thereafter each grantee organization would submit a report to you every six months upon receipt of a report which evidences the satisfactory continued implementation of the program supervised by an adequately qualified educator whether the initial nominated educator or a replacement selected by the educational_organization you will fund the subsequent payments in years one two and three and if extended years four and five if the nominated educator leaves the educational_organization after you enter into the grant agreement the educational_organization would be responsible for selecting an adequately qualified educator to continue implementing the program grantees will submit written reports to you every six months reports will include a narrative description of the implementation of the educational programming and will be accompanied by a financial report on the use of granted funds compared against the budget a program coordinator or other c representative will regularly communicate with each recipient organization to receive feedback on the funded program and how the grant monies are being spent in connection to such programming letter catalog number 58222y each grant recipient must keep and maintain such financial records and in such a manner so as to adequately reflect and account for_the_use_of the organization grant funds and to furnish originals or authentic copies to the program coordinator upon request c in its sole discretion may take any and all such reasonable and appropriate steps including possibly legal action to compel compliance of use of funds for their intended purpose including requiring the return of all or any portion of funds remitted and the withholding of funds not previously remitted the awarding of d is a multi-faceted process which begins with the initial identification of educational organizations at which nominated educators are then employed nominated educators are then sent informational materials and grant applications which they are encouraged to complete with the appropriate stakeholders at their respective educational organizations applications must be submitted by educational organizations completed applications submitted by those educational organizations are then received by you and evaluated by your selection committee each completed application will be reviewed by one or more members of your staff and a nominator other than the nominator who originally nominated the educator who was the architect for the related proposal each member will rate the application in connection with following parameters the internal logic educational strength and process of implementing the educational proposal described in the application the evidence and probability that the proposed educational programming will significantly deepen and enrich the educational growth of the program participants the track record of the organization in implementing educational programming and in successfully implementing new educational programming the readiness of the organization and commitment of the organization to expand and offer the new programming the level of involvement and supervision which the selected educator will assume in guiding the project the selection committee will also be responsible for identifying any relationships between potential grant applicants and disqualified persons and ensure that organizations with any such relationship s are not awarded grants your selection committee consists of one or more members of your staff and a nominator other than the nominator who originally nominated the educator who was the architect for the related proposal if any member of the senior staff or management of a potential grant recipient is either related to whether by blood or through marriage or has any direct or indirect affiliation with the d program coordinator or any director officer_or_employee of you or c they will be ineligible to participate in the program letter catalog number 58222y no director officer_or_employee of you or c or any other person who is involved in the process of selecting applicants for the program will be in a position to derive a private benefit directly or indirectly if certain potential grantees are selected over others basis for our determination the law imposes certain excise_taxes on the taxable_expenditures of private_foundations code sec_4945 a taxable_expenditure is any amount a private_foundation pays as a grant to an individual for travel study or other similar purposes however a grant that meets all of the following requirements of code sec_4945 is not a taxable_expenditure the foundation awards the grant on an objective and nondiscriminatory basis the irs approves in advance the procedure for awarding the grant the grant is - a scholarship or fellowship subject_to sec_117 and is to be used for study at an educational_organization described in sec_170 or - a prize or award subject_to the provisions of sec_74 if the recipient of the prize or award is selected from the general_public or - to achieve a specific objective produce a report or similar product or improve or enhance a literary artistic musical scientific teaching or other similar skill or talent of the recipient to receive approval of its educational grant procedures sec_53_4945-4 requires that a private_foundation show the grant procedure includes an objective and nondiscriminatory selection process the grant procedure results in the recipients performing the activities the grants were intended to finance the foundation plans to obtain reports to determine whether the recipients have performed the activities that the grants were intended to finance other conditions that apply to this determination this determination covers only the grant program described above this approval will apply to succeeding grant programs only if their standards and procedures don't differ significantly from those described in your original request this determination applies only to you it may not be cited as precedent you cannot rely on the conclusions in this letter if the facts you provided have changed substantially you must report any significant changes in your program to the cincinnati office of exempt_organizations at letter catalog number 58222y internal_revenue_service exempt_organizations determinations p o box cincinnati oh you cannot make grants to your creators officers directors trustees foundation managers or members of selection committees or their relatives all funds distributed to individuals must be made on a charitable basis and must further the purposes of your organization you cannot award grants for a purpose that is inconsistent with code sec_170 b you should keep adequate_records and case histories so that you can substantiate your grant distributions with the irs if necessary we've sent a copy of this letter to your representative as indicated in your power_of_attorney please keep a copy of this letter in your records if you have any questions please contact the person listed at the top of this letter sincerely director exempt_organizations letter catalog number 58222y


t c memo united_states tax_court deborah a cole petitioner v commissioner of internal revenue respondent docket no filed date keith h cole jr for petitioner stephanie r jensen for respondent memorandum opinion foley judge this matter is before the court on petitioner’s motion for award of reasonable administrative and litigation costs and fees under sec_7430 and rule unless otherwise indicated all section references are to the internal_revenue_code as in effect for the period relevant here and all rule references are to the tax_court rules_of_practice and procedure background petitioner resided in irving texas at the time the petition in this case was filed on or about date petitioner filed her federal_income_tax return the return reported two items of income dollar_figure of wages and dollar_figure of other income with a handwritten note misc income for petitioner's tax_year respondent received two forms a form 1099-misc from dr mark imhoff an individual for whom petitioner had rendered services indicated that petitioner had been paid dollar_figure the form 1099-misc reported the income as nonemployee compensation in addition a form 1099-int indicated that petitioner had been paid dollar_figure of interest_income on date respondent mailed a 30-day_letter to petitioner the letter indicated that respondent proposed to increase petitioner’s taxable_income by dollar_figure dollar_figure interest plus dollar_figure nonemployee income less a dollar_figure self-employment_tax deduction the proposed increase produced an additional tax_liability of dollar_figure and accrued interest of dollar_figure the letter stated that if petitioner did not respond within days respondent would issue a notice_of_deficiency the letter further stated that if petitioner did not agree with respondent's proposed changes petitioner should submit a signed letter of explanation and supporting documentation on date petitioner informed respondent that she disagreed with respondent's proposed changes on date petitioner mailed respondent a letter further delineating her position in the letter petitioner conceded that her return should have included the interest_income but disputed that her return omitted dollar_figure of other income petitioner asserted that for the tax_year she did not receive a form 1099-misc from dr imhoff estimated her income from dr imhoff and reported it as dollar_figure of miscellaneous income on her return was an employee not an independent_contractor of dr imhoff and thus received employee wages rather than self-employment_income and did not owe any additional federal_insurance_contributions_act fica tax on date respondent replied to petitioner's letter but did not address petitioner's contentions as set forth in the date letter on date petitioner again wrote to respondent and requested that respondent address the positions taken by petitioner in her letter on date respondent requested information from dr imhoff dr imhoff responded on date by asserting as he did on the form 1099-misc filed with the internal_revenue_service irs that the dollar_figure constituted nonemployee income on date respondent mailed petitioner a statutory_notice_of_deficiency determining an increase of dollar_figure in petitioner's tax_liability on date petitioner filed her petition with this court and on date respondent filed her answer from january through early june of respondent's appeals_office and petitioner conducted settlement discussions on date petitioner mailed respondent's appeals_office a letter with attached copies of billing records showing that petitioner had received dollar_figure from dr imhoff the letter noted that the dollar_figure amount was only dollar_figure higher than the amount reported as miscellaneous income on the return petitioner proposed that respondent concede the dollar_figure understatement also around this time respondent obtained from dr imhoff copies of checks paid to petitioner and ledgers maintained by dr imhoff's office after june but prior to date respondent concluded that the form 1099-misc prepared by dr imhoff which reported that petitioner had been paid dollar_figure overstated amounts paid_by dollar_figure the correct amount of wages from dr imhoff was dollar_figure petitioner had understated income by dollar_figure dollar_figure-dollar_figure of miscellaneous income reported on petitioner's return the dollar_figure understatement resulted from petitioner's failure to report checks from dr imhoff of dollar_figure dollar_figure and dollar_figure and petitioner qualified as an employee and would not be liable for self-employment_tax but would be liable for additional fica tax respondent did not immediately communicate these conclusions to petitioner on date respondent mailed petitioner a letter encouraging petitioner to settle at the appeals level and to provide documentation supporting her position on date respondent mailed petitioner a letter offering a settlement and enclosed a proposed stipulation of facts for petitioner's signature or comment respondent offered to concede that dollar_figure of income was overreported by dr imhoff and that petitioner was an employee liable for only the employee portion of fica tax the tax treatment of the three checks totaling dollar_figure was not mentioned in the letter respondent also did not address petitioner's contention that a portion of the alleged understatement was attributable to the dollar_figure that petitioner had reported as miscellaneous income on date petitioner provided respondent with wage statements for petitioner also explained that the dollar_figure check dated date was earned in the dollar_figure was reported on petitioner's income_tax return but was erroneously included on both the form 1099-misc and the this information is derived from the appeals officer's handwritten notes although the notes are undated we find that they were written after date ie the date petitioner mailed information incorporated in the notes and before date ie the date respondent proposed a settlement offer that incorporated calculations from the notes form 1099-misc prepared by dr imhoff petitioner offered to pay the additional income_tax associated with the dollar_figure and dollar_figure checks as well as the employee portion of the fica tax the determination of the year in which the dollar_figure check should be includable however remained in dispute on date respondent acknowledged that petitioner had reported the dollar_figure amount on her income_tax return although respondent noted that petitioner a cash_basis taxpayer was required to report income in the year of receipt ie respondent agreed to reduce the asserted unreported income for by dollar_figure respondent did not concede that petitioner had reported dollar_figure of the alleged understatement as miscellaneous income on date respondent changed her position and offered to concede that dollar_figure of the alleged understatement had in fact been reported as miscellaneous income after taking these proposed concessions into account there remained unreported income of dollar_figure producing an income_tax deficiency of dollar_figure and fica tax_liability of dollar_figure plus interest on date the parties filed with this court a decision document and a stipulation of settled issues the decision document stated that petitioner is liable for a deficiency of dollar_figure in her income_tax the stipulation of settled issues stated that petitioner agrees to pay fica tax of dollar_figure for petitioner agrees that she is liable for a deficiency of dollar_figure in her income_tax petitioner agrees that respondent was substantially justified in her position that petitioner received dollar_figure of income in date and respondent agrees that petitioner may file a claim for litigation and administrative costs the court entered the agreed decision on date on date petitioner filed her motion for award of reasonable administrative and litigation costs and fees and the court ordered for cause that the date decision be vacated discussion sec_7430 provides that a party that has prevailed in a tax_court proceeding may recover reasonable administrative and litigation costs and fees the court will award administrative and litigation costs only if petitioner establishes that she has exhausted her administrative remedies applicable to litigation costs only she has substantially prevailed in the controversy she satisfies certain net_worth requirements the position_of_the_united_states was not substantially justified she has not unreasonably protracted the administrative or court proceedings and the amount of costs sought is reasonable sec_7430 petitioner bears the burden of proving that she meets each of these requirements rule e 985_f2d_1315 5th cir her failure to establish any one of the requirements will preclude an award of costs 88_tc_492 for the reasons discussed below we conclude that petitioner is entitled to recover administrative and litigation costs respondent has conceded that petitioner has substantially prevailed and that she meets the net_worth requirement we address the remaining requirements of sec_7430 in turn i substantial justification respondent's position is substantially justified if the position was justified to a degree that would satisfy a reasonable person 487_us_552 lenox v commissioner 998_f2d_244 5th cir revg in part tcmemo_1992_382 to meet this standard respondent's position must have a basis in fact and law pierce v underwood supra lenox v commissioner supra to recover administrative and litigation costs petitioner must prove that respondent's positions in both the administrative_proceeding and the proceeding in this court were not substantially justified sec_7430 a and b huffman v commissioner 978_f2d_1139 9th cir affg in part revg in part on other grounds and remanding tcmemo_1991_144 89_tc_784 n this not substantially justified standard under sec_7430 is applied as of the separate dates respondent took positions in the administrative_proceeding and the proceeding in this court sec_7430 and b huffman v commissioner supra pincite7 see also caparaso v commissioner tcmemo_1993_255 for purposes of the administrative_proceeding respondent took a position on date the date of the notice_of_deficiency sec_7430 for purposes of the proceeding in this court respondent took a position on date the date she filed her answer huffman v commissioner supra pincite petitioner contends that respondent's position was not justified when taken respondent counters that her position was substantially justified we agree with petitioner under 54_tc_742 affd 445_f2d_985 10th cir we are obligated to follow the law as stated by the court_of_appeals in the circuit to which this case is appealable we thus consider whether respondent was substantially justified pursuant to precedent established by the u s court_of_appeals for the fifth circuit in 932_f2d_1128 5th cir portillo i affg in part and revg in part tcmemo_1990_68 the taxpayer a self-employed painting subcontractor had filed a federal_income_tax return reporting that dollar_figure of income had been received from a contractor the contractor later submitted to the irs a form_1099 that reported a dollar_figure payment from the contractor to the taxpayer the commissioner then issued a notice_of_deficiency claiming that the taxpayer had underreported his income by dollar_figure ie the difference between the dollar_figure the contractor reported to the irs and the dollar_figure reported on the taxpayer's return the u s court_of_appeals for the fifth circuit held for the taxpayer and stated that the notice_of_deficiency issued on the basis of the form_1099 was arbitrary and erroneous id pincite thus the commissioner was not entitled to the presumption of correctness ordinarily applicable to her determinations id the rationale for the court of appeals' holding is to prevent taxpayers from having to bear the unreasonable burden of proving the nonreceipt of income id pincite in 988_f2d_27 5th cir portillo ii revg tcmemo_1992_99 the taxpayer appealed our denial of administrative and litigation costs the u s court_of_appeals for the fifth circuit held that the commissioner's position was not substantially justified the court noted that one person's word ie 'a naked assertion ' is not sufficient support for a notice_of_deficiency and that the notice_of_deficiency was arbitrary and erroneous id pincite as a result the court concluded that the commissioner's position was not substantially justified id in the present case respondent took a position in her notice_of_deficiency and answer based on a form 1099-misc from dr imhoff indicating that petitioner received dollar_figure of income in and on an unsubstantiated assertion by dr imhoff that the dollar_figure constituted nonemployee income respondent did not obtain the necessary documentation from dr imhoff and petitioner until after the notice_of_deficiency was issued and the answer was filed once respondent obtained the necessary information she had little difficulty confirming most of petitioner's assertions this process should have preceded the issuance of the notice_of_deficiency respondent argues that the parties have stipulated that the commissioner was substantially justified in its sic position that petitioner received income from a check of dollar_figure in january our determination however of whether respondent was substantially justified within the meaning of sec_7430 is based on the position respondent took on date ie the date the notice_of_deficiency was issued and date ie the date respondent filed her answer see sec_7430 and b huffman v commissioner supra pincite7 on both of these dates respondent's position was not substantially justified because she had an insufficient basis in fact to determine that petitioner had received dollar_figure of nonemployee income portillo ii supra respondent did not take a position relating to the dollar_figure check until june or july of when she received a copy of the check the fact that respondent then took a valid position relating to the year in which the check was includable has no bearing on our conclusion that respondent's position was not substantially justified on the earlier dates identified above ii exhaustion of administrative remedies sec_7430 generally requires that a party seeking litigation costs exhaust all administrative remedies 88_tc_492 sec_301_7430-1 proced admin regs provides that where an appeals_office conference is available administrative remedies are exhausted only if a taxpayer participated in such conference prior to filing a petition or requested an appeals_conference and such request was denied respondent contends that petitioner did not participate in an appeals_conference petitioner concedes this point but contends that prior to the filing of the petition no appeals_conference was available within the meaning of sec_301_7430-1 proced admin regs several factors lead us to conclude that petitioner exhausted her administrative remedies first respondent's day letter made no mention of the appeals function at all the 30-day_letter stated that the enclosed publication contain sec_2 by contrast the department of the treasury's statement of procedural rules recognizes the importance of apprising taxpayers of their appeals rights and states that a 30-day_letter includes a description of such rights sec_601_105 statement of procedural rules more information about how to respond to this notice the reference to publication however did not mention petitioner's right to appeals consideration in addition publication was not attached to the copy of the 30-day_letter provided by respondent it therefore is unclear whether publication was even mailed to petitioner second petitioner did exactly what the 30-day_letter encouraged--she attempted to resolve the matter by written correspondence the letter stated if you do not agree with the proposed change s we encourage you to work with us to resolve the matter by mail we have found that the item s in question on your return can be resolved by written correspondence please return a signed statement of explanation and supporting documentation along with a copy of this notice in the enclosed envelope on date petitioner informed respondent that she disagreed with respondent's proposed changes on date petitioner mailed respondent a letter detailing her position respondent wrote back on date but did not respond to the issues raised by petitioner petitioner wrote again on date and requested that respondent address petitioner's positions respondent issued the notice_of_deficiency before she replied to petitioner's date letter this is not a case where the taxpayer chose silence as her litigation strategy see 85_tc_927 rogers v commissioner tcmemo_1987_374 while petitioner attempted to resolve the matter through correspondence it was respondent who failed to cooperate third when respondent issued the notice_of_deficiency the parties were in the middle of the negotiations process respondent had yet to reply to petitioner's letter of date and petitioner had no reason to believe that the negotiations had reached an impasse yet on date months before the period of limitations was to expire respondent precipitously issued a notice_of_deficiency for the above reasons we conclude that petitioner did all that was necessary in these circumstances to exhaust her administrative remedies iii unreasonable protraction of proceedings sec_7430 provides that a taxpayer may recover administrative and litigation costs and fees only if she demonstrates that she did not unreasonably protract the administrative and court proceedings respondent argues that petitioner did not provide information regarding the dollar_figure check in a timely manner consequently respondent argues that petitioner unreasonably protracted the litigation we disagree the issue relating to the dollar_figure check was not the last issue settled by the parties on date respondent conceded this issue yet the issue relating to the dollar_figure reported by petitioner as miscellaneous income was not settled until date thus any delay attributable to the dispute over the dollar_figure check did not unreasonably protract the administrative and court proceedings iv reasonableness of fees claimed sec_7430 defines reasonable litigation and administrative costs as including reasonable court costs administrative fees charged by the irs certain costs related to expert witnesses and production of reports and reasonable fees for the services of an attorney recoverable attorney's_fees are limited to a maximum of dollar_figure per hour adjusted for cost of living increases and special factors sec_7430 and petitioner seeks reimbursement for dollar_figure of her attorney's_fees respondent contends that a majority of these fees related to the dispute over the year in which the dollar_figure check was includable while petitioner does not refute this contention the record reveals that respondent did not take a position relating to the dollar_figure check until june or july of therefore all attorney's_fees incurred prior to this period are recoverable the stipulation however does affect the total amount of recoverable fees accordingly we award petitioner dollar_figure for her attorney's services in addition petitioner claims reimbursement for expenses of dollar_figure relating to photocopies dollar_figure phone calls dollar_figure postage dollar_figure fax charges dollar_figure federal express charges dollar_figure and her tax_court filing fee dollar_figure with the exception of the federal express charges see 93_tc_256 affd in part and revd in part 936_f2d_736 2d cir all of the above expenses are reasonable consequently petitioner is entitled to reimbursement of her reasonable administrative and litigation fees and costs of dollar_figure dollar_figure we have considered all other arguments made by petitioner and respondent and found them to be either irrelevant or without merit accordingly we shall grant petitioner's motion for award of reasonable administrative and litigation costs and fees to reflect the foregoing an appropriate order and decision will be entered


department of the treasury internal_revenue_service tr washington d c q a government entities division nov uniform issue list se'tiep ral t legend taxpayer a ira b financial_institution c state d amount this letter is in response to a request for a letter_ruling dated date as supplemented by additional information dated august september and date from your authorized representative in which you request a waiver of the 60-day rollover requirement contained in sec_408 of the internal_revenue_code code the following facts and representations have been submitted under penalty of perjury in support of the ruling requested taxpayer a age represents that she took a distribution from ira b totaling amount taxpayer a asserts that her failure to accomplish a rollover within the 60-day period prescribed by sec_408 of the code was due to her not being aware amount had been distributed from ira b taxpayer a further asserts that amount has not been used for any purpose taxpayer a maintained ira b an individual_retirement_account under sec_408 of the code with financial_institution c the only asset in ira b was a non-cash real_estate holding in a limited_liability_company llc purchased on january asaresult of the real_estate collapse of ‘and in dear state d taxpayer a’s income from her real_estate portfolio ceased eventually she and her husband defaulted on their mortgage and are preparing to file for bankruptcy informing taxpayer a financial_institution c attempted to deliver notice that during this period of financial difficulty taxpayer a received from financial_institution c a bill for the annual fee for ira b when taxpayer a failed to pay this fee financial_institution c discontinued taxpayer a's ira b financial_institution c prepared a letter dated november that since she failed to pay the annual fee for ira b it was now closed on november ira b was closed and a certificate of membership interest for the real_estate holding in ira b but taxpayer a was out of town taxpayer a asserts that she was unaware of the attempt to deliver the november unaware that financial_institution c was attempting to close ira b and make a distribution delivery of the letter was accomplished in january when taxpayer a received notice of the distribution but the 60-day rollover period had expired the notice received in january _ was dated the original date of attempted delivery november asa result of not receiving notice of the distribution from ira b on a timely basis taxpayer a failed to roll over amount into a new ira within the 60-day rollover period prescribed by sec_408 of the code taxpayer a received a form 1099-r for showing a taxable_distribution of amount letter and sec_408 of the code provides the rules applicable to ira_rollovers based on the above facts and representations you request that the internal_revenue_service service waive the 60-day rollover requirement contained in sec_408 of the code with respect to the distribution of amount sec_408a of the code provides that sec_408 of the code does not apply to any amount_paid or distributed out of an ira to the individual for whose benefit the ira is maintained if - sec_408 of the code provides that except as otherwise provided in sec_408 of the code any amount_paid or distributed out of an ira shall be included in gross_income by the payee or distributee as the case may be in the manner provided under sec_72 of the code individual not later than the day after the date on which the payment or i the entire amount received including money and any other_property is day after paid into an ira for the benefit of such individual not later than the the day on which the individual receives the payment or distribution or paid into an eligible_retirement_plan other than an ira for the benefit of such ii the entire amount received including money and any other_property is distribution is received except that the maximum amount which may be paid into such plan may not exceed the portion of the amount received which is includible in gross_income determined without regard to sec_408 of the code sec_408 of the code provides that sec_408 of the code does not apply to any amount described in sec_408 of the code received by an individual from an ira if at any time during the 1-year period ending on the day of such receipt such individual received any other amount described in sec_408 of the code from an ira which was not mouaible in gross_income because of the application of sec_408 of the ode sec_408 of the code provides a similar 60-day rollover period for partial rollovers sec_408 i of the code provides that the secretary may waive the 60-day requirement under sec_408 and sec_408 of the code where the failure to waive such requirement would be against equity or good conscience including casualty disaster or other events beyond the reasonable control of the individual subject_to such requirement only distributions that occurred after date are eligible for the waiver under sec_408 of the code revproc_2003_16 2003_4_irb_359 date provides that in determining whether to grant a waiver of the 60-day rollover requirement pursuant to sec_408 i of the code the service will consider all relevant facts and circumstances including errors committed by a financial_institution inability to complete a rollover due to death disability hospitalization incarceration restrictions imposed by a foreign_country or postal error the use of the amount distributed for example in the case of payment by check whether the check was cashed and the time elapsed since the distribution occurred the information presented and the documentation submitted by taxpayer a is consistent with her assertion that her failure to accomplish a timely rollover of amount was due to taxpayer not being aware of the distribution until after the expiration of the rollover period prescribed by sec_408 of the code therefore pursuant to sec_408 of the code the service hereby waives the 60-day rollover requirement with respect to the distribution of amount is granted a period of days from the issuance of from ira b taxpayer a this letter_ruling to contribute amount into a rollover ira provided all other requirements of sec_408 of the code except the 60-day requirement are met with respect to such contribution amount will be considered a rollover_contribution within the meaning of sec_408 b t no opinion is expressed as to the tax treatment of the transaction described herein under the provisions of any other section of either the code or regulations which may be applicable thereto this letter is directed only to the taxpayer who requested it sec_6110 of the code provides that it may not be used or cited as precedent a copy of this letter_ruling has been sent to your authorized representative pursuant to a power_of_attorney on file in this office this ruling please contact s if you wish to inquire about i d at manager employee_plans technical group enclosures deleted copy of this letter notice of intention to disclose notice cc


department of the treasury internal_revenue_service washington d c tax_exempt_and_government_entities_division release number release date date date uil code contact person identification_number contact number employer_identification_number form required to be filed tax years dear this is our final_determination that you do not qualify for exemption from federal_income_tax as an organization described in internal_revenue_code sec_501 recently we sent you a letter in response to your application that proposed an adverse determination the letter explained the facts law and rationale and gave you days to file a protest since we did not receive a protest within the requisite days the proposed adverse determination is now final you must file federal_income_tax returns on the form and for the years listed above within days of this letter unless you request an extension of time to file we will make this letter and our proposed adverse determination_letter available for public inspection under code sec_6110 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 you should follow the instructions in notice if you agree with our deletions you do not need to take any further action if you have any questions about this letter please contact the person whose name and telephone number are shown in the heading of this letter federal_income_tax status and responsibilities please contact irs customer service at if you have any questions about your letter cg catalog number or the irs customer service number for businesses the irs customer service number for people with hearing impairments is sincerely lois g lerner director exempt_organizations enclosure notice redacted proposed adverse determination_letter redacted final adverse determination_letter letter cg catalog number department of the treasury internal_revenue_service washington d c contact person identification_number contact number fax number employer_identification_number uil tax_exempt_and_government_entities_division date date legend n organization o state q date r date s company t number u number dear we have considered your application_for recognition of exemption from federal_income_tax under internal_revenue_code sec_501 based on the information provided we have concluded that you do not qualify for exemption under code sec_501 the basis for our conclusion is set forth below are you providing particular services to your members and not furthering the common business interests of a particular industry thereby disqualifying you from exemption under sec_501 of the code yes for the reasons described below letter cg catalog number 47628k facts you were incorporated in the state of o on q your articles of incorporation state you were formed to promote the common business interests of your members your twelve board members are employed by technology companies venture capital management companies and educational institutions section one article v of your revised bylaws provides there shall be one class of members there shall be no distinction between memberships all members shall have the same rights preferences limitations and restrictions and each member shall have one vote in corporate affairs an organization or individual may only become a member by invitation of the board_of directors which shall extend invitations only to those it believes in its sole discretion will contribute to the mission and purposes of the corporation you have t individual members and u member organizations your membership span sec_43 states and four countries thirty-five percent of your members represent state and regional economic development agencies percent are public and private seed funds and percent are incubators university tech transfer organizations your purpose is to to your members which include the following on your website you list various benefits available only additionally your website states where companies may seek capital your website then lists nine organizations letter cg catalog number 47628k to further your purposes you allocate your time to the following activities activity annual conference newsletters economic impact studies training sessions negotiations with s total percentage of time you described your conference as your most important networking event you explained that organizations track new approaches and resources further narticipants meet with professionals from outside their local networks making one-on- one contact with at your two and a half day annual conference you offer various lectures and panels on topics including trends in innovation capital women in entrepreneurship building early stage businesses pitching new technologies to the experts and connecting entrepreneurs with opportunities among others the majority of the lectures focus on investors and entrepreneurs however you do present two lectures that pertain to government involvement in economic development one of your sessions includes an opportunity for start-up companies to make their sales pitch to the audience of potential investors along with a wine and cheese reception your conference features at least three networking breaks the sample newsletter you submitted contains various articles regarding new technologies and investments your training sessions participants in this event learn practical tools for identifying analyzing pricing structuring and negotiating seed investments these training sessions are generally offered during your annual conference you describe the wherein they may write to you and ask questions regarding seed and early-stage capital you explained that experts in the field including members of your board answer the questions the economic impact studies are paid for by organizations or members who are interested in the information the study will produce and are distributed only to those organizations or members who paid for the studies as a service available to your members letter cg catalog number 47628k according to your website s is the world’s leading deal flow management and collaboration software publisher this software allows users to manage all current and future deals in their portfolio in addition s will include support for its platform on the public-facing portion of your website and will provide additional private discussion and social networking areas on the members-only portion of your website your negotiation with s allows all dues paying members access to this software your agreement with s describes you as according to your agreement s_ has you stated that your strategic alliance agreement with s would be beneficial to both you and s you are funded by conference sponsorships member dues conference fees advertisements in your newsletters and miscellaneous other income you did not explain what companies receive in return for their sponsorship fees your primary expense is payroll for your two employees in addition you pay for various travel and entertainment_expenses incurred by your employees other expenses include conference expenses marketing and various administrative expenses law sec_501 of the internal_revenue_code code provides that organizations organized as business_leagues chambers_of_commerce real-estate boards boards_of_trade or professional_football_leagues whether or not administering a pension fund for football players not organized for profit and no part of the net_earnings of which inures to the benefit of any private_shareholder_or_individual may be exempt from federal_income_tax sec_1_501_c_6_-1 a business league is an association of persons having some common business_interest 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 it is an organization of the same general class as a chamber of commerce or board_of trade thus its activities 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 persons an organization whose purpose is to engage in a regular business of a kind ordinarily carried on for profit even though the business is conducted on a cooperative basis or produces only sufficient income to be self- letter cg catalog number 47628k sustaining is not a business league an association engaged in furnishing information to prospective investors to enable them to make sound investments is not a business league since its activities do not further any common business_interest even though all of its income is devoted to the purpose stated revrul_56_65 1956_1_cb_199 holds that a local organization whose principal activity consists of furnishing particular information and specialized individual services to its individual members engaged in a particular industry through publications and other means to effect economies in the operation of their individual businesses is performing particular services for individual persons such organization therefore is not entitled to exemption under sec_501 of the code as a business league even though it performs functions which are of benefit to the particular industry and the public generally the activities of the organization consisted of the maintenance of plan rooms for the convenience of members where plans and specifications for local construction projects together with the names of general contractors bidding of specific projects are filed revrul_59_391 1959_2_cb_151 holds that an organization whose membership consists of individuals firms associations and corporations each of whom represents a different trade business occupation or profession and created for the purpose of exchanging information on business prospects does not qualify for exemption under sec_501 of the code part of the rationale for the ruling is that the members have no common business_interest other than a mutual desire to increase their individual sales revrul_67_295 1967_2_cb_197 holds that an organization of businessmen holding luncheon meetings may qualify for exemption under sec_501 of the code the key to the determination is that the luncheon meetings are devoted to discussions reviews and considerations of the various problems in a particular industry revrul_67_296 1967_2_cb_212 holds that an organization that qualifies for exemption under sec_501 of the internal_revenue_code may conduct classes to improve the educational standards of the profession this activity improves the business condition of one or more lines of business as a whole revrul_68_264 1968_1_cb_264 defines a particular service for the purposes of sec_501 of the code as an activity that serves as a convenience of economy to the members of the organization in the operation of their own businesses the revenue_ruling also states that activities that constitute the performance of a particular services for individual persons may preclude exemption under sec_501 of the code letter cg catalog number 47628k revrul_70_641 1970_2_cb_119 involves an organization comprised of individuals from various professions in the field of public health the organization's activities which consist of lectures seminars and discussions seek to provide an interdisciplinary forum for exchanging knowledge and information the revenue_ruling concludes that the organization’s activities promote the members’ common business_interest by increasing the effectiveness of the interaction among the various professions and solving common business problems the fact that the members represent various professions does not prevent the organization from qualifying for exemption under sec_501 of the code because they share a common business_interest in the field of public health indiana retail hardware assn inc v united_states ct_cl the organization in this case conducted activities such as informational meetings but it also supplied to such of its members as wished to pay for them managerial_services weekly bookkeeping quarterly audits yearly preparation of federal_income_tax returns and other similar services in this case the court held that when conducting particular services for members is a substantial activity of an organization the organization will be precluded from exemption under sec_501 of the code glass container industry research corp v united_states u s dist lexis w d pa the organization in this case was a membership_organization for glass manufacturers representing approximately thirty percent of glass manufacuterers the organization conducted research and made its research patents and licenses available exclusively to its members who were not permitted to share the results of the research with non-members since the information was not made available to the general_public or an entire industry the court found that the activities of the organization was performing a particular services for members which disqualified from being classified as a business league under sec_501 of the internal_revenue_code in addition the organization failed to qualify as a chamber of commerce or board_of trade under sec_501 the court held that chambers_of_commerce and board_of trade are organizations that engage in many diverse lines of business and promote and publicize the advantages of an area and the advantages of doing business in a particular city since the organization did not promote the advantages of doing business in a particular geographic area it did not qualify as a chamber of commerce or board_of trade under sec_501 of the code application of law sec_501 of the internal_revenue_code provides that organizations organized as business_leagues may be exempt from federal_income_tax you connect investors economic development organizations public and private funds and tech transfer professionals and were formed to promote investments in seed and early-stage companies to further your purpose you provide a forum through your conference and letter cg catalog number 47628k other activities where information is furnished to prospective investors in order to enable them to make sound investments although you include educational lectures and workshops in your annual conference you consistently explained that your purpose is to promote investments in addition you described your conference as your most important networking event these facts show that you are formed to promote investment opportunities for your members rather then improving overall business conditions in the industry as shown in sec_1_501_c_6_-1 an association engaged in furnishing information to prospective investors to enable them to make sound investments is not a business league since its activities do not further any common business_interest even though all of its income is devoted to the purpose stated thus you are not a business league and you are not furthering a common business_interest and do not qualify under c revrul_56_65 held that a local organization whose principal activity consisted of furnishing particular information and specialized individual services to its individual members to effect the operation of their individual businesses is performing particular services and was not entitled to exemption under sec_501 your principal activity is your annual conference at your conference you unite investors and start-up companies and provide them with information on how to succeed in their investments and business ventures as your most important networking event the purpose of your conference is to bring together investors and investees to this end you host sessions where start-up companies solicit investments in their business ventures and where attendees may make one-on-one contact with persons specializing in facility capital formation by bringing together potential investors and investees you are performing particular services for members and or their business organizations that perform services for individuals are precluded from exemption under sec_501 of the code and for this reason you do not qualify your operation is similar to that of the organization described in revrul_59_391 in that the purpose of your members joining and attending your meetings is to increase their individual business opportunities the basic holding in that revenue_ruling is that the participants have no common business_interest other than a mutual desire to increase sales this is not sufficient to establish a common line_of_business for the purposes of sec_501 of the code your membership is not made up of persons with a common business_interest within the meaning of sec_501 but rather of persons desiring to increase their own personal wealth and organizations desiring to improve the economic conditions of their respective communities accordingly you do not qualify for exemption under sec_501 of the code the organizations described in revrul_67_295 and revrul_67_296 qualified for exemption under sec_501 of the code these revenue rulings refer to organizations discussing problems within an industry and raising the educational standards within a profession you are distinguishable from these revenue rulings in letter cg catalog number 47628k that while you do provide some educational aspects through your conference the overall purpose it to provide a forum for investors and investees to exchange information although you present two lectures that purport to address economic development issues the majority of your conference which is designed to be a networking event is aimed at allowing individuals and companies to find investment and funding opportunities your ancillary activities such as your arrangement with s further support the fact that you operate to help your members increase and manage their investments and your software for the purposes of sec_501 revrul_68_264 defines a particular service as an activity that serves as a convenience of economy to the members of the organization in the operation of their own businesses in addition to your principal activity you conduct several other services for members these services include your economic impact studies and the software provided through your negotiations with s which allows members to manager their investments as you explained in your application these features are customized or can be customized to meet the individual needs of your members in addition the economic impact studies that you provide are only available to the persons or organizations purchasing the same essentially all of your activities are providing services to members accordingly you are precluded from exemption under sec_501 of the code in revrul_70_641 an organization qualified for exemption even though its members were from different professions the members were in the same industry and worked together to solve problems common to the industry unlike the organization described in revrul_70_641 your membership does not represent a specific industry nor various professions within a common business field your membership is composed primarily of investors business owners and individuals who wish to own a business and promote investment in seed and early-stage companies further you are not solving problems common to an industry instead you are operating a forum where members may receive business leads accordingly you do not qualify for exemption under sec_501 of the code in indiana retail hardware assn inc v united_states the court held that when conducting particular services for members is a substantial activity of an organization the organization will be precluded from exemption under sec_501 of the code as discussed in the analysis of revrul_56_65 and revrul_68_264 above essentially all of your activities are providing particular services for members accordingly your organization does not qualify for exemption from federal_income_tax under sec_501 of the internal_revenue_code similar to the organization in glass container industry research corp the services you offer such as your agreement with s are available only to your members and are not made available to the your economic impact studies and your software letter cg catalog number 47628k general_public or an entire industry in addition your conference provides a services to your members and participants by providing a forum where they may exchange investment ideas and business leads your activities do not further the common business_interest of a line_of_business because sec_1_501_c_6_-1 clearly precludes an organization furthering investment opportunities from qualifying as a business league under sec_501 of the code although some of your members are state and regional economic development agencies your organization does not promote economic development in particular geographic area your conferences and services may provide economic development organizations the opportunity to solicit businesses to invest in their respective regions but your organization is not involved in promoting a particular geographic region as your members come from all across the country and even from other parts of the world accordingly you do not qualify as a chamber of commerce or board_of trade under sec_501 of the internal_revenue_code applicant’s position you state that your mission is to promote the common business_interest of persons or entities who make early-stage investments in local entrepreneurs and economies your focus is on increasing access to capital investors and entrepreneurs in so-called flyover regions that have been historically overlooked by mainstream venture capital investors you present educational opportunities for your members you acknowledge that your events provide a forum during which your members may find private opportunities however arranging such opportunities is neither your primary purpose or stated mission you explained that the provision in your bylaws that limits membership to those invited by the board is an artifact from your early days and that membership is open to anyone involved in early stage innovation capital you further explained that you expect the bylaws to be amended at the next board meeting service response to applicant’s position you explained that you want to promote the common business interests of investors but did not explain what business interests they have in common you further acknowledged that your events provide a forum for members to pursue private opportunities although this is not your primary purpose however your conferences have sessions where early stage companies may make their sales pitch to potential investors and you hold several networking events throughout your conference in addition you described your conference as your most important networking event you explained that this statement is clearly indicative of the fact that you are training people how to obtain capital and providing information about investment opportunities an association engaged in furnishing information to prospective investors to enable them to make sound letter cg catalog number 47628k investments is not a business league you explain that your focus is on increasing access to capital investors and entrepreneurs in so-called flyover regions that have been historically overlooked by mainstream venture capital investors while some of your members may represent various geographic areas the activities described in your application and on your website do not advocate or promote investments in a particular geographic area instead your activities focus on providing investment opportunities information and services to state and economic development agencies investors and investees details of your membership reveal that you have a national and even international focus and promoting investment in general not investment in a particular geographic area the bylaws that your representative described as an artifact from your early days are dated r just a little more than five months before the filing of your application_for exemption the statement that your bylaws were an artifact from your early days was not signed by an officer or director of your organization further the date by which you explained your bylaws would be amended has passed and you have not submitted amended bylaws for review even if membership in your organization was open and voluntary you would not qualify for exemption since you are conducting an activity that is precluded from exemption namely you are furnishing information to prospective investors to make sound investment decisions your members do not have a common business_interest and your activities are primarily services for members conclusion your purpose is to provide services for members that do not have a common business_interest mainly through a forum where members may find private investment opportunities you do not promote the advancement of any particular line_of_business or the improvement of business conditions based upon the foregoing analysis you do not qualify for recognition of exemption as an organization described in sec_501 of the code you have the right to file a protest if you believe this determination is incorrect to protest you must submit a statement of your views and fully explain your reasoning you must submit the statement signed by one of your officers within days from the date of this letter we will consider your statement and decide if that information affects our determination if your statement does not provide a basis to reconsider our determination we will forward your case to our appeals_office you can find more information about the role of the appeals_office in publication exempt_organization appeal procedures for unagreed issues letter cg catalog number 47628k types of information that should be included in your appeal can be found on page of publication under the heading regional_office appeal these items include a a n w p o r o the organization’s name address and employer_identification_number a statement that the organization wants to appeal the determination the date and symbols on the determination_letter a statement of facts supporting the organization’s position in any contested factual issue a statement outlining the law or other authority the organization is relying on and a statement as to whether a hearing is desired the statement of facts item must be declared true under penalties of perjury this may be done by adding to the appeal the following signed declaration under penalties of perjury declare that have examined the statement of facts presented in this appeal and in any accompanying schedules and statements and to the best of my knowledge and belief they are true correct and complete your appeal will be considered incomplete without this statement lf an organization’s representative submits the appeal a substitute declaration must be included stating that the representative prepared the appeal and accompanying documents and whether the representative knows personally that the statements of facts contained in the appeal and accompanying documents are true and correct an attorney certified_public_accountant or an individual enrolled to practice before the internal_revenue_service may represent you during the appeal process to be represented during the appeal process you must file a proper power_of_attorney form_2848 power_of_attorney and declaration of representative if you have not already done so for more information about representation see publication practice_before_the_irs and power_of_attorney all forms and publications mentioned in this letter can be found at www irs gov forms and publications if you do not intend to protest this determination you do not need to take any further action if we do not hear from you within days we will issue a final adverse determination_letter to you that letter will provide information about filing tax returns and other matters please send your protest statement form_2848 and any supporting documents to the applicable address letter cg catalog number 47628k mail to deliver to 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 may also fax your statement using the fax number shown in the heading of this letter letter to confirm that he or she received your fax if you fax your statement please call the person identified in the heading of this if you have any questions please contact the person whose name and telephone number are shown in the heading of this letter sincerely lois g lerner director exempt_organizations enclosure publication letter cg catalog number 47628k


internal_revenue_service national_office technical_advice_memorandum date third party communication none date of communication not applicable number release date index uil no case-mis no ---------------------- ----------------------------------- tam-124251-04 taxpayer's name taxpayer's address taxpayer's identification no years involved date of conference legend ------------------------------------------------ -------------------------------- ---------------------- ---------------------------- ------------------------------- ---------------- ------------------------ no conference held taxpayer x ------------------------------------------------ ------------------- issue s is the gross qres method a reasonable method of allocating the group credit for purposes of sec_41 of the internal_revenue_code if so for taxable years ending before date may a taxpayer that is a member of a controlled_group use the gross qres method to allocate the group credit even though the other member of the controlled_group uses a different method and the controlled_group as a whole claims more than percent of the group credit tam-124251-04 conclusion s the gross qres method is a reasonable method of allocating the group credit for purposes of sec_41 of the internal_revenue_code for taxable years ending before date a taxpayer that is a member of a controlled_group may use the gross qres method to allocate the group credit where the other member of the controlled_group uses a different method and the controlled_group as a whole claims more than percent of the group credit facts taxpayer is a calendar_year taxpayer during the taxable years at issue taxpayer and x were members of the same controlled_group_of_corporations within the meaning of sec_41 for purposes of computing the credit_for_increasing_research_activities research_credit both taxpayer and x reached the same result in computing the research_credit for the controlled_group group credit however taxpayer and x used different methods to allocate the group credit among the members of the controlled_group as a result the members of the controlled_group collectively claimed more than percent of the group credit during the taxable years at issue there were no proposed or final regulations interpreting sec_41 law and analysis sec_41 provides a non-refundable income_tax_credit for qualified_research_expenses paid_or_incurred by a taxpayer during the taxable_year sec_41 provides that in determining the amount of the credit under ' all members of the same controlled_group_of_corporations shall be treated as a single_taxpayer and the credit if any allowable by ' to each such member shall be its proportionate shares of the qualified_research_expenses and basic_research_payments giving rise to the credit sec_41 provides that the term acontrolled group of corporations has the same meaning given to such term by sec_1563 except that amore than percent shall be substituted for aat least percent each place it appears in sec_1563 sec_1563 provides that a controlled_group_of_corporations includes a parent-subsidiary_controlled_group sec_1563 provides in relevant part that a parent-subsidiary_controlled_group is one or more chains of corporations connected through stock ownership with a common parent_corporation if b a stock possessing at least percent of the total combined voting power of all classes of stock entitled to vote or at least percent of the total value of shares of all classes of stock of each of the corporations except the common parent_corporation is owned y by one or more of the other corporations and b the common parent_corporation owns y stock possessing at least percent of the total combined voting power of all classes of stock entitled to vote or at least percent of the total value of shares of all classes of stock tam-124251-04 of at least one of the other corporations excluding in computing such voting power or value stock owned directly by such other corporations based solely on the facts submitted and representations made we conclude that the gross qres method is a reasonable method of allocating the group credit for purposes of sec_41 further we conclude that for taxable years ending before date a taxpayer that is a member of a controlled_group may use the gross qres method to allocate the group credit even though the other member of the controlled_group uses a different method and the controlled_group as a whole claims more than percent of the group credit caveat s a copy of this technical_advice_memorandum is to be given to the taxpayer s sec_6110 of the code provides that it may not be used or cited as precedent


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 uil -------------------------- -------------------------- --------------------------------- cc it a genin-148142-11 dear -------------- this letter responds to your request for information dated date in your letter you ask about a charitable_contribution for a payment to the department of treasury specifically you ask whether you may make a contribution to pay down the public debt and what assurances you have that the contribution will actually be used for that purpose whether the contribution is deductible and whether you will receive a receipt for your contribution as to the first part of your inquiry under federal_law the secretary_of_the_treasury may accept for the government a gift of money or other_property to reduce the public debt u s c sec_3113 enclosed the money or proceeds from the sale of the gift is placed in a special account to be used to pay at maturity or to redeem or buy before maturity an obligation of the government included in the public debt thus the law allows taxpayers to contribute to the treasury_department to reduce the public debt and requires treasury to dispense the account funds only for that purpose the enclosed treasury direct faq web page indicates procedures for making a cash contribution to the bureau of the public debt bureau an agency within the treasury_department to reduce the public debt regarding your question as to whether the contribution is deductible sec_170 of the internal_revenue_code allows a deduction for a charitable_contribution payment of which is made within the taxable_year if the contribution is properly verified to claim the deduction a taxpayer must itemize deductions on form_1040 schedule a sec_170 of the code defines the term charitable_contribution in part as a contribution or gift to or for use of the united_states but only if the contribution or gift is made exclusively for public purposes the treasury_department is within the executive branch of the federal government and a payment to the bureau to reduce the public debt is exclusively for public purposes therefore a payment to the federal government to reduce the public debt generally is a charitable_contribution genin-148142-11 as to the last part of your inquiry to be deductible the payment must be properly verified for contributions of cash there are two requirements under sec_170 no deduction is allowed for a cash contribution a contribution made by cash check or other monetary means of any amount unless the donor maintains as a record of the contribution either a bank record or a written communication from the donee the bank record or written communication must show the name of the donee the date of the contribution and the amount of the contribution a bank record includes a statement from a financial_institution an electronic transfer receipt a canceled check a scanned image of both sides of a canceled check obtained from a bank web site or a credit card statement each separate cash contribution is subject_to this recordkeeping requirement in addition under sec_170 for a contribution of dollar_figure or more the donor must substantiate the contribution by a contemporaneous written acknowledgment of the contribution by the donee the written acknowledgment must include the amount of cash and a description but not value of any property other than cash contributed a statement as to whether the donee provided any goods or services in consideration in whole or in part for the contribution and a description and good_faith value of any goods or services provided an acknowledgment is considered contemporaneous if the donor obtains it on or before the earlier of the date on which the taxpayer files a return for the taxable_year in which the gift contribution was made or the due_date including extensions for filing the return a donor is not required under sec_170 to substantiate separate contributions of less than dollar_figure even if the sum of the separate contributions made during a taxable_year equals or exceeds dollar_figure a cash contribution of dollar_figure or more is subject_to both the recordkeeping requirement under sec_170 and the substantiation requirement under sec_170 but both requirements may be satisfied by a single document that contains all the required information we understand that the bureau provides a written acknowledgment to the donor for cash contributions toward reducing the public debt a sample of that acknowledgment is enclosed the bureau ordinarily provides the acknowledgment to the donor within two weeks after the bureau receives the contribution for cash contributions paid_by electronic means the donor uses the enclosed transmittal form and the bureau transmits an electronic confirmation receipt to the donor i hope this information is helpful to you we also enclose publication charitable_contributions for more information on charitable_contributions generally this letter has called your attention to certain general principles of the law it is intended for informational purposes only and does not constitute a ruling see genin-148142-11 revproc_2012_1 sec_2 2012_1_irb_1 if you have any additional questions please contact ----------------------------------------------- sincerely susan j kassell senior counsel branch income_tax accounting enclosures u s c sec_3113 treasury direct faq web page sample acknowledgment from the treasury_department sample transmittal form publication charitable_contributions


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 washington d c december cc tege eb ec genin-144256-04 office_of_chief_counsel number info release date uil -------------------- ----------------------------------- ---------------------------------- dear -------------- this letter responds to your request for information dated date concerning the law applicable to an incentive_stock_option iso you asked whether an employer may amend outstanding isos to grant additional benefits for a select group_of_employees and thereby cause them to lose their qualification without affecting the status of all outstanding isos granted by the employer sec_424 of the internal_revenue_code contains definitions and special rules applicable to isos there in subsection h it is provided that if the terms of an iso are modified extended or renewed such modification extension or renewal is considered the grant of a new option pursuant to sec_1_424-1 of the income_tax regulations a modification is any change in the terms of the option which gives the optionee additional benefits under the option for example a change in the terms of an option that shortens the period during which an option is exercisable is not a modification however a change which provides more favorable terms for the payment for the stock purchased under the option is a modification therefore if an employer were for example to extend the date that any iso remains exercisable that change would be regarded as modification of that option and thus the grant of a new option on the date of the change that new option must then meet all of the requirements in order for it to qualify as an iso there is no indication in the code or regulations that a modification of any outstanding iso affects other outstanding iso’s this letter has called your attention to certain general principles of the law it is intended for informational purposes only and does not constitute a ruling see revproc_2004_1 sec_2 2004_1_irb_7 we apologize for the delay in responding to your genin-144256-04 request for information concerning iso plans if you have any additional questions please contact --------------------in our office at -------------------- sincerely robert b misner senior technician reviewer executive compensation branch office of the division counsel chief_counsel 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 1d no telephone number refer reply to cc tege eb hw plr-t-103509-15 date date legend taxpayer company date date date date trust a_trust b_trust c plan plr-t-103509-15 dollar_figurey dollar_figurez dear this responds to your letter dated date and subsequent correspondence requesting a ruling as to the continued qualification of taxpayer under sec_501 of the internal_revenue_code code following certain transactions including the merger of trust a and trust b into taxpayer and the transfer of assets from trust c to taxpayer facts company is a corporation that was formed through multiple business combinations taxpayer is a_trust and represents that it and trust a_trust b and trust c are each maintained as a voluntary employees’ beneficiary association veba under sec_501 taxpayer received a letter from the internal_revenue_service service dated date stating that it is a veba under sec_501 trust a received a letter from the service dated date stating that it is a veba under sec_501 trust b received a letter from the service dated date stating that it is a veba under sec_501 of the code trust c received a letter from the service dated date stating that it is a veba under sec_501 trust b provides life_insurance benefits under plan to eligible employees and eligible retirees and their eligible dependents trust a currently provides medical and long term disability benefits under plan to eligible employees eligible retirees and their eligible dependents two subaccounts are maintained under trust a one subaccount provides medical benefits to eligible active employees the other subaccount provides medical benefits to eligible retirees except those that are otherwise funded by a sec_401 account under a defined benefit pension_plan sponsored by company or one of its affiliates trust c currently provides medical benefits under plan to certain eligible retirees and their eligible dependents taxpayer represents that trust c has at all times qualified as a_trust maintained pursuant to a collective bargaining agreement under sec_1 419a- 2t of the income_tax regulations and that the contributions and related deductions for taxpayer currently provides medical and long term disability benefits under plan to eligible employees some of whose employment is subject_to a collective bargaining agreement plr-t-103509-15 trust c were calculated in accordance with the requirements of sec_419a of the code merger of trust a and trust b into taxpayer trust a and trust b will be merged with and into taxpayer by date taxpayer will be amended to provide that taxpayer may be permitted to fund benefits for certain non-union retirees taxpayer will be renamed and three separate subtrusts will be created under taxpayer to include a subtrust consisting of current trust a a subtrust consisting of current trust b and a subtrust consisting of the current taxpayer taxpayer represents that it will provide that none of the assets in a subtrust in taxpayer can be used as assets for any other subtrust and none of the assets in a subtrust are available to pay for any of the other subtrusts’ benefits each subtrust will be used to provide medical and welfare benefits to eligible active employees and retirees of company and certain of its affiliates in the same manner as prior to the proposed merger of the trusts taxpayer represents that each subtrust will continue to maintain separate books_and_records taxpayer represents that no assets of any of the subtrusts will be commingled with the other subtrusts transfer of assets from trust c to taxpayer taxpayer represents that it may provide other_benefits under the plan which are permissible under sec_501 taxpayer represents that to the extent that taxpayer provides such other_benefits company does not have a current obligation and will not have a future obligation to provide those benefits any such benefits will be provided through a separate subtrust under taxpayer and assets of trust a and trust b will not be used to pay for those benefits taxpayer represents that trust c will be amended to allow for a one-time transfer of i the trust c balance on the date of the transfer less ii dollar_figurey dollar_figurey is approximately i x of the projected amount required to fund the dollar_figurez of annual benefits and claims of the trust c and ii fifteen times the projected retiree contributions to trust c the amendment will require the one-time transfer to be completed by december the transferred amount will be held in the general account of taxpayer until able to fund each of the subtrusts at such point the funds held in the general account of taxpayer will be transferred and allocated to each subtrust to be used during a year for the payment of health and welfare claims and expenses none of the transferred amount will be used to fund benefits directly any portion of the transferred amount in excess of the amount needed to pay claims for that year will remain in taxpayer and be used in subsequent years to provide benefits payable through the subtrusts taxpayer represents that company does not have current or future contractual obligations to pay benefits provided by the current taxpayer trust a_trust b or trust plr-t-103509-15 c taxpayer acknowledges and represents that it will be subject_to tax on its unrelated_business_taxable_income including amounts held in its general account in a manner consistent with sec_511 and sec_512 including sec_512 and the applicable regulations thereunder rulings requested taxpayer requests a ruling that the proposed merger of trust a and trust b into taxpayer and the transfer from trust c to taxpayer will not result in prohibited inurement under sec_501 law sec_501 of the code provides an exemption from federal_income_tax for a voluntary employees’ beneficiary association providing for the payment of life sick accident or other_benefits to its members or their dependents or designated beneficiaries if no part of the net_earnings of such association inures other than through such payments to the benefit of any private_shareholder_or_individual sec_1_501_c_9_-3 of the income_tax regulations provides that the life sick accident or other_benefits provided by a voluntary employees' beneficiary association must be payable to its members their dependents or their designated beneficiaries life sick accident or other_benefits may take the form of cash or noncash benefits a voluntary employees' beneficiary association is not operated for the purpose of providing life sick accident or other_benefits unless substantially_all of its operations are in furtherance of the provision of such benefits further an organization is not described in this section if it systematically and knowingly provides benefits of more than a de_minimis amount that are not permitted by paragraphs b c d or e of this section sec_1_501_c_9_-3 provides in pertinent part that the term life benefit means a benefit payable by reason of the death of a member or dependent sec_1_501_c_9_-3 provides in pertinent part that the term sick_and_accident_benefits means amounts furnished to or on behalf of a member or a member's dependents in the event of illness or personal injury to a member or dependent such benefits may be provided through reimbursement to a member or a member's dependents for amounts expended because of illness or personal injury or through the payment of premiums to a medical_benefit or health insurance program similarly a sick and accident benefit includes an amount_paid to a member in lieu of income during a period in which the member is unable to work due to sickness or injury sec_1_501_c_9_-4 provides in pertinent part that no part of the net_earnings of an employees’ association may inure to the benefit of any private_shareholder_or_individual plr-t-103509-15 other than through the payment of benefits permitted by sec_1_501_c_9_-3 whether prohibited inurement has occurred is a question to be determined with regard to all of the facts and circumstances taking into account the guidelines set forth in the regulations analysis and conclusion merger of trust a and trust b into taxpayer taxpayer represents that following the merger of trust a and trust b into taxpayer the assets of each subtrust will be used to provide medical and welfare benefits to eligible employees and retirees of taxpayer and certain of its affiliates in the same manner as prior to merger taxpayer represents that each subtrust will continue to maintain separate books and record taxpayer also represents that none of the assets in a subtrust in taxpayer can be used as assets for any other subtrust and none of the assets in a subtrust are available to pay any of the other subtrusts’ benefits based on the information submitted by taxpayer we conclude that the merger of trust a and trust b into taxpayer will not result in prohibited inurement to a private_shareholder_or_individual other than through the payment of permissible veba benefits to employees and retirees as described in sec_1_501_c_9_-3 accordingly the trust merger will not result in prohibited inurement under sec_501 of the code transfer of assets from trust c to taxpayer the amendment of trust c a separate welfare_benefit_fund under a collective bargaining agreement within the meaning of sec_419a will allow amounts that were originally set_aside to provide retiree health benefits for union retirees of company be transferred to taxpayer and used to provide health and other welfare benefits to company’s employees and retirees all of the benefits to be provided under taxpayer are permissible veba benefits based on the information submitted by taxpayer we conclude that the transfer of assets from trust c to taxpayer will not result in prohibited inurement to a private_shareholder_or_individual other than through the payment of permissible veba benefits to employees and retirees as described in sec_1_501_c_9_-3 of the income_tax regulations accordingly the transfer will not result in prohibited inurement under sec_501 of the code we assume without expressing an opinion for purposes of this ruling that taxpayer has the authority to complete the transactions described and that the transactions described can otherwise be effectuated and do not fail to meet the requirements of other applicable federal and state law plr-t-103509-15 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 specifically no opinion is expressed regarding calculation of unrelated_business_taxable_income under sec_512 this ruling is directed only to the taxpayer requesting it specifically no opinion is expressed regarding the tax consequences of the described transactions to company nor is any opinion expressed regarding the status under sec_501 of any trust including subtrusts other than taxpayer sec_6110 provides that it may not be used or cited as precedent the rulings contained in this letter are based upon information and representations submitted by taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in support of the request for rulings it is subject_to verification on examination sincerely janet a laufer senior technician reviewer health welfare branch office of associate chief_counsel tax exempt government entities