office_of_chief_counsel internal_revenue_service memorandum number release date cc psi b02 -------------- scaf-100537-04 uilc date date to associate area_counsel long island small_business self-employed from chief branch office of associate chief_counsel passthroughs special industries subject withholding credits this significant service_center advice responds to your request for assistance dated date this advice may not be used or cited as precedent issues whether and how withholding credits under sec_31 of the internal_revenue_code for income paid_by employers or other parties payors to trusts estates partnerships or s_corporations passthrough entities may be allowed to beneficiaries of a_trust or estate partners in a partnership or shareholders in a s_corporation individuals on the individuals’ federal_income_tax returns conclusions the recipient of the income subject_to_withholding as defined in sec_31 is the person entitled to the credit payments made to a passthrough_entity in its capacity as a separate legal entity are not wages and are not subject_to income_tax_withholding however we understand that instead of making wage payments directly to an individual performing services as an employee employers sometimes make the payments to a passthrough_entity subjecting the payments to income_tax_withholding in the same manner as if the payments were made directly to the employee if an individual is the recipient then the individual may claim the credit even if the income was in fact paid to scaf-100537-04 the passthrough_entity current internal_revenue_service procedures do not offer a method for ensuring that the credit is allocated to the account of the correct taxpayer therefore payors individuals and passthrough entities may have to file amended returns including forms w-2 or to receive proper treatment if they did not initially file consistent with the proper determination of the recipient those offices with jurisdiction over relevant forms and procedures including the internal_revenue_manual should consider any changes necessary to avoid duplicative filings and ensure proper reporting we will be happy to provide any necessary assistance to those offices on the revision of forms and procedures dealing with issues under our jurisdiction facts payors have made payments of amounts subject_to_withholding to passthrough entities and withheld amounts from those payments pursuant to sec_3402 we assume for purposes of this advice that the payments made to the passthrough entities should have been paid directly to an individual as remuneration for services performed by the individual as an employee of the payor employer passthrough entities and individuals have filed returns with the sec_31 withholding credit included on the individuals’ form sec_1040 u s individual_income_tax_return rather than on the federal_income_tax returns of the passthrough entities some passthrough entities and individuals have attached additional forms or statements purporting to allocate the credit to the individuals as the forms w-2 wage and tax statement filed by payors were directed to the passthrough entities this results in a mismatch in the accounts of the passthrough entities processed by the internal_revenue_service as bmf accounts and individuals imf accounts law and analysis withholding sec_31 of the code provides that in general the amount withheld as tax under chapter collection of income_tax at source on wages shall be allowed to the recipient of the income as a credit against the tax imposed by subtitle a income taxes and the amount so withheld during any calendar_year shall be allowed as a credit for the taxable_year beginning in such calendar_year sec_1_31-1 of the income_tax regulations provides that the tax deducted and withheld at the source upon wages under chapter is allowable as a credit against the tax imposed by subtitle a upon the recipient of the income if the tax has actually been withheld at the source credit or refund shall be made even though such tax has not been paid over to the government by the employer for the purpose of the credit the recipient of the income is the person subject_to tax imposed under subtitle a upon the wages from which the tax was withheld for instance if a husband and wife domiciled in a state recognized as a community_property_state for federal_income_tax purposes make separate returns each reporting for income_tax purposes one-half of the wages received by the husband each spouse is entitled to one-half of the credit allowable for the tax withheld at source with respect to such wages scaf-100537-04 sec_3402 provides in general that except as otherwise provided in sec_3402 every employer making payment of wages shall deduct and withhold upon such wages a tax determined in accordance with tables or computational procedures prescribed by the secretary sec_3402 also requires withholding for certain payments other than wages in some circumstances including supplemental unemployment_compensation annuities and sick_pay under sec_3402 gambling winnings under sec_3402 and taxable payments of indian casino profits under sec_3402 trusts_and_estates estates and trusts are taxpayers which under sec_641 are generally subject_to income_tax under sec_1 estates and trusts may receive an income_tax deduction for their distributable_net_income dni as defined in sec_643 to the extent it is distributed to their beneficiaries the dni distributed is generally taxable on the beneficiaries’ own federal_income_tax returns certain trusts which must currently distribute all of their income simple trusts use sec_651 and sec_652 to determine what amounts of income whether actually distributed or not are taxed at the trust level and what amounts are taxable to the beneficiaries most other trusts complex trusts as well as estates use sec_661 and sec_662 to allocate these amounts credits arising from the activities of an estate_or_trust are generally allowable at the estate_or_trust level unless the provisions of a particular credit allocate some or all of that credit to the beneficiaries see for example sec_29 the nonconventional_source_fuels credit or sec_42 the low-income_housing_credit however sec_31 does not allocate any portion of the credit to estate_or_trust beneficiaries and therefore the credit usually will not be available to beneficiaries with two major exceptions provided below first sec_671 provides that where it is specified in subpart e grantors and others treated as substantial owners that the grantor or another person shall be treated as the owner of any portion of a_trust there shall then be included in computing the taxable_income and credits of the grantor or the other person those items of income deductions and credits against tax of the trust which are attributable to that portion of the trust to the extent that such items would be taken into account under chapter normal taxes and surtaxes in computing taxable_income or credits against the tax of an individual the grantor or another person shall be treated as the owner of any portion of a_trust common powers that may result in the grantor or another person being treated as the owner of a portion or all of a_trust include the grantor’s power_to_revoke the trust sec_676 or the power of a person other than the grantor to withdraw the trust property sec_678 if the sec_31 credit is allocable to a_trust or portion of a_trust treated as owned by the grantor or another person under subpart e then the credit should generally appear on that person’s form_1040 second sec_691 provides that the amount of all items of gross_income in respect of a decedent ird which are not properly includible in respect of the taxable_period in which falls the date of the decedent s death or a prior period including the amount of all scaf-100537-04 items of gross_income in respect of a prior decedent if the right to receive such amount was acquired by reason of the death of the prior decedent or by bequest devise or inheritance from the prior decedent shall be included in the gross_income for the taxable_year when received of a the estate of the decedent if the right to receive the amount is acquired by the decedent s estate from the decedent b the person who by reason of the death of the decedent acquires the right to receive the amount if the right to receive the amount is not acquired by the decedent s estate from the decedent or c the person who acquires from the decedent the right to receive the amount by bequest devise or inheritance if the amount is received after a distribution by the decedent s estate of such right if a person other than the estate of a decedent has the right to receive amounts of ird by reason of the decedent’s death under sec_691 from which withholding has taken place or has acquired that right by bequest devise or inheritance after a distribution by the estate under sec_691 then that person would be the recipient of the income and would be entitled to any sec_31 credit associated with that income in the case where a person other than the estate has the right to receive amounts of ird the ird and credit should never appear on the estate’s form_1041 u s income_tax return for estates and trusts all amounts earned but unpaid at an employee’s death received by an estate or beneficiary of a deceased employee should be reported on forms and as nonemployee compensation rather than in box of form_w-2 see revrul_86_109 1986_2_cb_196 thus amounts earned but unpaid prior to the employee’s death should not have been subjected to income_tax_withholding in the first place instead the employer should have issued a form_1099 to the beneficiary in addition reporting on form_w-2 of the medicare wages and social_security wages related to a payment after death is required if the payment is made in the same calendar_year as the death of the employee if the payments are made in the same calendar_year as the death of the employee the payments are generally subject_to federal_insurance_contributions_act fica_taxes and should also be reported in box social_security wages box social_security_tax withheld box medicare wages box medicare_tax withheld on form_w-2 issued in the name of the employee and with the social_security_number of the employee nothing should be reflected in box or box of form_w-2 with respect to a payment of compensation made after death it is reported on form_1099 as noted above if the payment is made after the calendar_year of the death of the employee the payment is not subject_to fica_taxes and the payment should not be reported as social_security wages or medicare wages on the employee’s final form_w-2 see sec_3121 of the internal_revenue_code forms w-2 should be issued to employees not estates if a payor has indicated the estate rather than the beneficiary as the recipient on form_w-2 the estate or the beneficiary should request that the payor issue a corrected form_w-2 with appropriate reporting in the name of the employee with the employee’s social_security_number any scaf-100537-04 forms w-2 issued in the name of estates should be corrected by reflecting zero entries in each box and new forms w-2 should be issued to the employees of the compensation erroneously reported on the estate’s form_w-2 sec_643 provides rules for allocating between an estate_or_trust and its beneficiaries any credit under sec_31 for amounts subject_to backup withholding under sec_3406 sec_643 provides that certain estimated_tax payments made by a_trust or estate may be treated as paid_by its beneficiaries this allocation is made by filing form 1041-t allocation of estimated_tax payments to beneficiaries neither sec_643 nor sec_643 is relevant to the treatment of the withholding credit under sec_31 and neither form 1041-t nor any other form or schedule can be used to allocate this credit except as described elsewhere in this memorandum partnerships sec_702 provides that in determining a partner’s income_tax each partner shall take into account separately that partner’s distributive_share of the partnership’s items of income gain loss deduction or credit to the extent provided by regulations prescribed by the secretary sec_702 provides that the character of any item_of_income gain loss deduction or credit included in a partner’s distributive_share under sec_702 shall be determined as if such item were realized directly from the source from which realized by the partnership or incurred in the same manner as incurred by the partnership sec_704 provides that a partner’s distributive_share of income gain loss deduction or credit shall except as otherwise provided in chapter be determined by the partnership_agreement sec_704 provides that a partner’s distributive_share of income gain loss deduction or credit or item thereof shall be determined in accordance with the partner’s interest in the partnership determined by taking into account all facts and circumstances if the partnership_agreement does not provide as to the partner’s distributive_share of income gain loss deduction or credit or item thereof or the allocation to a partner under the agreement of income gain loss deduction or credit or item thereof does not have substantial economic_effect assuming that the payments are for services performed by the partners as employees of the payor employer the partners are the recipients or the income for sec_31 purposes and the withholding credit should appear on the partners’ form sec_1040 not on the partnership’s form_1065 u s return of partnership income in accordance with the partners’ distributive_share of that credit as determined under sec_702 and sec_704 and the regulations thereunder forms w-2 should be issued to employees not partnerships if a payor has indicated the partnership as recipient on form_w-2 then the partnership or the partner should request that payor issue a corrected form_w-2 to the partnership reflecting zero entries in each box and a new form_w-2 should be issued to the employee partner in the name of the employee with the employee’s social_security_number reporting the payments erroneously reported on the partnership’s form_w-2 scaf-100537-04 additionally the parties would have to file amended returns to allocate the credit to the proper recipient s_corporations sec_1366 provides that in general in determining the tax under chapter of a shareholder of an s_corporation for the shareholder’s taxable_year in which the taxable_year of the s_corporation ends or for the final taxable_year of a shareholder who dies or of a_trust or estate which terminates before the end of the corporation’s taxable_year there shall be taken into account the shareholder’s pro_rata share of the corporation’s items of income including tax-exempt_income loss deduction or credit the separate treatment of which could affect the liability for tax of any shareholder s_corporation shareholders as sec_31 recipients should be treated in a manner similar to partners as described above the withholding credit should not appear on the s corporation’s form_1120s u s income_tax return for an s_corporation similar corrective filings may be necessary if the corporation was treated as recipient by a payor this writing may contain privileged information any unauthorized disclosure of this writing may undermine our ability to protect the privileged information if disclosure is determined to be necessary please contact this office for our views please call brad poston at -------------------- if you have any further questions


internal_revenue_service department of the treasury index number washington dc number release date person to contact telephone number refer reply to cc dom p si plr-112641-99 date date legend x state d1 d2 this responds to the letter dated date submitted on behalf of x requesting relief under sec_1362 of the internal_revenue_code facts x was incorporated under state law on d1 x’s shareholders intended that x be a subchapter_s_corporation effective d2 however an s_corporation_election under sec_1362 was not timely filed s_corporation sec_1362 provides that a small_business_corporation may elect to be an law and analysis sec_1362 provides the rule on when an s election will be effective if an s election is made within the first two and one-half months of a corporation’s taxable_year then that corporation will be treated as an s_corporation for the year in which the cc dom p si plr-112641-99 election is made if an s election is made after the first two and one-half months of a corporation’s taxable_year then that corporation will not be treated as an s_corporation until the taxable_year after the year in which the s election is made sec_1362 provides that if an election under sec_1362 is made for any taxable_year after the date prescribed for making such election for such taxable_year and the secretary determines that there was reasonable_cause for the failure to timely make the election then the secretary may treat the election as timely made for such taxable_year x’s s_corporation_election was not filed timely for the election to be effective as of d2 nevertheless x has established reasonable_cause for not making a timely election and is entitled to relief under sec_1362 conclusion based solely on the facts submitted and representations made and assuming that x otherwise qualifies as a subchapter_s_corporation as of d2 we conclude that x will be recognized as an s_corporation effective as of d2 x should file a completed form_2553 with a copy of this ruling attached reflecting its election of subchapter_s_corporation status as of d2 with the applicable service_center within days of the date of this letter except as specifically set forth above no opinion is expressed concerning the federal tax consequences of the facts described above under any other provision of the code specifically no opinion is expressed concerning whether x otherwise satisfies the s_corporation eligibility requirements this ruling is directed only to the taxpayer who requested it sec_6110 provides that it may not be used or cited as precedent pursuant to the power_of_attorney on file with this office a copy of this ruling is being sent x sincerely signed dianna k miosi dianna k miosi chief branch office of the assistant chief_counsel passthroughs and special industries cc dom p si plr-112641-99 enclosures copy of this letter copy for sec_6110 purposes


uil department of the treasury internal_revenue_service comme ce street dallas tx date december ll number release date certified mail dear person to contact identification nwnber contact telephone nwnber ein in reply refer to internal_revenue_service last date for filing a petition willi 1he united_states tax ffiurt this is a final adverse determination_letter as to your exempt status under section sol c of the internal_revenue_code your exemption from federal_income_tax under sec_501 of the code is hereby revoked effective january t20xx our adverse detennination was made for the following reasons a substantial part of your activities consisted of providing down payment assistance to home buyers to finance the assistance you relied on home sellers and other real-estate related businesses that stand to benefit from these down payment assistance transactions your receipt of a payment from the home seller corresponds to the amount of down payment assistance provided in substantially_all your transactions therefore you are operated for a substantial nonexempt purpose in addition your operations further the private interests of the persons that finance your activities accordingly you are not operated exclusively for exempt purposes described in sec_50 j c contributions to your organization are no longer deductible under sec_170 of the internal_revenue_code you are required to file federal_income_tax returns on form_1120 these returns should be filed with the appropriate service_center for the year ending december 20xx and for all years thereafter processing of income_tax returns ar assessment of any taxes due will not be delayed should a petition for declaratory_judgment be filed under sec_7428 of the internal_revenue_code if you decide to contest this determination under the declaratoryju igment provisions of code section a petition to the united_states tax_court the united_states court of oaims or the district_court of the united_states for the district of colwnbia must be filed before the day after the date this determination was mailed to you contact the clerk of the appropriate court for the rules for initiating suits for declaratory_judgment to secure a petition from the united_states tax_court write to the united_states tax_court second street n w washington d c we will notify the appropriate state officials of this action as required by sec_6104 of the internal_revenue_code you should contact your state officials if you have any questions about how this determination may affect your state responsibilities and requirements you also have the right to contact the office_of_the_taxpayer_advocate however you should first contact the person whose name and telephone munber are shown above since this person can access your tax infonnation and can help you get answers you can calll-877-777-4778 and ask for taxpayer_advocate assistance or you can contact the taxpayer_advocate from the site where the tax_deficiency was determined by calling or writing to internal_revenue_service taxpayer advocates office taxpayer_advocate assistance cannot be used as a substitute for established irs procedures fonnal appeals processes etc the taxpayer_advocate is not able to reverse legal or technically correct_tax determinations nor extend the time fixed by law that you have to file a petition in the united_states tax_court the taxpayer_advocate can however see that a tax matter that may not have been resolved through nonnal channels gets prompt and proper handling if you have any questions please contact the person whose name and telephone number are shown in the heading of this letter sincerely yours vicki l hansen acting director eo examinations department of the treasury internal_revenue_service commerce street dallas tx date date employer_identification_number form tax_year s ended person to contacvio number contact number telephone fax certified mail- return receipt requested dear we have enclosed a copy of our report of examination explaining why we believe revocation of your exempt status under sec_501 of the code code and the imposition of income and employment_taxes are necessary if you accept our findings please sign the enclosed form_6018 consent to proposed adverse action and form_4549 income_tax examination changes and return them to our office within days of the date of this letter an envelope has been provided for your convenience if you do not agree to our findings and wish to protest you must submit to us a written request for appeals consideration within days of the date of this letter your protest should include a statement of facts the applicable law and argument in support of your position an appeals officer who is independent of the director eo examinations will review your case the appeals_office resolves most disputes informally and promptly the enclosed publication the examination process and publication exempt_organizations appeal procedures for unagreed issues explain how to appeal an internal_revenue_service irs decision publication also includes information on your rights as a taxpayer and the irs collection process you may also request that we refer this matter for technical_advice as explained in publication if we issue a determination_letter to you based on technical_advice no further administrative appeal is available to you within the irs retarding the issue that was the subject of the technical_advice if we do not hear from you within days from the date of this tetter we will process your case based on the recommendations shown in the report of examination if you do not protest this proposed determination within days from the date of this letter the irs will consider it to be a failure to exhaust your available administrative remedies section b of the code provides in part a declaratory_judgment or decree under this section shall not be issued in any proceeding unless the tax_court the claims_court or the district_court of the united_states for the district of columbia determines that the organization involved has exhausted its administrative remedies within the internal_revenue_service n we will then issue a final revocation letter and assess any_tax as indicated on the attached report of examination we will also notify the appropriate state officials of the revocation in accordance with sec_6104 of the code you are liable for filing federal income and employment_tax returns for all subsequent years these returns are to be filed with the appropriate campus identified in the instructions for those returns you have the right to contact the office_of_the_taxpayer_advocate taxpayer_advocate assistance is not a substitute for established irs procedures such as the formal appeals process the taxpayer_advocate cannot reverse a legally correct_tax determination or extend the time fixed by law that you have to file a petition in a united_states court the taxpayer_advocate can however see that a tax mater that may not have been resolved through normal channels gets prompt and proper handling you may call toll-free and ask for taxpayer_advocate assistance if you prefer you may contact your local taxpayer_advocate at taxpayer_advocate if you have any questions please call the contact person at the telephone number shown in the heading of this letter if you write please provide a telephone number and the most convenient time to call if we need to contact you thank you f_r your cooperation sincerely v'ickrl fiansen acting director eo examinations enclosure publication publication report of examination envelope form 886-a rev date name of taxpayer issue explanations of items tax identification_number schedule number or exh bit year period ended december 20xx the tax_liability of under section ii a of the internal_revenue_code facts is a not-for-profit corporation incorporated on june 20xx it also has a certificate of authority to transact business in the state of incorporation is to expand the availability of decent safe affordable housing by capitalizing on current opportunities to acquire rehabilitate preserve buy lease rent manage broker or construct housing units for rent and or for sale as stated in the articles of the purpose of on september 20xx code sec_501 on form_1023 on january 20xx based on the information that in its application_for exemption and on the assumption that its application sec_501 applied for recognition as a tax exempt_organization under internal revenue provided would operate in the manner represented in was recognized as of june 20xx as a tax exempt_organization as described in operates a down payment program that provides financial assistance to homebuyers the amount provided can be used for the down payment closing costs outstanding debt or numerous other needs the stated in its application_for funds are generated from payments from builders and sellers although recognition of exempt status that it also planned to offer interim or specialized housing for the elderly or handicapped it did not engage in that activity the service conducted an examination of tax for the tax_year ended december 20xx based on the examination conducted it was concluded no longer qualified for exemption from federal_income_tax that conclusion was reached in part that for the following reasons form_990 return oforganization exempt from income does not exclusively serve an exempt_purpose described in sec_50l c provides substantial private benefit to persons who do not belong to a charitable_class down payment gift program does not limit assistance to certain geographic areas or target those areas experiencing deterioration or neighborhood tensions the transactions of make payments to down payment necessary to purchase homes from the sellers the sellers and buyers result in a circular flow of the money the sellers provides the funds to buyers the buyers use the funds to make the form 886-a page of3 department of the treasury -internal revenue service form 886-a rev date name of taxpayer explanations of items tax identification_number schedule number or exh bit year period ended december 20xx on october 20xx as a result of the examination of letter letter proposing revocation of tax exempt status form_990 return the service issued a day appealed the service's proposed revocation to the office of appeals law section ii a of the code imposes a tax for each taxable_year on the taxable_income of every corporation sec_61 ofthe code provides that except as otherwise provided gross_income means all income from whatever source derived section i62 a of the code provides that there shall be allowed as a deduction all the ordinary and necessary expenses paid_or_incurred during the taxable_year in carrying on any trade_or_business section l ii-i a of the federal tax regulations regs provides that every corporation foreign or domestic is liable to the tax imposed under section ii except i corporations specifically excepted under such section from such tax corporations expressly exempt from all taxation under subtitle a ofthe code see sec_50 i and corporations subject_to tax under sec_511 a regs sec_1_61-1 a provides that gross_income means all income from whatever source derived unless excluded by law gross_income includes income realized in any form whether in money property or services income may be realized therefore in the form of services meals accommodations stock or other_property as well as in cash regs sec_1_61-3 provides that in a manufacturing merchandising or mining business gross_income means the total sales less the cost_of_goods_sold plus any income from investments and from incidental or outside operations or sources regs sec_1_162-1 a provides that business_expenses deductible from gross_income include the ordinary and necessary expenditures directly connected with or pertaining to the taxpayer's trade_or_business regs section dollar_figure a l provides that except as provided every corporation subject_to taxation under subtitle a of the code shall make a return of income regardless of whether it has taxable_income or regardless of the amount of its gross_income form 886-a page of3 department of the treasury- internal_revenue_service form 886-a rev date name of taxpayer explanations of items tax identification_number schedule number or exh bit year period ended december 20xx regs section dollar_figure a provides that the return required of a corporation under this section shall be made on form_1120 unless the corporation is of a type for which a special form is prescribed irs position based on the letter referenced above from the service to recognized as exempt from federal_income_tax as an organization described in sec_501 ofthe code the revocation of tax exempt status is effective as of january 20xx dated october 20xx is no longer for the tax_year ended december 20xx is a taxable corporation as such by sec_11 of the code and is required to file form_1120 u s_corporation income_tax return for the tax years ended december 20xx pursuant to regs sec_1_6012-2 and is liable for the tax imposed that statutory period for the limitation oftime to assess tax owed by on january 20xx therefore pursuant to sec_6212 ofthe code the service is sending a notice_of_deficiency to with respect to the tax imposed by sec_11 a under sec_1l a ofthe code expires in computing the amount oftax due by amounts reported as revenue and expenses on 20xx to income and deductions on form_1120 return for the tax_year ended december 20xx the adjustments to convert income_tax examination changes under sec_11 ofthe code the service converted the form_990 return to form_1120 return are summarized on the enclosed form form_990 return for the tax_year ended december all revenues reported on form_990 return were treated as income pursuant to section 6l a ofthe code and regs sec_1_61-1 and -3 a see line item sec_1a-e adjustments to income on form_4549 all expenses reported on form_990 return were treated as ordinary and necessary expenses and allowed as deductions from income pursuant to section 6l a ofthe code and regs sec_1_162-1 a see line items i f-g adjustments to income form_4549 taxpayer position the issuance of a notice_of_deficiency along with projected tax_liabilities was discussed with an officer of form 886-a page of3 department of the treasury- internal_revenue_service


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 fip b04 plr-102496-09 date december legend company ------------------------------------------------------------------------------------------------------------ ---------------------------------------------------------------------------- --------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------- -------------------------------------------------------------- new fund --- ----------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------- -------------------------------------------------------------- adviser ---------------------------------------------------------------------------- --------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------- ------------------------------------------ adviser’s general_partner ----------------------------------- state a state b date number q ------------ ------------- --------------- ---- plr-102496-09 number r number s ---- -- fund ----------------------------------------------- ------------------------------------------------------------------------------------------------------ --------------------------------------------------------------------- fund ----------------------------------------------------------------------------------------------------------- --------------------------------------------------------------- fund ------------------------------------------------------------------- ---------------------------------------------------- fund --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------- fund --------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------- fund --------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------- -------------------------------------------------------------- fund ----------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------- fund -------------------------------------------------- fund -------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------- fund -------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------- fund ---------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------- a b ---- --- plr-102496-09 c d e f g h i j k l m o p ---- --- ------ -- --- ------- ------- -- ------ ------ -- ---- ------ dear --------------- this is in response to the letter submitted by your authorized representative dated date requesting rulings concerning the tax_ownership of new fund shares additional information was submitted in a letter dated date facts company is organized as a state a corporation company is registered as an open- end management investment_company with the securities_and_exchange_commission sec under the investment_company act of as amended the act and its shares are registered with the sec under the securities act of as amended the act company is comprised of number q portfolio sec_1 that have each elected and qualified to be taxed as a regulated_investment_company ric under subchapter_m of of the number q portfolios number r are structured as feeder portfolios and number s are structured as fund of funds plr-102496-09 the internal_revenue_code_of_1986 pursuant to sec_851 each portfolio is treated as a separate corporation for federal_income_tax purposes new fund is a newly formed series of company that intends to elect and qualify to be taxed as a regulated_investment_company shares of new fund will be sold only to separate_accounts of insurance_companies in conjunction with variable life and variable_annuity contracts new fund will file a form 1120-ric u s income_tax return for regulated_investment_companies with an annual_accounting_period ending on date using an accrual_method of accounting adviser is organized as a state b limited_partnership and is registered with the sec as an investment adviser under the investment adviser’s act of adviser will serve as investment manager to new fund adviser is controlled and operated by its general_partner adviser’s general_partner a state b corporation adviser files form_1065 u s return of partnership income on a calendar_year basis using an accrual_method of accounting adviser may enter into an investment subadvisory agreement with one or more investment advisers under which such subadviser will make investment decisions to buy and sell securities and conduct research that leads to those purchase and sale decisions for all or a portion of new fund’s portfolio any such subadviser will be registered with the sec as an investment adviser under the investment adviser's act of shares of new fund will be offered exclusively to separate_accounts of certain life_insurance_companies to support variable life and variable_annuity contracts purchased by individuals each a contract owner the assets of an account are generally allocated among sub-accounts each a sub-account that correspond to the variable investment options under the contracts contract owners will not be able to direct the new fund’s investment to any particular investment including the underlying funds as defined below and there will be no agreement or plan between an insurance_company and a contract owner or between adviser and a contract owner regarding any such investment the contract owners will have no legal equitable direct or indirect ownership in any of new fund’s assets rather the contract owners will only have a contractual claim against the insurance_company to collect cash payments pursuant to the terms of the contract new fund is a fund of funds which means that new fund allocates its assets among other rics including related variable funds and public funds the related variable funds are other regulated investment investments companies advised by adviser or an affiliate of adviser that except as otherwise permitted by sec_1_817-5 of the income_tax regulations are offered to insurance_company segregated_asset accounts to serve as an investment vehicle for variable_contracts public funds are rics that are available to investors other than through the purchase of a variable_contract or as plr-102496-09 otherwise permitted by sec_1_817-5 of the regulations underlying funds are comprised of related variable funds and or public funds new fund’s primary objective is total return consisting of capital appreciation and current income new fund seeks to achieve its investment objective by purchasing shares of underlying funds to provide exposure to domestic and international equity and fixed income securities with moderate allocation to global equity securities the range of allocation of assets between equity underlying funds consisting of the domestic equity underlying funds and the international equity underlying funds and fixed income underlying funds for new fund under normal circumstances is shown below range equity underlying funds fixed income underlying funds a - b c - a initially new fund is expected to invest in the underlying funds set out below some of which are offered to the public public funds and some of which except as otherwise permitted by sec_1_817-5 are offered exclusively to separate_accounts of life_insurance_companies related variable funds though it will be unknown to the contract owners the initial target allocation for new fund as set by adviser is set out below opposite each underlying fund domestic equity underlying funds fund fund shares of a related variable fund may also be held by a fund of funds such as new fund the shares of which fund of funds except as otherwise permitted by sec_1_817-5 are offered exclusively to separate_accounts of insurance_companies initial target allocation d e plr-102496-09 fund fund international equity underlying funds fund fund fund fixed income underlying funds fund fund fund fund subtotal subtotal subtotal f g h i j g k l m l m o this target allocation and the approved underlying funds may change from time to time in the sole and absolute discretion of adviser without notice to new fund’s shareholders as long as the allocation maintains under normal circumstances i global equity exposure and ii the equity fixed income mix in the moderate allocation range described above the target allocations will not be set out in new fund’s registration_statement rather it is contemplated that only the names of underlying funds will be set out in new fund’s registration_statement from time to time adviser may add or remove underlying funds in new fund’s portfolio without notice to new fund’s shareholders to maintain or adjust allocation ranges adjustments may be made each business_day by applying future investments in and redemptions from new fund in proportions necessary to rebalance or adjust the investments in the underlying funds in addition adviser will rebalance new fund’s portfolio at least quarterly if necessary by purchasing or selling shares of underlying funds to maintain or adjust allocation ranges plr-102496-09 in addition to changes in the allocation between equity and fixed income underlying funds adviser in its sole and absolute discretion may also vary the allocation in other ways including between domestic and international underlying funds the international equity underlying funds will vary in their investments in emerging markets or developing markets and as to each among different geographic regions with respect to equity underlying funds among large cap mid cap and small cap companies and within such capitalization ranges among value growth and core styles as well as exposure to equities and fixed income investments and real_estate and with respect to fixed income underlying funds among investments with varying average maturities and credit ratings also in addition to other short-term investments new fund may invest in affiliated and unaffiliated registered and unregistered money market funds to manage its cash pending investment in underlying funds or to maintain liquidity for the payment of redemptions or other purposes adviser expects that new fund’s allocations to underlying funds and make-up of underlying funds will vary over time in order to achieve new fund’s investment objective based on market conditions that exist at any given time new fund will comply with the diversification requirements of sec_817 and in accordance with these requirements must treat each public fund as a single investment pursuant to such requirements no more than fifty-five percent of the value of new fund’s total assets will be represented by any one investment no more than seventy percent of the value of new fund’s total assets will be represented by any two investments no more than eighty percent of the value of new fund’s total assets will be represented by any three investments and no more than ninety percent of the value of new fund’s total assets will be represented by any four investments representations in addition to the facts presented above company has also made the following representations a company is registered under the act as an open-end management investment_company b new fund is a newly formed separate series of company is a fund as such term is used in sec_851 and is treated as a separate corporation for federal_income_tax purposes pursuant to sec_851 c each underlying fund has elected to be taxed as a regulated_investment_company under part i of subchapter_m of the code and has qualified and plr-102496-09 intends to continue to qualify for the tax treatment afforded regulated_investment_companies under the code for each of its taxable years d new fund will elect to be taxed as a regulated_investment_company under part i of subchapter_m and intends to qualify for the tax treatment afforded regulated_investment_companies under the code for each of its taxable years e except as otherwise permitted by sec_1_817-5 all of the beneficial interests in new fund are held directly or indirectly by one or more segregated_asset accounts of one or more insurance_companies and public access to new fund is available exclusively through the purchase of a variable_contract within the meaning of sec_817 f except as otherwise permitted by sec_1_817-5 all of the beneficial interests in related variable funds will be held directly or indirectly by one or more segregated_asset accounts of one or more insurance_companies and public access to related variable funds will be available exclusively through the purchase of a variable_contract within the meaning of sec_817 g the life_insurance_companies whose segregated_asset accounts hold or will hold shares of related variable funds are life_insurance_companies within the meaning of sec_816 h the life_insurance_companies whose segregated_asset accounts hold or will hold shares of new fund will be life_insurance_companies within the meaning of sec_816 i each segregated_asset_account that will hold shares of new fund will be a separate_account registered with the sec as a unit_investment_trust under the act or exempt from registration under sec_3 under the act j new fund will satisfy the diversification requirements of sec_817 of the code and sec_1_817-5 of the regulations k there is not and there will not be any arrangement plan contract or agreement between adviser or a subadviser and a variable_contract holder regarding the availability of new fund as a subaccount under the variable_contract or the specific assets to be held by new fund or underlying fund l other than a variable_contract holder’s ability to allocate variable_contract premiums and transfer amounts in the insurance_company segregated_asset_account to and from the insurance_company subaccount corresponding to new fund all investment decisions concerning new fund are and will be made by adviser any the subadviser s and the company’s board_of directors in their plr-102496-09 sole and absolute discretion the percentage of new fund’s assets invested in a particular public fund will not be fixed in advance of any variable_contract holder’s investment and will be subject_to change by the adviser or a subadviser at any time m a variable_contract holder cannot and will not be able to direct new fund’s investment in any particular asset or recommend a particular investment or investment strategy and there is not and will not be any agreement or plan between adviser or a subadviser and a variable_contract holder regarding a particular investment of new fund n no variable_contract holder can or will be able to communicate directly or indirectly with adviser or a subadviser concerning the selection quality or rate of return on any specific investment or group of investments held by new fund o a variable_contract holder does not have and will not have any current knowledge of new fund’s specific assets other than as may be required to be presented in periodic reports to new fund’s shareholders a variable_contract holder does not have and will not have any legal equitable direct or indirect ownership_interest in any of the assets of new fund a variable_contract holder only has and only will have a contractual claim against the insurance_company offering the variable_contract to receive cash from the insurance_company under the terms of his or her variable_contract p except as otherwise permitted by sec_4982 all shares of new fund will be held directly or indirectly by segregated assets accounts of life_insurance_companies that are held in connection with variable_contracts as defined in sec_817 and new fund therefore will qualify for the exception from federal excise_tax provided by sec_4982 unless a variable_contract holder is treated as a shareholder of new fund pursuant to the investor_control requirements of revrul_81_225 1981_2_cb_12 and revrul_82_54 1982_1_cb_11 ruling requested new fund requests a ruling that the new fund’s investment in public funds will not cause the variable_contract holders to be treated as the owners of the new fund’s shares for federal_income_tax purposes law and analysis revrul_81_225 has been clarified by revrul_82_55 1982_1_cb_12 and clarified and amplified by revrul_2003_92 2003_2_cb_353 plr-102496-09 sec_61 provides that the term gross_income means all income from whatever source derived including gains derived from dealings in property interest and dividends a long standing doctrine_of taxation provides that taxation is not so much concerned with the refinement of title as it is with actual command over the property taxed - the actual benefit for which the tax is paid corliss v bowers 381_us_376 the incidence of taxation attributable to ownership of property is not shifted if the transferor continues to retain significant control_over the property transferred 435_us_561 333_us_591 309_us_331 without regard to whether such control is exercised through specific retention of legal_title the creation of a new equitable but controlled interest or the maintenance of effective benefit through the interposition of a subservient agency 749_f2d_513 8th cir revrul_77_85 1977_1_cb_12 considers a situation in which the individual purchaser of a variable_annuity contract retained the right to direct the custodian of the account supporting that variable_annuity to sell purchase and exchange securities or other assets held in the custodial_account the purchaser also was able to exercise an owner’s right to vote account securities either through the custodian or individually the internal_revenue_service the service concluded that the purchaser possessed significant incidents_of_ownership over the assets held in the custodial_account the service reasoned that if a purchaser of an investment annuity_contract may select and control the investment_assets in the separate_account of the life_insurance_company issuing the contract then the purchaser is treated as the owner of those assets for federal_income_tax purposes thus any interest dividends or other income derived from the investment_assets are included in the purchaser’s gross_income in revrul_80_274 1980_2_cb_27 the service applying revrul_77_85 concluded that if a purchaser of an annuity_contract may select and control the certificates of deposit supporting the contract then the purchaser is considered the owner of the certificates of deposit for federal_income_tax purposes similarly revrul_81_225 1981_2_cb_12 concludes that investments in mutual_fund shares to fund annuity_contracts are considered to be owned by the purchaser of the annuity_contract if the mutual_fund shares are available for purchase by the general_public revrul_81_225 also concludes that if the mutual_fund shares are available only through the purchase of an annuity_contract then the sole function of the fund is to provide an investment vehicle that allows the issuing insurance_company to meet its obligations under its annuity_contracts and the mutual_fund shares are considered to be owned by the insurance_company finally in revrul_82_54 1982_1_cb_11 the purchaser of certain annuity_contracts could allocate premium payments among three funds and had an unlimited right to reallocate contract value among the funds prior to the maturity_date plr-102496-09 of the annuity_contract interests in the funds were not available for purchase by the general_public but were instead only available through the purchase of an annuity_contract the service concludes that the purchaser’s ability to choose among general investment strategies for example between stock bonds or money market instruments either at the time of the initial purchase or subsequent thereto did not constitute control sufficient to cause the contract holders to be treated as the owners of the mutual_fund shares in christoffersen v united_states supra the eighth circuit considered the federal_income_tax consequences of the ownership of the assets supporting a segregated_asset_account the taxpayers in christoffersen purchased a variable_annuity contract that reflected the investment return and market_value of assets held in an account that was segregated from the general_asset_account of the issuing insurance_company the taxpayers had the right to direct that their premium payments be invested in any one of six publicly traded mutual funds the taxpayers could reallocate their investment among the funds at any time the taxpayers also had the right upon seven days notice to withdraw funds surrender the contract or apply the accumulated value under the contract to provide annuity payments the eighth circuit held that for federal_income_tax purposes the taxpayers not the issuing insurance_company owned the mutual_fund shares that funded the variable_annuity the court concluded that the taxpayers surrendered few of the rights of ownership or control_over the assets of the subaccount that supported the annuity_contract according to the court the payment of annuity premiums management fees and the limitation of withdrawals to cash did not reflect a lack of ownership or control as the same requirements could be placed on traditional brokerage or management accounts thus the taxpayers were required to include in gross_income any gains dividends or other income derived from the mutual_fund shares sec_817 which was enacted by congress as part of the deficit_reduction_act_of_1984 pub_l_no the 1984_act provides rules regarding the federal_income_tax treatment of variable life_insurance and annuity_contracts sec_817 of the code defines a variable_contract as a contract that provides for the allocation of all or part of the amounts received under the contract to an account that pursuant to state law or regulation is segregated from the general asset accounts of the company and that provides for the payment of annuities or is a life_insurance_contract in the legislative_history of the 1984_act congress expressed its intent to deny life_insurance treatment to any variable_contract if the assets supporting the contract include funds publicly available to investors the conference agreement allows any diversified fund to be used as the basis of variable_contracts so long as all shares of the funds are owned by one or more segregated_asset accounts of insurance_companies but only if access to the fund is available exclusively through the purchase of a variable_contract from an insurance plr-102496-09 company in authorizing treasury to prescribe diversification standards the conferees intend that the standards be designed to deny annuity or life_insurance treatment for investments that are publicly available to investors h_r conf_rep no pincite sec_817 of the code provides that a variable_contract based on a segregated_asset_account shall not be treated as an annuity endowment or life_insurance_contract unless the segregated_asset_account is adequately diversified in accordance with regulations prescribed by the secretary_of_the_treasury if a segregated_asset_account is not adequately diversified income earned by that segregated_asset_account is treated as ordinary_income received or accrued by the policyholders approximately two years after the enactment of sec_817 the treasury_department issued proposed and temporary regulations prescribing the minimum level of diversification that must be met for an annuity or life_insurance_contract to be treated as a variable_contract within the meaning of sec_817 the preamble to the temporary regulations stated as follows the temporary regulations do not provide guidance concerning the circumstances in which investor_control of the investments of a segregated_asset_account may cause the investor rather than the insurance_company to be treated as the owner of the assets in the account for example the temporary regulations provide that in appropriate cases a segregated_asset_account may include multiple sub-accounts but do not specify the extent to which policyholders may direct their investments to particular sub-accounts without being treated as owners of the underlying assets guidance on this and other issues will be provided in regulations or revenue rulings under sec_817 relating to the definition of variable_contracts fed reg date the final regulations adopted with certain revisions not relevant here the text of the temporary regulations in revrul_2003_91 2003_2_cb_347 a variable_contract holder did not have control_over segregated account assets sufficient for the service to deem the variable_contract holder the owner of the assets the variable_contracts at issue were funded by a separate_account that was divided into twelve subaccounts the issuing insurance_company could increase or decrease the number of subaccounts at any time but there would never be more than twenty subaccounts available under the contracts each subaccount offered a different investment strategy interests in the subaccounts were available solely through the purchase of a variable life or variable_annuity contract that qualified as a variable_contract under sec_817 the investment activities of each subaccount were managed by an independent investment adviser there was no plr-102496-09 arrangement plan contract or agreement between the contract holder and the issuing insurance_company or between the contract holder and the independent investment adviser regarding the availability of a particular subaccount the investment strategy of any subaccount or the assets to be held by a particular subaccount other than a contract holder’s right to allocate premiums and transfer funds among the available subaccounts all investment decisions concerning the subaccounts were made by the issuing insurance_company or the independent investment adviser in their sole and absolute discretion a contract holder had no legal equitable direct or indirect interest in any of the assets held by a subaccount but had only a contractual claim against the issuing insurance_company to collect cash in the form of death_benefits or cash surrender values under the contract the service concluded that based on all the facts and circumstances the contract holder did not have direct or indirect control_over the separate_account or any subaccount asset and therefore the contract holder did not possess sufficient incidents_of_ownership over the assets supporting the variable_contracts to be deemed the owner of the assets for federal_income_tax purposes sec_4982 imposes a tax on every regulated_investment_company for each calendar_year equal to percent of the excess if any of - the required_distribution for such calendar_year over the distributed_amount for such calendar_year sec_4982 provides an exemption from such excise_tax as follows this section shall not apply to any regulated_investment_company for any calendar_year if at all times during such calendar_year each shareholder in such company was either - a_trust described in sec_401 and exempt from tax under sec_501 or a segregated assets account of a life_insurance_company held in connection with variable_contracts as defined in sec_817 for purposes of the preceding sentence any shares attributable to an investment in the regulated_investment_company not exceeding dollar_figure made in connection with the organization of such company shall not be taken into account analysis in the revenue rulings discussed above the service took the position that if the holder of a variable life_insurance_policy or variable_annuity contract possesses sufficient incidents_of_ownership over the assets supporting the policy or contract the contract holder is viewed for federal_income_tax purposes as the owner of the underlying assets and as a result is currently taxed on any income and gains attributable to the underlying assets the service stated in revrul_2003_91 that the determination of whether the holder of a variable life_insurance_policy or variable_annuity contract possesses sufficient incidents_of_ownership over the assets of the separate_account plr-102496-09 underlying the variable life_insurance_contract or variable_annuity contract depends on all the relevant facts and circumstances in the present case the fact that new fund may invest in public funds does not cause the variable_contract holders to be treated as the owners of new fund’s shares for federal_income_tax purposes in revrul_82_54 the amounts held in the segregated_asset_account underlying a variable_contract were invested as the contract holder directed in shares of any or all of three open-end investment companies mutual funds each mutual_fund represented a different broad general investment strategy shares of the mutual funds were available only to insurance_company segregated_asset accounts while the mutual funds themselves were not available to the general_public the mutual funds held common stocks bonds and money market instruments all of which were available for purchase by members of the general_public the public availability of the assets held by the mutual funds did not lead to the conclusion that the issuing insurance_company was simply a conduit between the contract holders and their mutual funds or the underlying assets of the mutual funds revrul_82_54 held that the insurance_company not the contract holders was the owner of the mutual_fund shares similar to the mutual funds in revrul_82_54 the shares of new fund are or will be available only to insurance_company segregated_asset accounts and will invest in assets that are available to the general_public in the current case instead of investing in common stocks bonds and money market instruments that are available to the general_public new fund will generally invest in regulated_investment_companies and exchange trade funds that are available to the general_public based on the representations and facts presented by the taxpayer the variable_contract holder in this case does not appear to have any more control_over the assets held under their contract than was the case in revrul_82_54 in addition although shares of public funds are publicly offered it is not likely that the general_public can replicate the overall performance of new fund given adviser’s discretion and authority to change the investment at any time without notice to the contract owners and the allocation by new fund of a portion of its assets to related variable funds which are only available to the public through the purchase of variable_contracts the investment strategy of new fund provides adviser with the right to change the investment allocation among underlying funds and the right to remove underlying funds at any time this flexibility prevents the contract owners from replicating the performance of new fund and from creating a portfolio that is substantially identical to what a contract owner’s position would have been by directly investing in underlying funds based on the representations presented by the taxpayer new fund does not represent an indirect means of allowing a variable_contract holder to invest in a public fund conclusion plr-102496-09 based on the authority cited above and the representations and facts presented by the taxpayer new fund’s investment in public funds will not cause the variable_contract holders to be treated as the owners of new fund’s shares for federal_income_tax purposes except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter this ruling is directed only to the taxpayer requesting it sec_6110 of the code provides that it may not be used or cited as precedent temporary or final regulations pertaining to one or more of the issues addressed in this ruling have not yet been adopted therefore this ruling will be modified or revoked by the adoption of temporary or final regulations to the extent the regulations are inconsistent with any conclusion in the letter_ruling see dollar_figure of revproc_2009_1 2009_1_irb_1 however when the criteria in dollar_figure of revproc_2009_1 2009_1_irb_1 are satisfied a ruling is not revoked or modified retroactively except in rare or unusual circumstances in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative the rulings contained in this letter are 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 request for rulings it is subject_to verification on examination sincerely s donald j drees jr senior technician reviewer branch financial institutions products


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 ita b04 plr-110072-06 date date ------- taxpayer ----------------------------------------------------------------------- year dear ------------------- this letter is in response to a request filed on behalf taxpayer regarding the late filing of a form_8716 election to have a tax_year other than a required tax_year taxpayer has requested that its late-filed form_8716 be considered timely filed under authority contained in sec_301_9100-3 of the procedure and administration regulations taxpayer elected s_corporation status requesting a september tax year-end however taxpayer did not timely file a form_8716 electing to use a taxable_year ending september effective september year taxpayer relied on a qualified_tax professional to assure a proper and timely filing of the form_8716 the qualified_tax professional however did not timely file the form_8716 taxpayer has requested that the service consider its late-filed form_8716 to be timely filed under authority contained in sec_301_9100-3 of the procedure and administration regulations taxpayer filed form_1120s u s income_tax return for an s_corporation for the tax_year ending september year taxpayer also timely filed form_8752 required_payment or refund under sec_7519 for its year ending september year sec_1_444-3t of the temporary income_tax regulations provides that among other requirements form_8716 must be filed by the earlier of i the 15th day of the fifth month following the month that includes the first day of the taxable_year for which the election will first be effective or ii the due_date without regard to extensions of the income_tax return resulting from the sec_444 election plr-110072-06 sec_301_9100-1 sec_301_9100-2 and sec_301_9100-3 provide the standards that the commissioner will use to determine whether to grant an extension of time to make a regulatory election sec_301_9100-2 sets forth rules governing automatic extensions for regulatory elections including elections to use other than the required tax_year under sec_444 if the provisions of sec_301_9100-2 do not apply to the taxpayer's situation the provisions of sec_301_9100-3 may apply sec_301_9100-3 sets forth standards that the commissioner will employ in determining whether to grant relief in situations that do not meet the requirements of sec_301_9100-2 relief will be granted under this section if the taxpayer acted reasonably and in good_faith in the matter and the grant of relief will not prejudice the interests of the government see sec_301_9100-3 and c under sec_301_9100-3 a taxpayer generally will be deemed to have acted reasonably and in good_faith if the taxpayer reasonably relied on a qualified_tax professional and that professional failed to make or advise the taxpayer to make the election at issue the information submitted and representations furnished by taxpayer and its qualified_tax professionals establish that taxpayer acted reasonably and in good_faith in respect of this matter in addition because taxpayer filed form_1120s and form_8752 based on a taxable_year ending september and made all payments required under sec_7519 the granting of relief in this case will not prejudice the interests of the government accordingly the requirements of sec_301_9100-3 for the granting of relief have been satisfied therefore taxpayer’s form_8716 will be treated as timely filed if it is filed within days of the date of this letter with the internal_revenue_service center where taxpayer files its returns of tax a copy of this letter and taxpayer's form_8716 electing to use a taxable_year ending september effective september year must be filed within days of the date of this letter with internal_revenue_service center where taxpayer files its returns of tax a copy of this letter must be attached to any income_tax return to which it is relevant also enclosed is a copy of the letter showing the deletions proposed to be made when it is disclosed under sec_6110 of the internal_revenue_code 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 for example the grant of the extension of time to file form_8716 is not a determination that taxpayer is otherwise eligible to make the election to have a taxable_year ending september effective september year see sec_301_9100-1 plr-110072-06 the rulings contained in this letter are 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 request for rulings it is subject_to verification on examination this ruling is directed only to the taxpayer requesting it sec_6110 of the code provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative sincerely michael j montemurro branch chief office of associate chief_counsel income_tax accounting


significant index number department of the treasury internal_revenue_service washington d c tax_exempt_and_government_entities_division apr tep ra az re taxpayer dear for the above-named plan which are described in sections this letter constitutes notice that approval has been granted for your request for a 5-year automatic_extension for amortizing the unfunded liabilities as of september b b and b of the internal_revenue_code code and sec_304 and sec_304 of the employee_retirement_income_security_act_of_1974 erisa this extension is effective with the plan_year beginning september bases established as of september this extension applies to the eligible amortization charge the extension of the amortization periods of the unfunded liabilities of the plan was granted in accordance with sec_431 of the code sec_431 of the code requires the secretary to extend the period of time required to amortize any unfunded_liability of a plan for a period of time not in excess of years if the plan submits an application meeting the criteria stated in sec_431 the plan has submitted the required information to meet the criteria in sec_431 including a certification from the plan’s actuary that plan's funding status absent the extension under subparagraph a the plan would have an accumulated_funding_deficiency in the current plan_year or any of the succeeding pian years ii the plan_sponsor has adopted a plan to improve the i iii the plan is projected to have sufficient assets to timely pay expected benefits and anticipated expenditures over the amortization period as extended and iv the notice required under paragraph a has been provided we have sent a copy of this letter to the and to the this ruling is directed only to the taxpayer that requested it sec_6110 of the internal_revenue_code provides that it may not be used or cited by others as precedent if you require further assistance in this matter please contact sincerely yours he david m ziegler manager ep actuarial group