internal_revenue_service number release date index number ---------------------- --------------------------------------- ---------------------------------------------------------- -------------------------------- ------------------------------ ------------------------------------------------------------ ------- department of the treasury washington dc person to contact ------------------ id no ------------- telephone number --------------------- refer reply to cc fip b02 - plr-111808-03 date date ----------------------------------------- -------------------------------------------- ---------------------------------------------------------- legend fund ------------------------------------------------------------------ master portfolio advisor state dear ------------- revenue service rule that fund will be deemed to own a proportionate share of each asset of the master portfolio and will be deemed to be entitled to the income of the master portfolio attributable to its share for purposes of determining whether the fund satisfies the requirements of sec_851 sec_851 sec_852 sec_853 and sec_854 and that master portfolio is not a publicly_traded_partnership taxed as a corporation under sec_7704 this responds to your request dated date that the internal ------------------ plr-111808-03 facts master portfolio is also organized as a series of a business_trust established fund will operate as a series of a business_trust established under the laws of state it will qualify and elect to be taxed as a regulated_investment_company ric under subchapter_m part of the internal_revenue_code_of_1986 under the laws of state it is registered as an open-end management company under the investment_company act of usc 80a-1 et seq as amended the act it seeks to be classified as a partnership for federal tax purposes fund and master portfolio are participants in a master-feeder structure fund is a feeder fund that contributes solely cash to master portfolio in exchange for shares of beneficial_interest in master portfolio any future contributions by fund to master portfolio in exchange for shares of beneficial_interest in master portfolio will consist solely of cash other institutional investors feeder funds may contribute cash or assets to master portfolio in exchange for shares of beneficial_interest all holders of beneficial_interest in master portfolio have qualified as and elected to be taxed as rics managed at the master portfolio level advisor provides investment management and related_services and is the principal investment_advisor to master portfolio period by investing a fluctuating percentage of its assets in u s treasury bonds and other fixed income investments these investments designed to protect the original principal value of the fund represent a significant percentage of fund’s assets accordingly fund believes that it does not invest substantially_all of its assets in master portfolio as required by revproc_2001_57 2001_2_cb_577 and thus that the safe_harbor set forth in that revenue_procedure is not available fund therefore requests this ruling fund guarantees its shareholders a minimum net asset value after a seven-year fund and master portfolio have an identical investment objective assets are fund represents the following fund will contribute solely cash to master portfolio in exchange for shares of beneficial_interest approximately equal in value to the contributed cash at no time will fund transfer assets other than cash to master portfolio the master portfolio has been organized in a manner so as to enable its classification as a partnership and not to enable investors which are rics to make distributions that would be prohibited by revrul_89_81 1989_1_cb_226 had they invested directly in the securities held by the master portfolio plr-111808-03 master portfolio will invest its assets so as to comply with the requirements of subchapter_m part of the code as if such requirements applied at the master portfolio level for purposes of determining its required_distribution under sec_4982 of the code fund will account for its share of items of income gain loss and deduction of master portfolio as they are taken into account by master portfolio master portfolio has not elected to be treated as a corporation under sec_301_7701-3 of the regulations beneficial interests in the master portfolio are not traded on an established_securities_market as described in sec_1_7704-1 interests in master portfolio are not regularly quoted by any broker or dealer or market maker nor are any quotations for bids or offers made available with respect to any interest in the master portfolio there are no means available for holders of beneficial interests in master portfolio to buy sell or exchange their interest in master portfolio through public means in a manner comparable to trading on an established_securities_market all holders of beneficial interests in master portfolio have qualified and elected ric status as described in sec_851 of the code master portfolio does not have and will not have more than partners counting as partners for this purpose any partner in any partnership investing in master portfolio no interests in master portfolio have been or will be traded on an established_securities_market or issued in a transaction registered under the securities act of the act law and analysis ruling_request fund will be deemed to own a proportionate share of each asset of master portfolio and will be deemed to be entitled to the income of master portfolio attributable to its share for purposes of determining whether it satisfies the requirements of sec_851 sec_851 sec_852 sec_853 and sec_854 sec_851 provides that certain requirements must be satisfied in order for a domestic_corporation to be taxed as a ric and thereby to be exempt from the corporate level tax on most income plr-111808-03 sec_851 provides that to qualify as a ric at least percent of a corporation's gross_income must be derived from dividends interest payments_with_respect_to_securities_loans as defined in sec_512 gains from the sale_or_other_disposition of stocks securities foreign_currencies or other income derived with respect to its business of investing in such stocks securities or currencies sec_851 requires that in order to qualify as a ric at the close of each quarter of the taxable_year at least percent of the value of a corporation's total assets must be represented by cash and cash items including receivables government securities securities of other rics and other_securities generally limited in respect of any one issuer to an amount not greater in value than percent of the value of the total assets of the corporation and to not more than percent of the outstanding_voting_securities_of_such_issuer sec_851 provides that in order to qualify as a ric not more than percent of the corporation's total assets may be invested in the securities other than government securities and the securities of other rics of any one issuer or of two or more issuers that the corporation controls and which are determined under regulations to be engaged in the same or similar trades_or_businesses or related trades_or_businesses sec_852 provides that a ric at least of the value as defined in sec_851 of whose total assets at the close of each calendar_quarter consists of obligations described in sec_103 is eligible to pay exempt-interest dividends which are treated by the ric's shareholders as interest excludable from gross_income pursuant to sec_103 sec_853 provides that a ric more than percent of the value as defined in sec_851 of whose total assets at the close of the taxable_year consists of stock_or_securities in foreign_corporations and which meets the requirements of sec_852 for the taxable_year may elect to treat its shareholders as if they had paid certain foreign taxes incurred by the ric for purposes of determining a shareholder's foreign_tax_credit under sec_901 sec_854 provides that a dividend other than a capital_gain dividend received from a ric qualifies for the dividends received deduction under sec_243 to the extent so designated by the ric provided that the ric meets the requirements of sec_852 for the taxable_year during which it paid the dividend sec_854 provides that the aggregate amount that may be designated as dividends under sec_854 shall not exceed the aggregate_dividends_received by the ric for the taxable_year plr-111808-03 sec_854 provides that the term aggregate_dividends_received includes only dividends received from domestic corporations sec_854 provides in part that for purposes of determining an amount to be treated as a dividend eligible for the dividends received deduction under sec_243 a payment to a ric shall not be treated as a dividend unless had it not been a ric it would have been allowed a dividends received deduction under sec_243 with respect to the payment sec_702 provides with respect to a partnership that the character of items stated in sec_702 that are included in a partner's_distributive_share shall be determined as if such items were realized directly from the source from which they were realized by the partnership or incurred in the same manner as incurred by the partnership sec_702 provides that where it is necessary to determine the amount or character of the gross_income of a partner such amount shall include that partner's_distributive_share of the gross_income of the partnership section n l of the technical_and_miscellaneous_revenue_act_of_1988 added a sentence to the flush language of sec_851 that states that income derived from a partnership or trust shall be treated as satisfying the percent requirement of sec_851 only to the extent that such income is attributable to items of income of the partnership or trust which would be described in sec_851 if earned directly by the ric the legislative_history of that sentence indicates that it was intended to clarify the general_rule used to characterize items of income gain loss deduction or credit includable in a partner's_distributive_share as applied to rics that are partners it therefore explains the relationship of sec_702 to the percent test under sec_851 see s rep no 100th cong 2d sess under subchapter_k a partnership is considered to be either an aggregate of its members or a separate_entity under the aggregate approach each partner is treated as an owner of an undivided_interest in partnership assets and operations under the entity approach the partnership is treated as a separate_entity in which partners have no direct interest in partnership assets and operations see s rep no 83d cong 2d sess h_r rep no 83d cong 2d sess in order for fund to qualify as a ric under the diversification tests of sec_851 the aggregate approach will have to be applied to fund's partnership_interest in a master partnership as an aggregate fund will be entitled to take into account its share of the individual items of income and assets of the master partnership revrul_75_62 1975_1_cb_188 concerns a life_insurance_company that contributed cash to a partnership in exchange for a percent interest in the partnership the partnership held real_estate as its principal asset for the taxable_year plr-111808-03 in question sec_805 required life_insurance_companies to value their assets each taxable_year for this purpose sec_805 required that shares of stock and real_estate be valued at their fair market values and that other assets be valued at their adjusted bases the issue presented in the ruling is whether for purposes of sec_805 the life_insurance company's interest in the partnership is considered to be an investment in the real_estate held by the partnership an aggregate approach or an investment in other_property an entity approach revrul_75_62 holds that the partnership_interest held by the life_insurance_company must be accounted for as other_property for purposes of sec_805 the ruling cites sec_705 and sec_741 both of which generally treat an interest in a partnership as an interest in an entity as evidence of an intent in subchapter_k to take the entity approach in questions concerning the nature of an interest in a partnership the ruling states that the legislative_history of sec_805 does not indicate that application of the entity approach to the facts of the ruling is inappropriate and that there is no compelling reason to take the aggregate approach the flush language of sec_851 and its legislative_history indicate that here unlike the situation described in revrul_75_62 congress intended that an aggregate approach be taken in determining the nature of the partnership interests held by the holders the flush language of sec_851 mandates an aggregate approach in applying the percent gross_income_test of sec_851 to rics that hold partnership interests it would be anomalous to suggest that congress intended that a ric's interest in a partnership be viewed as a direct investment in the partnership's assets for purposes of the sec_851 test but not be viewed as a direct investment in those assets for purposes of the test set out in sec_851 the tax treatment accorded real_estate_investment_trusts reits lends further support to applying the aggregate approach to the present case reits were created to provide an investment vehicle similar to the ric for small investors to invest in real_estate and real_estate mortgages see h_r rep no 86th cong 2d sess like rics reits are subject_to restrictions on the type of assets they can hold if they want to retain the benefits accorded them under subchapter_m and are subject_to certain gross_income source tests reits and rics also have similar distribution and holding_period requirements sec_1_856-3 provides that in the case of a real_estate_investment_trust which is a partner in a partnership as defined in sec_7701 and the regulations thereunder the trust will be deemed to own its proportionate share of each of the assets of the partnership and will be deemed to be entitled to the income of the partnership attributable to such share for purposes of sec_856 the interest of a partner in the partnership's assets shall be plr-111808-03 determined in accordance with his capital interest in the partnership the character of the various assets in the hands of the partnership and items of gross_income of the partnership shall retain the same character in the hands of the partners for all purposes of sec_856 thus for example if the trust owns a 30-percent capital interest in a partnership which owns a piece of rental property the trust will be treated as owning percent of such property and as being entitled to percent of the rent derived from the property by the partnership similarly if the partnership holds any property primarily_for_sale_to_customers in the ordinary course of its trade_or_business the trust will be treated as holding its proportionate share of such property primarily for such purpose also for example where a partnership sells real_property or a_trust sells its interest in a partnership which owns real_property any gross_income realized from such sale to the extent that it is attributable to the real_property shall be deemed gross_income from the sale or disposition of real_property held for either the period that the partnership has held the real_property or the period that the trust was a member of the partnership whichever is the shorter thus the regulation adopts the aggregate look-through approach in determining how a reit should account for its partnership interests for purposes of all of the income and asset qualification tests under sec_856 the legislative purpose underlying the creation of both rics and reits was to provide small investors a means of pooling their resources to invest in a particular type of assets without the imposition of corporate_income_tax the qualification tests are similar for each therefore although the ric regulations do not specifically address the issue herein it is appropriate to adopt an approach for rics that parallels that set forth for reits revproc_2001_57 sets forth conditions under which a ric that holds a partnership_interest is treated for purposes of qualifying as a ric under sec_851 for purposes of the payment of exempt-interest dividends under sec_852 and for purposes of the passthrough of the foreign_tax_credit under sec_853 as if directly invested in the assets held by the partnership under this revenue_procedure a publicly offered open-end ric that invests substantially_all its assets in one or more master partnerships that are registered as management companies under the act and except as required by sec_1_704-3 of the regulations whose allocable share of each item of the master partnership’s income gain loss deduction and credit is proportionate to its percentage of ownership of the capital interests in the master partnership is treated as if it directly invested in the assets held by the master partnership for the described purposes plr-111808-03 in a typical master-feeder structure described by revproc_2001_57 a feeder fund invests substantially_all its assets in an investment_partnership a master partnership some feeder funds may invest in more than one master partnership the requirement of section dollar_figure of revproc_2001_57 that a feeder fund invest substantially_all its assets in one or more master partnerships the substantially_all requirement is an anti-abuse provision intended as a safeguard against the selection of appreciated assets having a low basis in the hands of a feeder fund for contribution to a master partnership in exchange for shares of beneficial_interest in the master partnership where as here a feeder fund contributes solely cash to a master partnership this risk is not present ruling_request master portfolio is not a publicly_traded_partnership taxed as a corporation under sec_7704 sec_7704 provides that a publicly_traded_partnership is treated as a corporation sec_7704 and sec_1_7704-1 of the regulations provide that for purposes of sec_7704 the term publicly_traded_partnership means any partnership if interests in the partnership are traded on an established_securities_market or readily_tradable on a secondary market or the substantial equivalent thereof sec_1_7704-1 provides that interests in a partnership are readily_tradable on a secondary market or the substantial equivalent thereof if taking into account all of the facts and circumstances the partners are readily able to buy sell or exchange their partnership interests in a manner that is comparable economically to trading on an established_securities_market sec_1_7704-1 provides in general that interests in a partnership are not readily_tradable on a secondary market or the substantial equivalent thereof for purposes of sec_7704 if i all interests in the partnership were issued in a transaction or transactions that was not required to be registered under the act and ii the partnership does not have more than partners at any time during the taxable_year sec_1_7704-1 provides that for purposes of sec_1_7704-1 of the regulations a person owning an interest in a partnership grantor_trust or s_corporation flow- through entity that owns directly or through other flow-through entities an interest in the partnership is treated as a partner in the partnership only if i substantially_all of the value of the beneficial owner's interest in the flow-through_entity is attributable to the flow-through entity's interest direct or indirect in the partnership and ii a principal purpose of the use of the tiered arrangement is to permit the partnership to satisfy the 100-partner limitation of sec_1 h ii plr-111808-03 master portfolio has represented that the number of partners in master portfolio will be limited to or fewer calculated pursuant to sec_1_7704-1 of the regulations no interest in master portfolio has been or will be issued in a transaction or transactions required to be registered under the1933 act rulings ruling_request based on the information and representations submitted we rule that fund assuming it qualifies as a ric and is a partner in master portfolio will be deemed to own a proportionate share of each asset of master portfolio and will be deemed to be entitled to the income of master portfolio attributable to that share for purposes of determining whether it satisfies the requirements of sec_851 sec_851 sec_852 sec_853 and sec_854 of the code for purposes of these sections fund’s interest in master portfolio shall be determined in accordance with its capital interest in master portfolio ruling_request meaning of sec_7704 of the code we rule that master portfolio will not be a publicly_traded_partnership within the except as specifically ruled upon above we express no opinion on the federal tax consequences of the transactions described above under any other provisions of the code and regulations no opinion is expressed concerning whether fund qualifies as a ric taxable under subchapter_m part i this ruling is directed only to the taxpayers who requested it sec_6110 provides that it may not be used or cited as precedent a copy of this letter should be attached to the federal_income_tax return of fund for every taxable_year in which it participates in the master-feeder_arrangement described in this letter sincerely william e coppersmith william e coppersmith plr-111808-03 chief branch office of associate chief_counsel financial institutions products


internal_revenue_service number release date index numbers ------------------------------------ ------------------------------- --------------------------- ----------------------------------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ------------------------- id no ----------------- ----------------------------------------------------- telephone number ---------------------- refer reply to cc psi b03 plr-112173-18 date august legend x ------------------------------------------ -------------------------------------- a b c d e -------------------- --------------------- -------------------- ------------------------ ------------------ state ------------------- date -------------------------- year ------- dear ------------------ this letter responds to a letter dated date and subsequent correspondence submitted on behalf of x requesting an extension of time under sec_301_9100-3 of the procedure and administration regulations for x to make an election under sec_754 of the internal_revenue_code code plr-112173-18 facts according to the information submitted x is a state limited_liability limited_partnership classified as a partnership for federal tax purposes x was owned by a b c d and e at the time of formation a died shortly after the formation of x during year x represents that its tax_return for year was filed timely but a sec_754 election to adjust the basis of partnership property was not filed with the return x represents that its professional tax_return_preparer did not inform x of the availability of the sec_754 election at the time its tax_return for year was prepared and filed but that x has acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government law and analysis sec_754 provides that a partnership may elect to adjust the basis of partnership property when there is a distribution_of_property or a transfer of a partnership_interest an election under sec_754 applies with respect to all distributions of property by the partnership and to all transfers of interests in the partnership during the taxable_year with respect to which the election was filed and all subsequent taxable years sec_1_754-1 of the income_tax regulations provides that an election under sec_754 to adjust the basis of partnership property under sec_734 and sec_743 with respect to a distribution_of_property to a partner or a transfer of an interest in a partnership must be made in a written_statement filed with the partnership return for the taxable_year during which the distribution or transfer occurs for the election to be valid the return must be filed not later than the time prescribed by sec_1_6031_a_-1 including extensions for filing the return for such taxable_year under sec_301_9100-1 the commissioner may grant a reasonable extension of time to make a regulatory election or a statutory election but no more than six months except in the case of a taxpayer who is abroad under all subtitles of the code except subtitles e g h and i sec_301_9100-1 provides that the term regulatory election includes an election whose due_date is prescribed by a regulation published in the federal_register sec_301_9100-1 through provide the standards the commissioner will use to determine whether to grant an extension of time to make an election sec_301_9100-2 provides automatic extensions of time for making certain elections sec_301_9100-3 provides extensions of time for regulatory elections that do not meet the requirements of sec_301_9100-2 sec_301_9100-3 provides that requests for relief under sec_301_9100-3 will be granted when the taxpayer provides the evidence including affidavits described in plr-112173-18 sec_301_9100-3 to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and the grant of relief will not prejudice the interests of the government conclusion based solely upon the facts submitted and the representations made we conclude that the requirements of sec_301_9100-1 and sec_301_9100-3 have been satisfied as a result x is granted an extension of time of days from the date of this letter to make a sec_754 election for its year taxable_year and thereafter the election should be made in a written_statement filed with the applicable service_center for association with x's return for its year taxable_year a copy of this letter should be attached to the statement filed this ruling is contingent on x and its partners filing within days of this letter all required returns for all open years consistent with the requested relief any depreciation deduction allowable for an open_year is to be computed based upon the remaining useful_life and using property basis as adjusted by the greater of any depreciation deduction allowed_or_allowable in any prior year had the sec_754 election been timely made additionally as a condition of this ruling x must adjust the basis of its properties to reflect any sec_734 or sec_743 adjustments that would have been made if the sec_754 election had been timely made these basis adjustments must reflect any additional_depreciation that would have been allowable if the sec_754 election had been timely made regardless of whether the statutory period of limitation on assessment or filing a claim_for_refund has expired for any year subject_to this grant of late relief additionally the partners of x must adjust the basis of their interests in x to reflect what that basis would be if the sec_754 election had been timely made regardless of whether the statutory period of limitation on assessment or filing a claim_for_refund has expired for any year subject_to this grant of late relief specifically the partners of x must reduce the basis of their interests in x in the amount of any additional_depreciation that would have been allowable if the sec_754 election had been timely made except for the specific ruling above we express or imply no opinion concerning the federal tax consequences of the facts of this case under any other provision of the code in addition sec_301_9100-1 provides that the granting of an extension of time for making an election is not a determination that the taxpayer is otherwise eligible to make the election the ruling contained in this letter is based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in support of the ruling_request it is subject_to verification on examination plr-112173-18 this ruling is directed only to the taxpayer requesting it according to sec_6110 this ruling may not be used or cited as precedent under a power_of_attorney on file with this office we are sending a copy of this letter to x’s authorized representative sincerely associate chief_counsel passthroughs special industries by _____________________________ richard t probst senior technician reviewer branch office of the associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes


department of the treasury internal_revenue_service washington d c tax_exempt_and_government_entities_division aug uniform issue list legend taxpayer a ira x amount c amount d ira z date date date date dear this is in response to a letter dated submitted on your behalf by your authorized representative as supplemented by correspondence dated and contained in sec_408 of the internal_revenue_code the code’ in which you request a waiver of the 60-day rollover requirement the following facts and representations have been submitted under penalty of perjury in support of the ruling requested page of taxpayer a age_ represents that his failure to accomplish a rollover of amount d within the 60-day period prescribed by sec_408 was due to his medical_condition that impaired his ability to handle his financial affairs during the 60-day rollover period taxpayer a also represents that amount d has not been used for any other purpose during taxpayer a suffered from a series of strokes as well as from other serious medical conditions on date taxpayer a was admitted to the hospital as a result of his worsening medical_condition taxpayer a suffered memory loss and his ability to conduct his financial affairs was impaired he was released from the hospital on date on date while taxpayer a was still mentally and physically impaired he received a distribution of amount c from ira x taxpayer a's authorized representative asserts that taxpayer a intended at that time to roll over amount d to another ira and use the remainder of the distribution for his medical_expenses however medical documentation shows that both immediately after the distribution was made and throughout the 60-day period following that event taxpayer a's ability to conduct his financial affairs was impaired in march taxpayer a’s financial advisor made taxpayer a aware of his failure to roll over amount d and on date amount d was rolled over into ira z based on the facts and representations you request a ruling that the internal_revenue_service the service waive the day rollover requirement with respect to amount d sec_408 of the code provides that except as otherwise provided in sec_408 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 sec_408 of the code defines and provides the rules applicable to ira_rollovers sec_408 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 i the entire amount received including money and any other_property is paid into an ira for the benefit of such individual not later than the day after the day on which the individual receives the payment or distribution or ii the entire amount received including money and any other_property is paid into an eligible_retirement_plan other than an ira for the benefit of such individual not later than the day after the date on which the payment or distribution is received except that the maximum amount which may be paid into page of such plan may not exceed the portion of the amount received which is includible in gross_income determined without regard to sec_408 sec_408 of the code provides that sec_408 does not apply to any amount described in sec_408 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 from an ira which was not includible in gross_income because of the application of sec_408 sec_408 of the code provides a similar 60-day rollover period for partial rollovers sec_408 of the code provides that the rollover provisions of sec_408 do not apply to any amount required to be distributed under sec_408 sec_408 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 r b date provides that in determining whether to grant a waiver of the 60-day rollover requirement pursuant to sec_408 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 documentation submitted by taxpayer a is consistent with his assertion that his failure to accomplish a timely rollover was caused by his medical_condition which impaired his ability to handle his financial affairs during the 60-day rollover period therefore pursuant to sec_408 of the code the service hereby waives the 60-day rollover requirement with respect to the distribution of amount d from ira x provided all other requirements of sec_408 of the code except the 60-day requirement are met with respect to such contribution amount d which was contributed to ira z rollover_contribution within the meaning of sec_408 of the code will be considered a page of this ruling does not authorize the rollover of amounts that are required to be distributed by sec_401 of the code 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 if you wish to inquire about this ruling please contact id at please address all correspondence to sincerely yours pas manager employee_plans technical group enclosures deleted copy of ruling letter notice of intention to disclose cc


internal_revenue_service number release date index number ------------------------------------- ---------------------------------------------------- ----------------------------------------- -------------------------------------- ---------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ------------------- id no ------------- telephone number --------------------- refer reply to cc psi plr-125126-09 date ----------------------------------------------------- x -------------------------------------------------- country date --------------- ---------------------- dear ------------- this responds to a letter dated date submitted on behalf of x requesting that the service grant x an extension of time under sec_301_9100-3 of the procedure and administration regulations to make an entity classification election the information submitted states that x was formed under the laws of country x represents that x is a foreign_entity eligible to be treated as a disregarded_entity but that it failed to timely file form_8832 entity classification election sec_301_7701-3 provides that a business_entity that is not classified as a corporation under sec_301_7701-2 or an eligible_entity can elect its classification for federal tax purposes a business_entity is any entity recognized for federal tax purposes that is not properly classified as a_trust under sec_301_7701-4 or otherwise subject_to special treatment under the internal_revenue_code sec_301_7701-3 provides guidance on the classification of a foreign_entity for federal_income_tax purposes generally a foreign eligible_entity is treated as an association_taxable_as_a_corporation if all members have limited_liability unless the entity makes an election to be treated otherwise if the foreign eligible_entity has only one owner it may elect to be treated as a disregarded_entity pursuant to the rules in sec_301_7701-3 sec_301_7701-3 provides that to elect to be classified other than as provided in sec_301_7701-3 an eligible_entity must file form_8832 with the designated plr-125126-09 service_center and that an entity classification election must be filed on form_8832 and can be effective up to seventy-five days prior to the date the form is filed or up to twelve months after the date on which the form is filed sec_301_9100-1 provides that the commissioner may grant a reasonable extension of time to make a regulatory election or a statutory election but no more than months except in the case of a taxpayer who is abroad under all subtitles of the internal_revenue_code except subtitles e g h and i sec_301_9100-1 defines the term regulatory election as an election whose due_date is prescribed by a regulation published in the federal_register or a revenue_ruling revenue_procedure notice or announcement published in the internal_revenue_bulletin sec_301_9100-1 through provide the standards the commissioner will use to determine whether to grant an extension of time to make the election sec_301_9100-2 provides the rules governing automatic extensions of time for making certain elections sec_301_9100-3 provides the standards the commissioner will use to determine whether to grant an extension of time for regulatory elections that do not meet the requirements of sec_301_9100-2 under sec_301_9100-3 a request for relief will be granted when the taxpayer provides evidence to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and granting relief will not prejudice the interests of the government based solely on the information submitted and representations made we conclude that the requirements of sec_301_9100-3 have been satisfied as a result x is granted an extension of time of days from the date of this letter to file a form_8832 with the appropriate service_center and elect to be treated as a disregarded_entity effective date a copy of this letter should be attached to the form_8832 a copy is enclosed for that purpose except as expressly provided herein we express or imply no opinion concerning the federal tax consequences of any aspect of any transaction or item discussed or referenced in this letter this ruling is directed only to the taxpayer requesting it sec_6110 of the code provides that it may not be used or cited as precedent plr-125126-09 in accordance with a power_of_attorney on file with this office a copy of this letter is being sent to x’s authorized representatives sincerely curt g wilson associate chief_counsel office_of_chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes


internal_revenue_service number release date index number -------------------- ---------------------------- ------------------------------------------ ------------------------ -------------------------- ------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ------------------ id no ---------------- telephone number ------------------------ refer reply to cc psi b04 plr-127661-05 date april legend husband wife son son daughter trust a b x foundation date state company company case case -------------------------------------------- -------------------------------------------- ------------------------ ----------------- ------------------------- ------------------------------------------------------------- ----------------------- ----- ------- -- ------------------------------- -------------------------- ----------- ------------------------------- -------- -------------------------------------------------------------- ---------------------- -------------------------------------------------------------------- --------------- dear ---------- concerning the gift and income_tax consequences of husband’s and wife’s proposed this is in response to your date letter and other correspondence paragraph first of trust provides that in each taxable_year of trust the paragraph first provides that upon the death of the survivor of husband the facts and representations are summarized as follows husband established plr-127661-05 renunciation of their interests in trust and husband’s proposed irrevocable designation of the charitable_remainder beneficiary or beneficiaries in trust trust a charitable_remainder_unitrust crut on date trust was funded with a shares of company stock and b shares of company stock the trustees of trust are husband’s children son son and daughter trustees shall pay husband during his lifetime and after his death wife for such time as she survives a unitrust_amount equal to the lesser_of a_trust income for the taxable_year as defined in sec_643 and b c percent of the net fair_market_value of the assets of trust valued as of the first day of each taxable_year of trust the unitrust_amount for any year shall also include any amount of trust income for such year that is in excess of the amount required to be distributed under b above to the extent that the aggregate of the amounts paid in prior years was less than the aggregate of the amounts computed as c percent of the net fair_market_value of trust assets on the valuation dates and wife the trustees shall distribute all of the then principal and income of trust other than any amount due either of husband or wife or their estates to such one or more organizations described in sec_170 sec_2055 and sec_2522 in such proportions or amounts i as husband while living and legally competent and or ii if wife survives husband then as a majority of wife and husband’s children son daughter and son from time to time living and legally competent shall at any time and from time to time designate by written instrument duly executed and acknowledged and delivered to the trustees if more than one designation has been delivered to the trustees by husband and or wife and children then the last such designation so delivered shall govern if organization s named in the last designation delivered to the trustees is not an organization described in sec_170 sec_2055 and sec_2522 at the time when any principal or income of trust is to be distributed to it then the trustees shall distribute such principal and income to the remaining one or more organizations which are described in sec_170 sec_2055 and sec_2522 if any proportionately but if none of such organizations is an organization described in sec_170 sec_2055 and sec_2522 at the time when any principal or income of trust is to be distributed to it or if no such designation is made by either husband or wife and children then the trustees shall distribute such principal and income to foundation a state not-for-profit corporation if foundation is not an organization described in sec_170 sec_2055 and sec_2522 at the time when any principal or income of trust is to be distributed to it then the trustees shall distribute such principal and income to such one or more organizations described in sec_170 sec_2055 and sec_2522 as the trustees shall select in their sole discretion under state law if husband and wife renounce their interests in trust the it is represented that at the time trust was created husband and wife had no paragraph first provides that the operation of trust shall be governed by husband wife and their children propose the following transaction first wife plr-127661-05 the laws of state intention to divide the unitrust and remainder interests as a method to avoid the partial_interests rules in sec_170 renunciation of their unitrust interests will accelerate the remainder_interest see case and case son son and daughter will each irrevocably release their contingent right to designate one or more charitable organizations described in sec_170 sec_2055 and sec_2522 as the remainder beneficiary or beneficiaries of trust irrevocable renunciation second wife will renounce her only other interest in trust ie her right to receive unitrust distributions from trust in the event that wife survives husband irrevocable renunciation third husband will renounce all of his remaining interests in trust ie his right to receive any future unitrust distributions from trust and his right to make any further charitable_beneficiary designations and then husband will irrevocably designate one or more specific charitable organizations described in sec_170 sec_2055 and sec_2522 as the remainder beneficiary or beneficiaries of trust irrevocable renunciation and designation the probate_court having jurisdiction over trust requesting that the court rule that they have the right to renounce their unitrust interests in trust and that as a result of the renunciation the remainder_interest will be accelerated and all principal and income remaining in trust at the time of husband’s renunciation other than the final prorated unitrust_amount that is due and payable to husband or wife will be immediately payable to the charitable_organization s irrevocably designated by husband as the remainder beneficiary or beneficiaries husband and wife and their children as trustees of trust will file an action with you have requested the following rulings husband will be entitled to a gift_tax deduction under sec_2522 for the value of his unitrust_interest and the remainder_interest in trust transferred as a result of his execution of the irrevocable renunciation and designation wife will be entitled to a gift_tax deduction under sec_2522 for the value of her unitrust_interest in trust transferred as a result of her execution of the irrevocable renunciation plr-127661-05 husband will be entitled to an income_tax deduction under sec_170 for the value of his unitrust_interest in trust transferred as a result of his execution of the irrevocable renunciation and designation wife will be entitled to an income_tax deduction under sec_170 for the value of her unitrust_interest in trust transferred as a result of her execution of the irrevocable renunciation sec_170 of the internal_revenue_code allows as an income_tax sec_170 provides that no charitable_contribution_deduction is allowed sec_170 provides that a contribution not made by a transfer in trust law and analysis deduction any contribution or gift to or for_the_use_of organizations described in sec_170 payment of which is made within the taxable_year for the value of any interest in property other than a remainder_interest transferred in trust unless the interest is in the form of a guaranteed annuity or a fixed percentage distributed annually of the fair_market_value of the trust property determined annually and the grantor is treated as the owner of the interest for purposes of applying sec_671 relating to grantor trusts of less than the taxpayer's entire_interest in property is not allowed as a charitable_contribution_deduction except to the extent that the value of the interest contributed would be allowable as a deduction had such interest been transferred in trust sec_1_170a-6 and sec_1_170a-7 of the income_tax regulations provide that a deduction is allowed for a contribution of a partial interest in property if such interest is the taxpayer's entire_interest in the property such as an income_interest or a remainder_interest if however the property in which such partial interest exists was divided in order to create such interest and thus avoid sec_170 and f a the deduction is not allowed property other than money the amount of the contribution is generally the fair_market_value of the property at the time of the contribution charitable purposes is dependent upon the performance of some act or the happening of a precedent event in order that it might become effective no deduction is allowable unless the possibility that the charitable transfer will not become effective is so remote sec_1_170a-1 provides that if a charitable_contribution is made in sec_1_170a-1 provides that if as of the date of the gift a transfer for sec_2511 provides that the tax imposed by sec_2501 shall apply sec_2501 imposes a tax for each calendar_year on the transfer of property plr-127661-05 as to be negligible by gift during such calendar_year by any individual whether the transfer is in trust or otherwise whether the gift is direct or indirect and whether the property is real or personal tangible or intangible sec_25_2511-2 of the gift_tax regulations provides in part that a gift is incomplete if and to the extent a reserved power gives the donor the power to name new beneficiaries or to change the interests of the beneficiaries as between themselves unless the power is a fiduciary power limited by a fixed_or_ascertainable_standard thus a gift would be incomplete to the extent the donor retains the power to designate the beneficiaries of the gift even if the power retained is limited to designating charitable beneficiaries see eg revrul_77_275 1977_2_cb_346 sec_25_2511-2 provides in part that the relinquishment or termination of a power to change the beneficiaries of transferred property occurring otherwise than by the death of the donor the statute being confined to transfers by living donors is regarded as the event which completes the gift and causes the tax to apply sec_2522 provides that in computing taxable_gifts for the calendar_year there shall be allowed as a deduction the amount of all gifts made during such year to or for_the_use_of a corporation or trust or community chest fund or foundation organized and operated exclusively for religious charitable scientific literary or educational_purposes no part of the net_earnings of which inures to the benefit of any private_shareholder_or_individual sec_2522 provides that where a donor transfers an interest in property other than an interest described in sec_170 to a person or for a use described in sec_2522 or b and an interest in the same property is retained by the donor or is transferred or has been transferred for less than an adequate_and_full_consideration in money_or_money's_worth from the donor to a person or for a use not described in sec_2522 or b no deduction shall be allowed under this section for the interest which is or has been transferred unless-- a in the case of a remainder_interest such interest is in a_trust which is a charitable_remainder_annuity_trust or a charitable_remainder_unitrust described in sec_664 or a pooled_income_fund described in sec_642 or b in the case of any other interest such interest is in the form of a guaranteed annuity or is a fixed percentage distributed yearly of the fair_market_value of the property to be determined yearly plr-127661-05 situation of revrul_86_60 1986_1_cb_302 considers whether a transfer to situation of revrul_86_60 1986_1_cb_302 considers whether a transfer to charity by the grantor a of a charitable_remainder_annuity_trust of a’s entire retained annuity interest qualifies for the gift_tax_charitable_deduction following the transfer a did not retain any interest in the trust and neither at that time nor at any prior time did a make a transfer from the trust for private purposes although the transfer of the remainder_interest to charity divided a’s prior interest that transfer was for charitable not private purposes consequently a’s transfer of the annuity interest to charity was not required to be in a form described in sec_2522 and sec_25_2522_c_-3 in order to qualify for the charitable deduction accordingly a’s transfer of a’s annuity interest to charity qualifies for a deduction under sec_2522 further a’s transfer qualifies for an income_tax charitable deduction under sec_170 because although a had previously divided the interest a held in the property the division was not to avoid sec_170 thus under sec_1_170a-7 a’s transfer of a’s entire life_annuity interest qualifies for an income_tax deduction under sec_170 charity by a secondary life annuitant b of a charitable_remainder_annuity_trust of b’s entire contingent life_annuity interest in the trust qualifies for the gift_tax_charitable_deduction following the transfer b did not retain any interest in the trust and at no time had b made a transfer of an interest in the trust for a private purposes consequently there is no requirement that the transfer to charity be in a form described in sec_25_2522_c_-3 and b’s transfer of b’s annuity interest to charity qualifies for a deduction under sec_2522 further b’s transfer qualifies for an income_tax charitable deduction under sec_170 the secondary life_annuity interest was the only interest in the trust that b owned at the time of the transfer therefore under sec_1_170a-7 b’s transfer of b’s entire secondary life_annuity interest qualifies for an income_tax deduction under sec_170 unitrust husband is the beneficiary of the first life unitrust_interest and wife is the beneficiary of the second life unitrust_interest because husband wife son son and daughter retained the right to designate the charitable_remainder beneficiary or beneficiaries of trust husband did not make a completed_gift to charity of the remainder_interest for gift_tax purposes at the time trust was created in the instant case on date husband established trust a charitable_remainder under the proposed transaction wife son son and daughter will each irrevocably release their contingent right to designate one or more charitable organizations as the remainder beneficiary or beneficiaries of trust wife will renounce her unitrust_interest in trust and as in situation of revrul_86_60 wife’s transfer will qualify for the gift_tax_charitable_deduction under sec_2522 subsequently husband will renounce his unitrust_interest in trust under state law the remainder_interest in trust will accelerate and will become payable outright to plr-127661-05 the charitable_remainder beneficiary or beneficiaries then husband will irrevocably designate a charity or charities as the remainder beneficiary or beneficiaries when husband designates the charitable_remainder beneficiary or beneficiaries husband’s gift will become complete for gift_tax purposes and the charity or charities designated will receive the entire_interest in trust outright as in situation of revrul_86_60 husband will donate his entire_interest in trust to charity and following the transfer husband will not retain any interest in trust accordingly we rule that husband will be entitled to a gift_tax_charitable_deduction under sec_2522 for the value for his unitrust_interest and the remainder_interest in trust that passes to the charity or charities and wife will be entitled to a gift_tax_charitable_deduction under sec_2522 for the value of her unitrust_interest passing to charity further we rule that husband will be entitled to an income_tax deduction under sec_170 for the value of his unitrust_interest and wife will be entitled to an income_tax deduction under sec_170 for the value of her unitrust_interest in accordance with the power_of_attorney on file with this office a copy of this except as expressly provided herein no opinion is expressed or implied the rulings contained in this letter are based upon information and letter is being sent to your authorized representatives concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in support of the request for rulings it is subject_to verification on examination provides that it may not be used or cited as precedent this ruling is directed only to the taxpayer requesting it sec_6110 sincerely lorraine e gardner senior counsel branch office of the associate chief_counsel passthroughs special industries enclosures copy for sec_6110 purposes copy of this letter-


department of the treasury internal_revenue_service washington d c t a x e x e m p t a n d g o v e r n m e n t e n t i t i e s d i v i s i o n contact person telephone number identification_number employer_identification_number number release date se t eo t1 date date uil legend a b c d e f g h j dear ------------------ we have considered your representative's letter requesting that we determine that you meets the requirements of revproc_95_48 1995_2_cb_418 and are not required to file form_990 return of organization exempt from federal_income_tax facts a is the voluntary council on aging for b a was recognized as an organization exempt from federal_income_tax under sec_501 of the code and as other than a private_foundation under sec_509 and sec_170 of the code a has not been issued a ruling under sec_115 of the code a collects facts and statistics and make special studies of conditions pertaining to the employment financial status recreation social adjustment mental and physical health or other conditions affecting the welfare of the aging people in b to keep abreast of the latest developments in these fields of activity to interpret its findings to the citizens of its service to provide for the mutual exchange of ideas and information in b and at the state level to conduct public meetings to make recommendations for needed improvements and additional resources to promote the welfare of aging people to coordinate and monitor services with other local agencies serving the aging people of the parish and to assist and cooperate with c d and other departments of state and local governments serving the elderly and to make recommendations relevant to the planning and delivery of services to the elderly of b specific services provided by a to the elderly residents of b include providing transportation homemakers prescription assistance information and assistance outreach utility assistance congregate and home delivered meals nutritional education recreation personal care in-home respite and wellness in ------- e authorized the chartering of voluntary councils on aging and limited the number of councils to be formed in e the created and established f in the office of the governor f coordinates the services of all of e's agencies serving the elderly which includes each voluntary council on aging the law also established the authority under which the voluntary councils on aging operate an application_for a charter must be approved by the executive director of the f before it is sent to the secretary of state for the issuance of the charter the statute also states immediately upon receipt of the charter by the secretary of state voluntary council on aging will be authorized to receive public funds from any governmental or political_subdivision and provides that the functions of each parish voluntary council on aging shall comply with the objectives of state laws and shall be governed by the policies and regulations established by f and upon review and recommendation of g g with the approval of the governor and upon review and recommendation of h may revoke the charter of any voluntary council on the aging for noncompliance with the provisions of the law or the policies regulations or amendments established by h the formula used to determine the annual appropriation of state funds to each of the councils on aging is based on the elderly population in each council's service area and is determined under state law the law requires each voluntary council to file annual financial statements with f although the a is responsible for managing its daily affairs it is also being supervised and controlled by e through f and g a is required to prepare an annual financial statement and have it audited the financial statements are prepared using governmental accounting principles and contain information that is comparable to the information required by form_990 the audited financial statement must be filed by december of each year with the legislative auditor and the financial statement is a public record ruling requested a satisfies the requirements of being an affiliate of a governmental_unit of revproc_95_48 1995_2_cb_418 and therefore is not required to file form_990 statement of law sec_501 of the code provides an exemption from federal_income_tax for organizations described in sec_501 including organizations that are organized and operated exclusively for charitable educational or scientific purposes sec_6033 of the code generally requires the filing of annual information returns by exempt_organizations sec_6033 of the code provides certain mandatory exceptions to filing annual information returns sec_6033 of the code provides discretionary exceptions from filing such returns where the secretary determines that such filing is not necessary to the efficient administration of the tax laws revproc_95_48 provides an exception from filing for governmental units or affiliates of governmental units that are exempt from federal_income_tax under sec_501 of the code section dollar_figure of revproc_95_48 provides that an organization will be treated as an affiliate of a governmental_unit if it is described in sec_501 of the code and either a it has a ruling from the service that its exempt_purpose income is excluded under sec_115 it is entitled to receive deductible contributions under sec_170 because the contributions are the for_the_use_of a governmental_unit or it is a wholly owned instrumentality of a state or political_subdivision for employment_tax purposes or b it meets the requirements of sec_4 b of revproc_95_48 sec_4 b of revproc_95_48 provides the following criteria to be used to determine whether an organization meets the requirements of sec_4 b the organization is either operated supervised or controlled within the meaning of sec_1_509_a_-4 of the income_tax regulations by governmental units or by an organization's governing body that is elected by the public at large the organization possesses two or more affiliation factors listed under section dollar_figure of the revenue_procedure and the organization's filing of form_990 is not otherwise necessary to the efficient administration of the internal revenue laws section dollar_figure of revproc_95_48 describes among the affiliation factors the following a the organization was created by one or more governmental units organizations that are affiliates of governmental units or public officials acting in their official capacity b the organization is subject_to financial audit by the governmental_unit to which it reports or the governmental_unit or affiliate of a governmental_unit exercises control_over or oversees some or all of the organization's expenditures and c one or more governmental units or organizations that are affiliates of governmental units exercise control_over or oversee some or all of the organization’s expenditures section dollar_figure of revproc_95_48 provides that in making a ruling or determination whether the organization’s filing of form_990 is otherwise necessary to the efficient administration of the internal revenue laws under sec_4 b iii all relevant facts and circumstances shall be considered these include the extent to which the organization has taxable subsidiaries or participates in joint ventures with non-exempt entities whether it engages in substantial public fund-raising efforts and whether its activities provide significant benefits to private interests sec_1_509_a_-4 of the regulations provides in part that the terms operated by supervised by ' and controlled by as used in sec_509 of the code presupposes a substantial degree of direction over the policies programs and activities of a supporting_organization by one or more publicly supported organizations the relationship described under any one of these terms is comparable to that of a parent and subsidiary where the subsidiary is under the direction of and accountable or responsible to the parent organization this relationship is established by the fact that a majority of the officers directors or trustees of the supporting_organization are appointed or elected by the governing body officers acting in their official capacity or the membership of one or more publicly supported organizations analysis you have stated that a does not have a ruling that meets the criteria of sec_4 a of revproc_95_48 and therefore it must meet the requirements in sec_4 b the internal_revenue_service has determined that a is exempt from federal_income_tax under sec_501 of the code and is a supporting_organization under sec_509 a was created by state statute its board_of directors is selected from the population to whom it provides services and represents different areas within the service area although a is responsible for managing its daily affairs it is also being supervised and controlled by e through f and g as evidenced by state statute a is required to prepare an annual financial statement and have it audited in accordance with state law the financial statements are prepared using governmental accounting principles and contain information that is at least comparable to the information required by form_990 the audited financial statement must be filed by december of each year with the legislative auditor and the financial statement is a public record a meets the requirements of sec_4 b ii because the special charter under which it operates was created by an act of e and because it is financially accountable to both c and j it is required to file monthly and annual financial reports with f and it is required to file annual audited financial statements with j the audited financial statements which are filed using a prescribed governmental format contain at least as much if not more information than is required by form_990 the audited statement is also a public record a meets the requirements of sec_4 b iii because it has no taxable subsidiaries has no joint ventures with nonexempt entities does not engage in substantial public fund-raising activities and its activities are required by state statute to provide benefits to the elderly of b there are no significant benefits provided to private interests therefore since the filing of form_990 is not otherwise necessary to the efficient administration of the internal revenue laws a meets the requirement of sec_4 b iii of revproc_95_48 since a is described in sec_501 of the code and meets the requirements of sec_4 b of revproc_95_48 a is treated as an affiliate of a governmental_unit under section dollar_figure of revproc_95_48 ruling therefore we rule a satisfies the requirements of being an affiliate of a governmental_unit under revproc_95_48 and therefore is not required to file form_990 this ruling does not address the applicability of any section of the code or regulations to the facts submitted other than with respect to the sections described please keep a copy of this ruling in your permanent records this ruling is based on the understanding that there will be no material changes in the facts upon which it is based this ruling is directed only to the organization that requested it sec_6110 of the code provides that it may not be used or cited by others as precedent this ruling will be made available for public inspection under sec_6110 of the code after certain deletions of identifying information are made for details see enclosed notice notice of intention to disclose a copy of this ruling with deletions that we intend to make available for public inspection is attached to notice if you disagree with our proposed deletions you should follow the instructions in notice if you have any questions about this ruling please contact the person whose name and telephone number are shown in the heading of this letter sincerely yours lawrence brauer acting manager exempt_organizations technical group enclosure notice