internal_revenue_service number release date index number ----------------------------- ----------------------------- --------------------------------------- --------------------------------- ----------------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ------------------------ id no ------------- telephone number --------------------- refer reply to cc corp b04 plr-138062-09 date date parent ------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------ ------------------------ acquiring ------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------ ----------------------- sub target target sub ------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------ -------------- ------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------ ----------------------- ------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------ -------------- industry -------------------- regional -------- state ------------------- country x -------- plr-138062-09 country y -------------- date date date date date date date date year -------------------------- ------------------- ------------------ ------------------- ------------------- ------------------- ------------------- -------------------------- ------- year ------- a b c d e ------ ----------------------------------- ----------------------------------- --------------------------------- -------------------------------- dear ----------------- this letter responds to your letter dated date in which you requested rulings regarding certain federal_income_tax consequences of a series of completed transactions the information submitted in that letter and later correspondence is summarized below the rulings contained in this letter are based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury plr-138062-09 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 summary of facts parent is a privately held state corporation and the common parent of an affiliated_group_of_corporations that files a consolidated federal_income_tax return on a calendar-year basis the group parent owns all the stock of acquiring a state corporation and acquiring owns all the stock of sub a country x entity required to be treated as a corporation for federal_income_tax purposes under sec_301_7701-2 sub is a controlled_foreign_corporation under sec_957 of the internal_revenue_code a cfc and maintains its financial information on a calendar-year basis before the conversion described below acquiring also owned all the stock of target a state corporation acquiring is a member of the group as was target before the conversion target was formed by acquiring to hold an a-percent interest in target sub a country y entity treated as a corporation for u s federal_income_tax purposes the remaining interests in target sub were owned by persons unrelated to acquiring the unrelated members in connection with the formation of target sub target committed to make cash loans to target sub from time to time totaling b dollars in partial satisfaction of this commitment target loaned target sub c dollars in exchange for a promissory note early in year the year note because target held no material assets other than its interest in target sub at the time the funds loaned by target to target sub were first loaned to target by acquiring in exchange for a promissory note the target note early in year in further satisfaction of target’s remaining commitment discussed above target loaned target sub another d dollars in exchange for a second promissory note the year note and together with the year note the target sub notes as before the d dollars loaned by target to target sub had first been loaned by acquiring to target in exchange for a promissory note together with the target note the target notes other than its interest in target sub and the target sub notes target held no material assets at any time before the conversion the transactions for what are represented to be valid business reasons parent caused the following series of transactions to occur the transactions i on date target and the unrelated members contributed all of their target sub debt except for the year note which target retained to target sub in exchange for additional shares of target sub stock plr-138062-09 ii following step i above acquiring contributed the target notes to the capital of target on date the target notes contribution the target notes contribution occurred in contemplation of a transfer of the target sub ownership interests to sub iii pursuant to a share purchase agreement effective on date acquiring sold all the stock of target to sub the sale for approximately e dollars in cash the purchase cash the sale was designed to provide sub with certain benefits that would result from owning an interest in target sub originally target was to sell its interest in target sub directly to sub for the purchase cash but due to concerns that such a sale would violate parent’s third party debt covenants it was decided that acquiring should sell its stock in target a holding_company for the target sub interest to sub parent had been advised by legal counsel that such a sale would not violate any of its debt covenants after the sale was completed however parent was informed by its tax advisors that the sale would result in unintended adverse federal_income_tax consequences to the group to avoid these unintended consequences acquiring and sub entered into an agreement on date to rescind the sale the rescission agreement and the rescission under the rescission agreement the parties agreed that the share purchase agreement that had effected the sale would be null and void from its inception and neither acquiring nor sub would have any enforceable rights or obligations under the share purchase agreement in addition the existing certificates representing shares of target stock issued in acquiring’s name would continue to be valid and acquiring would have no obligation to deliver target stock certificates to sub the parties also agreed to treat the rescission as a rescission of the share purchase agreement and not as an acquisition of target stock by sub followed by a re-acquisition of the target stock by acquiring or as any other form of transaction plr-138062-09 the parties also stated in the recitals of the rescission agreement that the purpose of the rescission is and the effect of the rescission will be to restore in all material respects the legal and financial arrangements among the parties that would have existed had the share purchase agreement never been executed and in particular this rescission agreement is intended to restore the legal and financial arrangements between acquiring and sub that would have existed had acquiring not received the purchase cash and to cause the legal and financial arrangements between acquiring and sub to be identical in all material respects from the date immediately before the share purchase agreement was executed to such arrangements that would have existed had the share purchase agreement never been executed neither acquiring sub target parent nor any other person or entity under their respective control will take any material position or make any material_change inconsistent with the position that would have existed had the share purchase agreement never been executed the rescission was completed on date at which time acquiring repaid the purchase cash to sub following the rescission and to achieve the business benefits for sub that the sale would have produced parent caused the following steps to occur i ii effective date target converted under state law to a limited_liability_company target llc and the conversion pursuant to an agreement effective on date acquiring sold its interest in target llc and thus the interest in target sub and the year note held by target llc to sub the transfer for approximately e dollars the transfer cash the conversion was intended to qualify as a reorganization under sec_368 representations regarding the rescission parent represents that a the sale was a transaction to which sec_304 would have applied b the sale occurred during the taxable_year of the group ending date the year tax_year and the rescission was effective during the year tax_year c the intent and effect of the rescission agreement was and is to restore in all material respects the legal and financial arrangements between acquiring target and sub that would have existed had the sale not occurred plr-138062-09 d parent acquiring and sub have examined their activities and the activities of all other entities controlled directly or indirectly by parent between the sale and the rescission the interim period and have i determined that no activity of any such entity has occurred that is materially inconsistent with the rescission and ii agreed that no activity of any such entity will occur that is materially inconsistent with the rescission e during the interim period the sale had no legal or material economic consequences to any of parent acquiring sub or any other corporation controlled directly or indirectly by parent during the interim period f the rescission placed parent acquiring and sub in the status quo ante immediately before the sale g the rescission did not involve any party that was not involved in the sale h acquiring and sub executed the rescission agreement and implemented the rescission in accordance with the terms of the executed rescission agreement i the parties will treat the rescission as a rescission of the sale and not as an acquisition of target stock by sub followed by a reacquisition of the stock by acquiring or as any type of transaction other than a rescission of the sale j provided the rescission is effective to disregard the sale for federal_income_tax purposes parent and its subsidiaries will file their federal_income_tax and information returns for the year tax_year as if acquiring had not sold the stock of target to sub in the sale in particular the return of the group for the year tax_year will reflect target as being a member of the group for the period of the year tax_year preceding the conversion and all material items of income deduction gain and loss of each member of the group will be reflected on the group’s consolidated federal_income_tax return as if the sale had not occurred regarding the conversion parent represents that k overall plan each step of the conversion and the transfer was effected under a single l no election was filed or will be filed for target or target llc during the 60-month period ending on the effective date of the conversion or thereafter that would change its initial or default classification m target and sub participated in the conversion and the transfer for bona_fide business reasons parent’s management believes that the conversion and the transfer will allow sub to fully realize the growth potential of the country x business by i providing country x industry customers with the ability to commercialize their plr-138062-09 products across regional markets ii providing country x industry customers with the ability to free up their own resources to focus on developing strategic assets and iii allowing sub to learn from and understand the target sub business model and replicate this model in country x for the future growth of its business n acquiring acquired at least percent of the fair_market_value of the net assets and at least percent of the fair_market_value of the gross assets held by target immediately before the conversion for purposes of this representation amounts paid_by target to dissenters amounts used by target to pay its reorganization expenses amounts paid_by target to shareholders who receive cash or other_property and all redemptions and distributions except for regular normal dividends made by target immediately before the transfer will be included as assets of target held immediately before the transaction o the transfer cash received by acquiring was approximately equal to the fair_market_value of the target llc interest surrendered therefor p the fair_market_value of the property transferred by target to acquiring in the conversion exceeded the amount of liabilities of target immediately before the exchange including any liabilities cancelled extinguished or assumed in the exchange and the fair_market_value of the assets of acquiring equaled or exceeded the amount of its liabilities immediately after the conversion q the liabilities if any assumed within the meaning of sec_357 in the conversion by acquiring were incurred in the ordinary course of business and are associated with the property of target r except for the transfer acquiring has no plan or intention to cause target llc to sell or otherwise dispose_of any of the assets held by target before the conversion except for i dispositions made in the ordinary course of business or ii transfers of assets to one or more corporations controlled by acquiring within the meaning of sec_368 after the conversion s following the conversion and transfer sub will continue the historical business of target or use a significant portion of the historical business_assets of target in a business within the meaning of sec_1_368-1 t sub is a member of acquiring’s qualified_group within the meaning of sec_1_368-1 u target acquiring and sub each paid their respective expenses if any incurred in connection with the conversion v no indebtedness existed between target and acquiring before the conversion that was issued acquired or settled at a discount plr-138062-09 w no two parties to the conversion were investment companies within the meaning of sec_368 and iv x y neither target nor acquiring was or is under the jurisdiction of a court in a title_11_or_similar_case within the meaning of sec_368 items of income gain loss deduction and credit will be taken into account as required by the applicable intercompany_transaction regulations as a result of the conversion see sec_1_1502-13 and sec_1 as in effect before the publication of t d 1995_2_cb_147 and as currently in effect sec_1_1502-13 as published by t d z parent will remain as the common parent of the group and the group will not terminate aa all of the rights and obligations under the target notes were extinguished for federal_income_tax purposes in the conversion bb the adjusted_issue_price of the target notes was equal to acquiring’s basis in each of the target notes cc target's corresponding_item and acquiring's intercompany_item after taking into account the special rules of sec_1_1502-13 with respect to the target notes offset in amount dd neither target nor acquiring has a special status within the meaning of sec_1_1502-13 or attributes subject_to a limitation under the separate_return_limitation_year rules eg sec_1_1502-15 sec_1_1502-21 or sec_1 c ee during the entire period of time that target held stock in target sub target sub has never been a cfc with respect to which target was a u s shareholder ff neither target sub nor any of its predecessors has ever been a passive_foreign_investment_company pfic within the meaning of sec_1297 gg prior to the conversion target did not carry on activities that would have risen to the level of a qualified_business_unit and which pursuant to sec_1_985-1 would have been treated as having a functional_currency other than the u s dollar hh prior to the conversion target did not carry on activities directly or indirectly that would have been treated as a separate_unit under sec_1503 thus target has never incurred losses that were subject_to an agreement election or certification filed pursuant to sec_1503 and the regulations thereunder plr-138062-09 rulings based solely on the information submitted and the representations made herein we rule as follows for federal_income_tax purposes i the sale is disregarded ii the shares of target stock that acquiring held on date are treated as having been owned by acquiring throughout the interim period and iii target is treated as having remained a wholly owned subsidiary of acquiring and a member of the group at all times during the year tax_year until consummation of the conversion on date revenue_ruling c b the conversion is a reorganization within the meaning of sec_368 target and acquiring are each a_party_to_a_reorganization within the meaning of sec_368 the transfer did not prevent the conversion from qualifying as a reorganization under sec_368 sec_368 sec_1 k no gain_or_loss was recognized by target on the transfer of its properties to acquiring in exchange for deemed issued shares of acquiring voting_stock and the assumption by acquiring of related liabilities sec_361 and b sec_357 sec_1_1502-13 and revrul_72_464 c b no gain_or_loss was recognized by acquiring on the receipt of target’s assets from target in exchange for deemed issued shares of acquiring stock sec_1032 the adjusted_basis of each target asset in the hands of acquiring equals the adjusted_basis of that asset in the hands of target immediately before the exchange sec_362 the holding_period of acquiring in each asset received from target includes the holding_period of that asset in the hands of target immediately before the exchange sec_1223 pursuant to sec_381 and sec_1_381_a_-1 acquiring succeeded to and will take into account the items described in sec_381 on the date of the conversion these items will be taken into account by acquiring subject_to the provisions and limitations specified in sec_381 sec_382 sec_383 sec_384 sec_904 sec_1502 and the regulations thereunder sec_1_381_b_-1 revrul_70_27 1970_1_cb_83 revrul_80_144 c b plr-138062-09 acquiring will recognize gain_or_loss on the transfer equal to the amount_realized less acquiring's basis in the target sub stock and the year note sec_61 and sec_1001 caveats 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 including under the international provisions of the code procedural statements 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 a copy of this letter must be attached to any income_tax return to which it is relevant alternatively taxpayers filing their returns electronically may satisfy this requirement by attaching a statement to their return that provides the date and control number of the letter_ruling in accordance with the power_of_attorney on file with this office a copy of this letter will be sent to your authorized representative sincerely _____________________________ lewis k brickates branch chief branch associate chief_counsel corporate cc


third party communication none date of communication not applicable office_of_chief_counsel internal_revenue_service memorandum number release date cc psi hldamazo postf-111979-17 uilc date date to thomas r mackinson associate area_counsel san francisco group small_business self-employed attn cameron w carr from leslie h finlow senior technician reviewer branch associate chief_counsel passthroughs special industries subject gift_tax examination this chief_counsel_advice responds to your request for assistance this advice may not be used or cited as precedent legend donor corporation a corporation b_trust shares date date issue -------------------------------------------------------------- ------------------------------------------------------------------------- --------------------------------------------------------------------------- -------------------------------------------------------------------------------------- -------------------------------------------------------------------------------- ----------------------------------------- ------------------------------------------ postf-111979-17 whether under the circumstances described below the hypothetical willing buyer and seller of shares in a publicly-traded company would consider a pending merger when valuing stock for gift_tax purposes conclusion yes under the fair_market_value standard the hypothetical willing buyer and seller of a publicly-traded company would consider a pending merger when valuing stock for gift_tax purposes facts donor is a co-founder and chairman of the board_of corporation a a publicly-traded corporation on date donor transferred shares to trust a newly-formed grantor_retained_annuity_trust with a ------------ term with a remainder to his children ------------- later on date after the market closed corporation a announced a merger with corporation b the merger was the culmination of -------------- negotiations with multiple parties and then -------------------- before the date transfer exclusive negotiations with corporation b on the ----- day of trading after the merger was announced the value of the corporation a stock increased substantially though less than the agreed merger price the merger was consummated more than ----------------- after date the internal_revenue_service has reviewed the underlying transaction documents from the year preceding the merger such documents include the corporation a and corporation b exclusivity agreement correspondence between corporation a and corporation b and board meeting minutes the record as compiled to date supports the position that as of date the hypothetical willing buyer of the stock could have reasonably foreseen the merger and anticipated that the price of corporation a stock would trade at a premium law sec_2512 of the code provides that if a gift is made in property the value thereof at the date of the gift shall be considered the amount_of_the_gift sec_25_2512-1 of the gift_tax regulations provides in part that if a gift is made in property its value at the date of the gift shall be considered the amount_of_the_gift the value of the property is the price at which such property would change hands between a willing buyer and a willing seller neither being under any compulsion to buy or sell and both having reasonable knowledge of relevant facts sec_25_2512-2 generally provides that the value of stocks and bonds is the fair_market_value per share or bond on the date of the gift postf-111979-17 sec_25_2512-2 provides in relevant part that if there is a market for stocks or bonds on a stock exchange in an over-the-counter market or otherwise the mean between the highest and lowest quoted selling prices on the date of the gift is the fair_market_value per share or bond sec_25_2512-2 provides in relevant part that in cases in which it is established that the value per bond or share of any security determined on the basis of the selling or bid and asked prices as provided under sec_25_2512-2 does not represent the fair_market_value thereof then some reasonable modification of the value determined on that basis or other relevant facts and elements of value shall be considered in determining fair_market_value the value of property for federal transfer_tax purposes is a factual inquiry wherein the trier of fact must weigh all relevant evidence and draw appropriate inferences to arrive at the property’s fair_market_value 120_tc_174 rev’d on other grounds 458_f3d_564 7th cir citing 323_us_119 for this purpose fair_market_value is the price that a hypothetical willing buyer would pay a hypothetical willing seller neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts sec_25_2512-1 revrul_59_60 1959_1_cb_237 the valuation of property is a question of fact see redstone v commissioner tcmemo_2015_237 the willing buyer and willing seller are hypothetical persons rather than specific individuals or entities and their characteristics are not necessarily the same as those of the donor and the donee see estate of 120_tc_358 rev’d on other grounds 461_f3d_614 5th cir 94_tc_193 the hypothetical willing buyer and willing seller are presumed to be dedicated to achieving the maximum economic advantage newhouse t c pincite the principle that the hypothetical willing buyer and seller are presumed to have reasonable knowledge of relevant facts affecting the value of property at issue applies even if the relevant facts at issue were unknown to the actual owner of the property estate of kollsman v commissioner tcmemo_2017_40 appeal docketed no 9th cir date moreover both parties are presumed to have made a reasonable investigation of the relevant facts id thus in addition to facts that are publicly available reasonable knowledge includes those facts that a reasonable buyer or seller would uncover during the course of negotiations over the purchase_price of the property id moreover a hypothetical willing buyer is presumed to be reasonably informed and prudent and to have asked the hypothetical willing seller for information that is not publicly available estate of kollsman supra postf-111979-17 generally a valuation of property for federal transfer_tax purposes is made as of the valuation_date without regard to events happening after that date 279_us_151 subsequent events may be considered however if they are relevant to the question of value estate of noble v commissioner tcmemo_2005_2 n federal_law favors the admission of probative evidence and the test of relevancy under the federal rules of evidence is designed to achieve that end id thus a post-valuation date event may be considered if the event was reasonably foreseeable as of the valuation_date 885_f2d_561 9th cir 120_tc_174 furthermore a post-valuation date event even if unforeseeable as of the valuation_date also may be probative of the earlier valuation to the extent that it is relevant to establishing the amount that a hypothetical willing buyer would have paid a hypothetical willing seller for the subject property as of the valuation_date see 88_tc_38 in silverman v commissioner tcmemo_1974_285 aff’d 538_f2d_927 2d cir cert_denied 431_us_938 the petitioners gifted shares of preferred_stock while in the process of reorganizing with the intent to go public the tax_court rejected the expert testimony presented by the petitioners because the expert failed to take into account the circumstances of the future public sale in 174_f3d_997 9th cir aff’g 108_tc_244 the appellate court considered the issue of whether the tax_court correctly held that taxpayers were liable for gain in appreciated stock under the anticipatory_assignment_of_income doctrine in ferguson taxpayers owned percent of ahc and served as officers and on the board_of directors in late and early the ahc board_of directors contacted and eventually authorized goldman sachs co to find a purchaser of ahc and to assist in the negotiations by date goldman sachs had found four prospective purchasers shortly thereafter ahc entered into a merger agreement with dci holdings inc with the taxpayers abstaining from the vote the ahc board unanimously approved the merger agreement on date the tender offer was started on august taxpayers with the help of their broker executed a donation-in-kind record with respect to their intention to donate stock to a charity and two foundations on date the charity and the foundations tendered their stock on date the final shares were tendered and on date the merger was completed the court concluded that the transfers to charity and the foundations occurred after the shares in ahc had ripened from an interest in a viable corporation into a fixed_right to receive cash and the merger was practically certain to go through in particular the court noted that t he tax_court really only needed to ascertain that as of the valuation_date the surrounding circumstances were sufficient to indicate that the tender offer and the merger were practically certain to proceed by the time of their actual deadlines - several days in the future ferguson f 3d pincite consequently the assignment_of_income_doctrine applied and the taxpayers realized gain when the shares were disposed of by charity and the foundations postf-111979-17 the current case shares many factual similarities with ferguson including the targeted search by the board_of directors of corporation a to find merger candidates the exclusive negotiations with corporation b immediately before the final agreement the generous terms of the merger and an agreement that was practically certain to go through while the ferguson opinion deals exclusively with the assignment_of_income_doctrine it also relies upon the proposition that the facts and circumstances surrounding a transaction are relevant to the determination that a merger is likely to go through see bank one and kollsman supra the current case presents an analogous issue that is whether the fair_market_value of the stock should take into consideration the likelihood of the merger as of the date transfer of shares to trust the ferguson and silverman opinions as considered by the tax_court and the second and ninth circuit courts of appeal support the conclusion that the value of stock in corporation a must take into consideration the pending merger accordingly a value determined on the basis of the selling_price as provided under sec_25_2512-2 does not represent the fair_market_value of shares as of the valuation_date pursuant to sec_25_2512-2 other relevant facts and elements of value must be considered in determining fair_market_value under the fair_market_value standard as articulated in sec_25_2512-1 the hypothetical willing buyer and willing seller as of date would be reasonably informed during the course of negotiations over the purchase and sale of shares and would have knowledge of all relevant facts including the pending merger indeed to ignore the facts and circumstances of the pending merger would undermine the basic tenets of fair_market_value and yield a baseless valuation case development hazards and other considerations 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 if you have any further questions


internal_revenue_service number release date index number --------------------- -------------------------- ------------------------------------------------------------ ----------------------------------------- ----------------------------------- ------------------------ ------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ----------------------- id no ------------------- --------------------------------------------------- telephone number -------------------- refer reply to cc corp b05 plr-116338-17 date november date taxpayer corporation a b c d dear ------------ - ------------------------ ----------------------------------------------------- --------------------------------- ------- ---------- ---------- ---------- ---------- this letter responds to your authorized representative’s letter dated date requesting a ruling under sec_302 of the internal_revenue_code the code with respect to a transaction to which sec_304 applied the information provided in that request and in subsequent correspondence is summarized below the ruling contained in this letter is based upon information and representations submitted by the taxpayer and accompanied by a penalties of perjury statement executed by an appropriate party this office has not verified any of the materials plr-116338-17 submitted in support of the ruling_request verification of the facts representations and other information may be required as part of the audit process facts on date taxpayer disposed of stock it owned in corporation in a taxable_exchange to which sec_304 applied to treat the receipt of property for stock as a redemption subject_to sec_302 the transaction taking into account applicable constructive_ownership rules immediately before the transaction taxpayer’s percentage interest in the i vote and ii current earnings accumulated surplus and net assets upon liquidation in corporation was a and b respectively and immediately after the transaction taxpayer’s percentage interest in the i vote and ii current earnings accumulated surplus and net assets upon liquidation in corporation was c and d respectively ruling based solely on the information submitted and the representations made we rule that taxpayer’s receipt of property in the transaction was not essentially_equivalent_to_a_dividend under sec_302 caveats 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 procedural statements 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 a copy of this letter must be attached to any income_tax return to which it is relevant alternatively taxpayers filing their returns electronically may satisfy this plr-116338-17 requirement by attaching a statement to their return that provides the date and control number of the letter_ruling sincerely t ian russell branch chief branch office of associate chief_counsel corporate cc


significant index number sir sy s department of the treasury internal_revenue_service washington d c government entities division sep tep ra ar re taxpayer dear 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 date for the above-named plan which are described in sec_431 and sec_431 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 date this extension applies to the eligible amortization charge bases as identified in your application submission established as of date 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 i absent the extension under subparagraph a the plan would have an accumulated_funding_deficiency in the current plan_year or any of the succeeding plan years ii the plan_sponsor has adopted a plan to improve the plan's funding status 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 to the and to your authorized representative pursuant to a power of enemy on file in this office 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 david m ziegler manager ep actuarial group


internal_revenue_service number release date index number ------------------------------------------- ------------------ ----------------------- ----------------------------- - department of the treasury washington dc third party communication none date of communication not applicable_person to contact ------------------- id no ------------- telephone number --------------------- refer reply to cc psi b01 plr-140404-06 date date ------------- ------------------ -------------------------- this letter responds to a letter dated date submitted on behalf of x legend x ----------------------------------------- state d1 dear -------------- requesting rulings regarding a proposed transaction including rulings under sec_368 and sec_1361 of the internal_revenue_code facts on d1 x made an s election effective d1 for business reasons x intends to reorganize as a limited_liability_company llc under the laws of state the newly formed llc will elect under sec_301_7701-3 of the procedure and administration regulations to be treated as an association_taxable_as_a_corporation for federal tax purposes effective from the date of formation concurrently with or shortly after the formation and entity classification election of the llc x will merge into the llc under state law with the llc surviving the llc members and their percentage membership interests in the llc will be identical to x shareholders and their percentage shareholder interests in x the information submitted states that x was incorporated under the laws of state plr-140404-06 the llc will be manager managed the llc managers are in this case the equivalent of corporate officers managers can be elected and removed by majority vote of the members with respect to the llc its members will have identical rights other than the ability to bind the llc in contract as to third parties which right will be limited to the elected managers with respect to the llc all items of income and loss will be allocated among the members pro_rata in accordance with their percentage membership interests in the llc and all distributions both liquidating and non- liquidating will be made to the members pro_rata in accordance with their percentage membership interests the fair_market_value of the llc membership interests that the shareholders of x will receive in the merger will be equal to the fair_market_value of x shares surrendered in the exchange the shareholders will receive no consideration other than llc membership interests for their x shares there is no plan or intention by any of the shareholders to sell exchange or otherwise dispose_of any llc membership interest that he or she will receive in the merger the llc has no plan or intention to issue llc membership interests following the merger immediately following the consummation of the merger the shareholders will own all of the membership interests of the llc and will own such interests solely by reason of their ownership of x stock immediately prior to the merger immediately following the merger the llc will possess all of the assets and liabilities as those possessed by x immediately prior to the transaction no assets will be distributed and there will be no dissenting shareholders at the time of the merger x will not have outstanding any warrants options convertible securities or any other type of right by which any person could acquire stock in x the llc has no plan or intention to reacquire or redeem any of its membership interests issued in the merger the llc has no plan or intention to sell or otherwise dispose_of any of the assets of x acquired in the proposed transaction except for dispositions made in the ordinary course of business the liabilities of x to be assumed by the llc plus the liabilities if any to which the assets to be transferred are subject were incurred by x in the ordinary course of business and are associated with the assets transferred following the merger the llc will conduct the same business that was conducted by x prior to the merger the shareholders will pay their expenses if any incurred in connection with the transaction x is not currently under the jurisdiction of any court in a title_11_case or similar case within the meaning of sec_368 of the internal_revenue_code immediately after the merger the llc will not be under the jurisdiction of any court in a title_11_case or similar case within the meaning of sec_368 of the internal_revenue_code law and analysis change in identity form or place of organization of one corporation however effected sec_368 provides that the term reorganization means a mere sec_1361 defines an s_corporation as a small_business_corporation for plr-140404-06 which an election under sec_1362 is in effect for such year domestic_corporation that is not an ineligible_corporation and that does not a have more than shareholders b have as a shareholder a person other than an estate a_trust described in sec_1361 or an organization described in sec_1361 who is not an individual c have a nonresident_alien as a shareholder and d have more than one class of stock sec_1361 provides that the term small_business_corporation means a sec_1_1361-1 provides that a corporation is treated as having only one class of stock if all outstanding shares of stock of the corporation confer identical rights to distribution and liquidation proceeds sec_1_1361-1 provides that the determination of whether all outstanding shares of stock confer identical right to distribution and liquidation proceeds is made based on the corporate charter articles of incorporation bylaws applicable state law and binding agreement relating to distribution and liquidation proceeds collectively the governing provisions a commercial contractual agreement such as a lease employment agreement or loan agreement is not a binding agreement relating to distribution and liquidation proceeds and thus is not a governing provision unless a principal purpose of the arrangement is to circumvent the one class of stock requirement of sec_1361 and sec_1_1361-1 sec_301_7701-3 provides that a business_entity that is not classified as a corporation under sec_301_7701-2 or an eligible_entity can elect its classification for federal tax purposes as provided in sec_301_7701-3 an eligible_entity with at least two members can elect to be classified as either an association and thus a corporation under sec_301_7701-2 or a partnership and an eligible_entity with a single owner can elect to be classified as an association or to be disregarded as an entity separate from its owner revrul_64_250 1964_2_cb_333 concludes that when an s_corporation merges into a newly formed corporation in a transaction qualifying as a reorganization under sec_368 and the newly formed surviving corporation also meets the requirements of an s_corporation the reorganization does not terminate the s election thus the s election remains in effect for the new corporation revrul_73_526 1973_2_cb_404 concludes that the identifying number previously assigned to the transferor_corporation should be used by the surviving corporation in a statutory merger qualifying as a reorganization under sec_368 conclusions based solely on the information submitted and the representations as set forth plr-140404-06 above we conclude that the merger of x into the llc pursuant to state law and the llc’s election to be treated as an association_taxable_as_a_corporation for federal tax purposes which will be in effect on the date of the proposed transaction qualifies as a reorganization under sec_368 x will not recognize any gain_or_loss on the exchange sec_361 and sec_357 the basis of x assets in the hands of the llc will be the same as the basis of such assets in the hands of x immediately prior to the proposed transaction sec_362 the holding_period of x assets held by the llc will include the period during which such assets were held by x sec_1223 the basis of the llc interests received by the shareholders will be the same as the basis of x shares surrendered in the exchange sec_358 the holding_period of the llc interests to be received by the shareholders will include the period during which x shares surrendered therefore were held provided that the shares are held as capital assets on the date of the exchange sec_1223 the llc’s agreement once executed in a substantially identical form will be considered a governing provision for purposes of sec_1_1361-1 since it will be a binding agreement that defines the members’ rights to distribution and liquidating proceeds further the llc agreement once executed will not by its terms cause x to have a second class of stock within the meaning of sec_1361 the llc will retain x’s previously assigned identifying number ein see revrul_73_526 1973_2_cb_404 concerning the tax consequences of any aspect of any transaction or item discussed in this letter specifically this ruling expresses no opinion regarding the existence of any other document or arrangement that could be considered a governing provision under sec_1_1361-1 in addition any arrangement that allows the owners to share in current distributions and liquidating proceeds in a manner that differs from their stated ownership percentage interests could potentially be considered to create a second class of stock except as specifically set forth herein no opinion is expressed or implied 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-140404-06 in accordance with the power_of_attorney on file with this office a copy of this letter is being mailed to your authorized representative sincerely audrey w ellis senior counsel branch office of associate 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 b09 plr-165140-04 date date ------- ----------------------- ---------------------------------------------- --------------- -------------------------- year grantor_trust accountant spouse dear ------------------------ this responds to your representative’s letter dated date requesting an extension of time under sec_2642 of the internal_revenue_code and sec_301_9100-3 of the procedure and administration regulations to make an allocation of your generation- skipping transfer gst tax exemption facts the information submitted states that in year grantor created and transferred property to trust an irrevocable_trust under the terms of trust there is a possibility that a generation-skipping_transfer gst may occur grantor hired accountant to prepare the united_states gift and generation-skipping_transfer_tax form form_709 to report the transfer in year grantor’s spouse spouse consented to split the gift pursuant to sec_2513 in preparing the form sec_709 accountant inadvertently failed to allocate grantor’s and spouse’s available gst tax exemption to the transfer by failing to attach a notice of allocation to grantor’s and spouse’s form sec_709 for year grantor and spouse now request an extension of time to allocate gst tax exemption under sec_2642 with respect to the assets transferred to trust in year law and analysis sec_2501 imposes a tax for each calendar_year on the transfer of property by gift during such calendar_year by any individual resident or nonresident sec_2511 plr-165140-04 provides that subject_to certain limitations the gift_tax applies whether the transfer is in trust or otherwise direct or indirect and whether the property transferred is real or personal tangible or intangible sec_2513 provides that a gift made by one spouse to any person other than his spouse shall for purposes of this chapter be considered as made one-half by him and one-half by his spouse but only if at the time of the gift each spouse is a citizen or resident_of_the_united_states sec_2513 provides that sec_2513 shall apply only if both spouses have signified under the regulations provided for in sec_2513 their consent to the application of sec_2513 in the case of all such gifts made during the calendar_year by either while married to the other sec_2601 imposes a tax on every gst a gst is defined under sec_2611 as a taxable_distribution a taxable_termination and a direct_skip sec_2631 as in effect at the time of the transfer provided that for purposes of determining the inclusion_ratio every individual shall be allowed a gst tax exemption of dollar_figure which may be allocated by such individual or his executor to any property with respect to which such individual is the transferor sec_2632 provides that any allocation by an individual of his or her gst tax exemption under sec_2631 may be made at any time on or before the date prescribed for filing the estate_tax_return for such individual’s estate determined with regard to extensions regardless of whether such a return is required to be filed sec_2642 provides that except as provided in sec_2642 if the allocation of the gst tax exemption to any transfers of property is made on a gift_tax_return filed on or before the date prescribed by sec_6075 for such transfer or is deemed to be made under sec_2632 or c the value of such property for purposes of sec_2642 shall be its value as finally determined for purposes of chapter within the meaning of sec_2001 or in the case of an allocation deemed to have been made at the close of an estate_tax_inclusion_period on and after the close of such estate_tax_inclusion_period sec_2642 provides generally that the secretary shall by regulation prescribe such circumstances and procedures under which extensions of time will be granted to make an allocation of gst tax exemption described in sec_2642 or and an election under sec_2632 or c such regulations shall include procedures for requesting comparable relief with respect to transfers made before the date of the enactment of this paragraph sec_2642 provides that in determining whether to grant relief under this paragraph the secretary shall take into account all relevant circumstances including evidence of intent contained in the trust instrument or instrument of transfer and such plr-165140-04 other factors as the secretary deems relevant for purposes of determining whether to grant relief under this paragraph the time for making the allocation or election shall be treated as if not expressly prescribed by statute notice_2001_50 2001_2_cb_189 provides that under sec_2642 the time for allocating the gst tax exemption to lifetime transfers and transfers at death the time for electing out of the automatic allocation rules and the time for electing to treat any trust as a gst_trust are to be treated as if not expressly prescribed by statute the notice further provides that taxpayers may seek an extension of time to make an allocation described in sec_2642 or b or an election described in sec_2632 or c under the provisions of sec_301_9100-3 sec_301_9100-1 provides that the commissioner has discretion to grant a reasonable extension of time under the rules set forth in sec_301_9100-2 and sec_301_9100-3 to make a regulatory election or a statutory election but no more than six months except in the case of a taxpayer who is abroad under all subtitles of the internal_revenue_code except in subtitles e g h and i sec_301_9100-3 provides that in general requests for extensions of time for regulatory elections that do not meet the requirements of sec_301_9100-2 must be made under the rules of sec_301_9100-3 under sec_301_9100-1 a regulatory election includes an election whose due_date is prescribed by a notice published in the internal_revenue_bulletin in accordance with sec_2642 and notice_2001_50 taxpayers may seek an extension of time to make an election described in sec_2642 or b or an election described in sec_2632 or c under the provisions of sec_301_9100-3 requests for relief under sec_301_9100-3 will be granted when the taxpayer provides the evidence to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government sec_301_9100-3 provides that a taxpayer is deemed to have acted reasonably and in good_faith if the taxpayer reasonably relied on a qualified_tax professional including a tax professional employed by the taxpayer and the tax professional failed to make or to advise the taxpayer to make the election based on the facts submitted and the representations made we conclude that the requirements of sec_301_9100-3 have been satisfied therefore grantor and spouse are granted an extension of time of days from the date of this letter to allocate gst_exemption to the transfer to trust in year that is considered made one-half by grantor and one-half by spouse pursuant to sec_2513 the allocations will be effective as of the date of the transfers and the value of the transfers for gift_tax purposes will be used in determining the amount of gst tax exemption to be allocated the allocations of gst plr-165140-04 exemption should be made on form sec_709 and filed with the cincinnati service_center at internal_revenue_service cincinnati service_center - stop cincinnati oh copies of this letter should be attached to each form_709 the rulings contained in this letter are based upon information and representations submitted by the taxpayers 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 taxpayers 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 a copy of this letter must be attached to any income_tax return to which it is relevant sincerely heather c maloy associate chief_counsel passthroughs special industries cc


t c memo united_states tax_court isaak abdi ibrahim petitioner v commissioner of internal revenue respondent docket no filed date kathryn j sedo for petitioner jeremy j eggerth for respondent memorandum findings_of_fact and opinion nega judge respondent determined a deficiency of dollar_figure in petitioner’s federal_income_tax for the issues for decision are i whether petitioner is entitled to file a joint_return under sec_6013 ii whether unless otherwise indicated section references are to the internal revenue continued petitioner qualifies for the earned_income_credit eic and iii whether petitioner is entitled to dependency_exemption deductions and child tax_credits for minor children k f and a f who were not originally claimed as dependents on petitioner’ sec_2011 tax_return petitioner resided in minnesota at the time he filed his petition findings_of_fact some of the facts have been stipulated and are so found we incorporate by reference the stipulation of facts and attached exhibits petitioner his wife rukia hassan and their four children resided in minneapolis minnesota at the time his petition was filed petitioner’s wife is the widow of petitioner’s half-brother who was the biological father of the four children currently residing with petitioner and his wife petitioner and rukia hassan are immigrants from somalia and cannot speak read or write english petitioner timely filed hi sec_2011 form 1040a u s individual_income_tax_return petitioner and his wife used oday tax service oday to prepare separate tax returns since employees there spoke somali petitioner claimed head of continued code in effect for the year in issue and all rule references are to the tax_court rules_of_practice and procedure the court refers to minor children by their initials see rule a household filing_status on his return and his wife claimed single filing_status on her return petitioner claimed two dependents on hi sec_2011 return minor children s f and z f but did not include the two other minor children k f and a f respondent timely sent a notice_of_deficiency to petitioner for hi sec_2011 tax_year petitioner filed a petition with the court to challenge the deficiency before receipt of the notice_of_deficiency and the filing of petitioner’s petition petitioner did not elect to file an amended joint_return with his wife for tax_year i burden_of_proof opinion respondent’s determination as to petitioner’s tax_liability is presumed correct and petitioner bears the burden of proving otherwise see rule a 290_us_111 deductions are a matter of legislative grace 308_us_488 new colonial ice co v helvering u s pincite taxpayers must comply with specific requirements for any deductions claimed see 503_us_79 new colonial ice co v helvering u s pincite likewise a taxpayer is obliged to demonstrate entitlement to an advantageous filing_status see smith v commissioner tcmemo_2008_229 ii filing_status respondent determined that petitioner’s correct filing_status for was married_filing_separately rather than head_of_household sec_1 provides a special tax_rate for an individual who qualifies as a head_of_household as relevant to petitioner an individual is eligible to file as a head_of_household if and only if such individual is not married at the close of his taxable_year sec_2 since petitioner was legally married to his wife rukia hassan at the close of tax_year respondent asserts that petitioner is not eligible to file as a head_of_household sec_1 requires that the taxable_income of every married individual who does not file a joint_return with his spouse be taxed at the tax_rates for married individuals filing separately thus respondent asserts that since petitioner and rukia hassan filed separate tax returns for petitioner’s correct filing_status is married_filing_separately petitioner asserts that he is entitled to amend his return to elect married_filing_jointly filing_status which would afford him the tax_rate structure set out in sec_1 petitioner’s main argument is that he was incorrectly advised by oday as to his filing_status and so should be allowed to file an amended_return for sec_6013 allows an individual who has filed a separate_return for a taxable_year in which the individual could have filed a joint_return with his spouse to amend his return to elect joint filing_status sec_6013 enumerates four limitations on filing an amended_return under sec_6013 sec_6013 specifically bars taxpayers from electing to file a joint_return after filing a separate_return after there has been mailed to either spouse with respect to such taxable_year a notice_of_deficiency under sec_6212 if the spouse as to such notice files a petition with the tax_court within the time prescribed in sec_6213 as noted above petitioner filed a timely petition with the court challenging respondent’s deficiency_notice as a result petitioner is specifically barred by sec_6013 from filing a joint_return with rukia hassan petitioner argues that notwithstanding the explicit bar of sec_6013 he is allowed to change his filing_status because he has not previously filed a separate_return as that term is defined in sec_6013 petitioner asserts that if no separate_return has been filed the limitation laid out in sec_6013 does not apply and he should be allowed to change his filing_status to married_filing_jointly in support of this argument petitioner cites decisions in the courts of appeals for the fifth and eleventh circuits in 641_f2d_339 5th cir the court_of_appeals for the fifth circuit held that separate_return as used in sec_6013 refers only to married filing separately status and not to any other filing_status including as here head_of_household through 661_f2d_1206 11th cir the court_of_appeals for the eleventh circuit adopted all prior decisions by the court_of_appeals for the fifth circuit as binding precedent on all federal courts within the eleventh circuit as a result of bonner glaze is binding precedent within both the fifth and eleventh circuits we are bound by the precedent of the court_of_appeals to which an appeal from this case would lie see 54_tc_742 aff’d 445_f2d_985 10th cir consequently we follow the decisions of the court_of_appeals for the eighth circuit which are squarely on point in deciding this case see id that court_of_appeals has not directly addressed the issue in this case but numerous court cases announce precedent that is contrary to the holding in glaze outside of the fifth and eleventh circuits we are not bound by glaze petitioner’s argument ignores such contrary precedent this court has consistently held that sec_6013 applies to married taxpayers who file returns with an incorrect status such as head_of_household or single filer see eg currie v commissioner tcmemo_1986_71 blumenthal v commissioner tcmemo_1983_737 saniewski v commissioner tcmemo_1979_337 see also 86_tc_433 w e believe that that reading of sec_6013 in glaze is too narrow aff’d in part rev’d in part on another issue 851_f2d_1492 d c cir additionally both the office_of_chief_counsel and the internal_revenue_service have announced they will not follow glaze see revrul_83_183 1983_2_cb_220 action on decision date in declining to follow glaze the office_of_chief_counsel and the internal_revenue_service noted that the legislative_history of sec_6013 does not indicate that separate_return is limited to married_filing_separately as glaze pronounced this rationale is supported by the fact that congress enacted the predecessor statute to sec_6013 in but did not establish a separate rate structure for married taxpayers filing separately until see tax reform act of pub_l_no sec_803 sec_83 stat pincite as previously mentioned appeal would lie to the court_of_appeals for the eighth circuit the holding in glaze is not controlling in the eighth circuit and we follow prior court precedent holding that sec_6013 bars a taxpayer who has filed a return with single or head_of_household filing_status for a tax_year and in response to a notice_of_deficiency for that year has filed a petition with this court from changing his filing_status to married_filing_jointly although petitioner’s case produces an unfortunate result we cannot depart from the clear bar of sec_6013 and must apply the law as it is written thus petitioner is ineligible to elect to amend his return to file jointly with his spouse iii earned_income_credit sec_32 provides an eligible_individual with an earned_income_credit eic against the individual’s income_tax_liability subject_to a phaseout in sec_32 to be considered an eligible_individual a married taxpayer must file a joint_return sec_32 petitioner was married in but filed a separate_return for that year he is now prohibited from filing a joint_return by sec_6013 hence petitioner is not an eligible_individual under sec_32 and may not claim the eic for iv dependency_exemption deductions and child_tax_credit the internal_revenue_code allows as a deduction an exemption for each dependent of a taxpayer in computing taxable_income see sec_151 sec_152 defines a dependent as a qualifying_child or qualifying_relative of the taxpayer in addition to meeting other requirements a qualifying_child must be a child brother sister stepbrother stepsister or descendant of such relatives of the taxpayer respondent has conceded that petitioner is entitled to deductions for two of petitioner’s four children s f and z f petitioner did not claim two other minor children a f and k f as dependents on hi sec_2011 tax_return petitioner now wishes to claim one or both omitted children as dependents on an amended_return respondent has conceded that a f and k f meet the relationship_test as both the nieces and stepchildren of petitioner however petitioner has not substantiated his claim that a f and k f are his qualifying children and we are constrained to rule only on the facts in evidence since petitioner has not met his burden_of_proof a f and k f are not qualifying children of petitioner for petitioner has also not asserted that a f and k f are qualifying relatives under sec_152 petitioner is not entitled to the dependency_exemption deductions with respect to a f and k f for under sec_24 a taxpayer may claim a child_tax_credit with respect to each qualifying_child of the taxpayer since a f and k f are not qualifying children of petitioner for petitioner is not entitled to the child tax_credits with respect to a f and k f for conclusion for the reasons discussed herein petitioner is barred by sec_6013 from amending hi sec_2011 return to elect married_filing_jointly status additionally it appears that petitioner’s wife rukia hassan claimed k f on her tax_return and received an eic for k f petitioner is also not allowed the earned_income_credit petitioner may not claim minor children a f and k f as dependents for purposes of the dependency_exemption deduction and the child_tax_credit respondent’s determination is therefore sustained to reflect the foregoing decision will be entered for respondent


t c memo united_states tax_court early robertson jr petitioner v commissioner of internal revenue respondent docket no 10113-02l filed date in a collection proceeding r issued a notice_of_determination with respect to p’s through taxable years after p petitioned this court for review r filed a motion for summary_judgment held r’s motion for summary_judgment will be granted as to and p received a notice_of_deficiency for those years and has not raised any material issues regarding an abuse_of_discretion by r held further r’s motion for summary_judgment will be denied as to p is entitled to challenge his self-reported liabilities for that year and has raised a question of material fact with respect thereto held further r’s motion for summary_judgment will be granted as to and p has not raised any material issues of fact with respect to his underlying liabilities for those years or with respect to any abuse_of_discretion by r early robertson jr pro_se marshall r jones and robert w west for respondent memorandum opinion wherry judge this case is before the court on respondent’s motion for summary_judgment pursuant to rule the instant proceeding arises from a petition for judicial review filed in response to a notice_of_determination concerning collection actions s under sec_6330 of the internal_revenue_code the issue for decision is whether respondent may proceed with collection action as so determined background on date respondent issued to petitioner a notice_of_deficiency for the and taxable years the notice reflected deficiencies of dollar_figure and dollar_figure in petitioner’s income taxes for and respectively petitioner did not file a petition with the court contesting this deficiency_notice thereafter on date respondent issued to petitioner a final notice--notice of intent to levy and notice of your right to a hearing with respect to unpaid tax liabilitie sec_1 unless otherwise indicated section references are to the internal_revenue_code as amended and rule references are to the tax_court rules_of_practice and procedure for years through the total amount due for the years was shown as dollar_figure on date respondent received from petitioner a timely form request for a collection_due_process_hearing a hearing was conducted by telephone on date following the hearing on date respondent issued to petitioner the notice_of_determination concerning collection action s under sec_6330 sustaining the proposed levy the notice summarized the determination as follows we have determined that the proposed levy is appropriate we considered the liability issues you raised for tax years and and determined that the liability should not be decreased we did not consider the liability issues you raised for tax years and because you received the statutory_notice_of_deficiency for those years an attachment to the notice then expanded on the foregoing summary under the heading relevant issues presented by the taxpayer you have raised a liability issue regarding a dependency_exemption head_of_household filing_status and the earned_income_credit these liability issues for years and could not be discussed at the hearing because you received the statutory_notice_of_deficiency you failed to invoke the jurisdiction of the u s tax_court and the tax for and was properly assessed we did consider the liability issues you raised for tax years as part of the collection_due_process_hearing however you failed to provide any documentation to show that you were entitled to claim a dependent head_of_household filing_status and the earned_income_credit therefore your liabilities for these years were not decreased no other issues were raised at the hearing on date the court filed as an imperfect petition a document received from petitioner therein petitioner stated his desire to file a petition for the tax period of to because my dependent was not on the tax form petitioner at that time resided in andalusia alabama subsequently on date petitioner filed an amended petition expressing disagreement for the years to on the following grounds i did not file proper information during these years i have enclosed information that should correct the filing procedure for those years attached to the petition was a certified copy of an order dated date from the circuit_court of covington county alabama the order recited that the child tangie l robertson born date has been living with the father since date and on the basis of that change_of circumstances granted petitioner custody of the child and modified petitioner’s child_support_obligations these obligations continued to require monthly payments for two other children this court takes judicial_notice of the date order see fed r evid 87_tc_1016 respondent answered the amended petition and thereafter on date filed the subject motion for summary_judgment a hearing was held on date and the motion was taken under advisement discussion rule a allows a party to move for a summary adjudication in the moving party’s favor upon all or any part of the legal issues in controversy rule b directs that a decision on such a motion shall be rendered if the pleadings answers to interrogatories depositions admissions and any other acceptable materials together with the affidavits if any show that there is no genuine issue as to any material fact and that a decision may be rendered as a matter of law the moving party bears the burden of demonstrating that no genuine issue of material fact exists and that he or she is entitled to judgment as a matter of law 98_tc_518 affd 17_f3d_965 7th cir facts are viewed in the light most favorable to the nonmoving party id however where a motion for summary_judgment has been properly made and supported by the moving party the opposing party may not rest upon mere allegations or denials contained in that party’s pleadings but must by affidavits or otherwise set forth specific facts showing that there is a genuine issue for trial rule d i general rules--collection actions sec_6331 authorizes the commissioner to levy upon all property and rights to property of a taxpayer where there exists a failure to pay any_tax liability within days after notice_and_demand for payment sec_6331 and sec_6330 then set forth procedures generally applicable to afford protections for taxpayers in such levy situations sec_6331 establishes the requirement that a person be provided with at least days’ prior written notice of the commissioner’s intent to levy before collection may proceed sec_6331 also indicates that this notification should include a statement of available administrative appeals sec_6330 expands in several respects upon the premise of sec_6331 forbidding collection by levy until the taxpayer has received notice of the opportunity for administrative review of the matter in the form of a hearing before the internal_revenue_service office of appeals sec_6330 grants a taxpayer who so requests the right to a fair hearing before an impartial appeals officer sec_6330 addresses the matters to be considered at the hearing sec_6330 matters considered at hearing --in the case of any hearing conducted under this section-- requirement of investigation --the appeals officer shall at the hearing obtain verification from the secretary that the requirements of any applicable law or administrative procedure have been met issues at hearing -- a in general --the person may raise at the hearing any relevant issue relating to the unpaid tax or the proposed levy including-- i appropriate spousal defenses ii challenges to the appropriateness of collection actions and iii offers of collection alternatives which may include the posting of a bond the substitution of other assets an installment_agreement or an offer-in-compromise b underlying liability --the person may also raise at the hearing challenges to the existence or amount of the underlying tax_liability for any_tax period if the person did not receive any statutory_notice_of_deficiency for such tax_liability or did not otherwise have an opportunity to dispute such tax_liability once the appeals officer has issued a determination regarding the disputed collection action sec_6330 allows the taxpayer to seek judicial review in the tax_court or a district_court in considering whether taxpayers are entitled to any relief from the commissioner’s determination this court has established the following standard of review where the validity of the underlying tax_liability is properly at issue the court will review the matter on a de novo basis however where the validity of the underlying tax_liability is not properly at issue the court will review the commissioner’s administrative determination for abuse_of_discretion 114_tc_604 ii contentions of the parties although less than entirely clear petitioner’s petition and amended petition appear to contest respondent’s collection determination on the basis of a challenge to his underlying liabilities for some or all of the years from to the pleadings filed suggest that petitioner believes he is entitled to an additional dependent_exemption deduction and head_of_household filing_status conversely neither of these documents seems to raise issues related to spousal defenses collection alternatives or other challenges to the appropriateness of the collection action at the hearing on respondent’s motion petitioner did raise an installment_agreement and dollar_figure payments thereon totaling dollar_figure all of which were applied to his tax_year respondent’s motion seeks summary_judgment with respect to the to period covered in the notice_of_determination as pertains to that period the motion is premised on two principal considerations each of which addresses petitioner’s attempts to dispute his underlying tax_liabilities first respondent maintains that because petitioner received a notice_of_deficiency for and he is precluded from challenging his underlying liabilities as to those years second it is respondent’s position that petitioner may not challenge his underlying liabilities for and because the assessments for those years correspond to amounts self-reported by petitioner on his respective returns iii analysis a and 1996--challenges to underlying liability as previously indicated sec_6330 precludes challenges to the underlying tax_liability where the taxpayer received a statutory_notice_of_deficiency respondent issued to petitioner on date a notice_of_deficiency with respect to and nothing in respondent’s records indicates that petitioner did not receive the notice additionally while petitioner testified at the hearing on respondent’s motion that he did not remember anything about the notice_of_deficiency off the top of his head he at no time claimed that he failed to receive the notice he also confirmed that the address shown on the notice was correct and remains his current location we conclude that petitioner received the statutory notice for and and as result is precluded from challenging his underlying tax_liabilities for those years in this action a remedy provided the statute_of_limitations remains open is to pay the liabilities and file a refund claim and if necessary a refund_suit b and 1999--challenges to underlying liability as set forth above sec_6330 permits challenges to underlying liability where the taxpayer did not receive a notice_of_deficiency or otherwise have an opportunity to dispute the tax_liability with respect to the through years respondent concedes that petitioner was not issued a notice_of_deficiency however respondent contends that the otherwise have an opportunity to dispute language of sec_6330 should not be interpreted to permit taxpayers to challenge self- reported liabilities in conjunction with collection proceedings subsequent to the hearing in the instant matter the court issued its opinion in montgomery v commissioner t c ___ the taxpayers in that case claimed that they had erred in computing the tax shown on their original return id at ___ slip op pincite in denying a motion for summary_judgment filed by the commissioner we held that sec_6330 permits petitioners to challenge the existence or amount of the tax_liability reported on their original income_tax return because they have not received a notice_of_deficiency for and they have not otherwise had an opportunity to dispute the tax_liability in question id consistent with montgomery v commissioner supra we conclude here that petitioner is not precluded by sec_6330 from challenging his underlying liability with respect to the through years in opposing respondent’s motion for summary_judgment petitioner testified at the hearing as follows the court all right well mr robertson as i understand it you’re saying you believe you were entitled to a dependency_deduction for your daughter beginning sometime in ‘93 that you didn’t claim on your tax_return mr robertson that was when i went to court and got custody of her i should have filed her yes sir i should have filed her but i didn’t the court okay mr robertson i had just went through a divorce and i wasn’t doing that right the court and that continued through ‘99 is that what you said mr robertson i never put her on she went all the way through school and finished school and she went about a year or something in nursing i never did put her on the court so you believe this condition existed in ‘93 mr robertson she was when i had gotten her i think she stayed with me until she finished school and then she went to nursing school and then she might have left about when she left my house and got her an apartment and bought her a car i think she moved along there somewhere the court so she was how old when you got her mr robertson yes sir the court and you think she moved out when she was mr robertson i think that’s about right the court so if you added four years--if you took and subtracted that leaves four years that she lived in your house is that correct mr robertson that’s correct the court all right so if we took the year and added four years to it then you would say you got her in december ‘93 was that what you said mr robertson december ‘93 was when it was filed in the courthouse the court so at most that would be like maybe ‘93 but ‘94 ‘95 ‘96 and ‘97 but ‘98 and ‘99 she wouldn’t have lived in your house any more is that-- mr robertson that’s true through the foregoing colloquy petitioner has raised a question of material fact with respect to his entitlement to a dependent_exemption deduction for his daughter for as well as to other potential correlative changes such as head_of_household filing_status see sec_2 accordingly we will deny respondent’s motion for summary_judgment as it relates to at the same time as regards and petitioner appears to have conceded that the criteria for such a deduction would not have been met he thus has failed properly to oppose respondent’s motion for summary_judgment for and at least insofar as the issue of underlying liability is concerned c and 1999--abuse of discretion in light of our conclusions above regarding challenges to the underlying liability disposition of the remainder of respondent’s motion rests on whether petitioner has for on the basis of the limited factual record available to the court there may be merit to these contentions or raised material issues pertaining to any of those matters enumerated in sec_6330 and subject_to review for abuse_of_discretion these items include spousal defenses collection alternatives and other valid challenges to the appropriateness of the collection action id the record does not reflect that petitioner has at any time pursued a spousal defense as to collection alternatives there was some discussion at the hearing on respondent’s motion concerning a series of dollar_figure payments made by petitioner at some time between and a review of transcripts of petitioner’s accounts revealed that these payments had been properly credited and petitioner did not suggest that he had proposed or was currently seeking an installment_agreement or other collection alternative to satisfy his outstanding liabilities for the period before us nor is there any indication that petitioner has otherwise challenged the appropriateness of the collection action within the meaning of sec_6330 given that matters not properly raised or preserved in collection proceedings are typically deemed conceded see rule b 118_tc_488 117_tc_183 114_tc_176 we conclude that petitioner has not advanced any issues of material fact with regard to whether respondent’s determination to proceed with collection for and was an abuse_of_discretion we therefore shall deny respondent’s motion with respect to and grant summary_judgment with respect to and to reflect the foregoing an appropriate order will be issued granting in part and denying in part respondent’s motion for summary_judgment


id office uilc cca_2010061408375619 ------------ number release date from --------------------- sent monday date am to -------------------------------------------------------------------- cc --------------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------ subject treaty question under art the u s definition of pensions and other similar remuneration would apply there's an argument that art might apply however based on the information we have i think the much better view is that art applies ------------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------------ -----------------------------------


significant index no department of the treasury internal_revenue_service washington d c tax_exempt_and_government_entities_division in re this letter constitutes notice that the conditional waiver of the-minimum fundin standard for the above-named plan for the plan_year onc it was granted in our ruling letter dated date has by changing the deadline by which an agreement must be reached with the pension_benefit_guaranty_corporation pbgc on securing repayment of the waived amount been moditied a the date of the original ruling ct to according to information submitted with the request a tentative agreement on security was being negotiated with the pbgc before th eadline however the official documents have not been signed because they require the approval of third parties who are currently in the process of reviewing documents are expected to be signed ents the final the do or this ruling is directed only to the taxpayer that requested it sec_6110 of the code provides that it may not be used or cited by others as precedent we have sent a copy of this letter to the manager ep classification in authorized representative pursuant to a power_of_attorney on file in this office __ to the manager ep compliance unit in and to your if you require further assistance in this matter please contact _ at sincerely yours


internal_revenue_service number info release date cc psi 1-genin-119980-03 april uilc dear we are answering your request for automatic late s_corporation relief based on the information submitted it appears you wish to establish s_corporation status effective as of date however automatic relief is unavailable under revproc_97_48 because the internal_revenue_service failed to receive a timely tax_return form_1120s for the taxable_year although we are unable to respond to your request as submitted this letter provides information relating to your request announcement copy enclosed provides guidance on seeking relief for late s_corporation elections generally to request relief for a late s_corporation_election you must request a private_letter_ruling from the national_office the information forwarded to our office is insufficient for us to process a private_letter_ruling request the procedures for requesting a private_letter_ruling are set forth in revproc_2003_1 copy enclosed in addition taxpayers must submit a user_fee along with their ruling_request the standard user_fee for a private_letter_ruling is dollar_figure however if your corporate gross_income was less than dollar_figure million for the most recent 12-month taxable_year you qualify for the reduced user_fee which is dollar_figure you must include a statement claiming that your gross_income for the last 12-month taxable_year was less than dollar_figure million if you are qualified for the lower fee if you decide to submit a formal request for a private_letter_ruling please follow the sample format provided in appendix b of revproc_2003_1 your request should include all required procedural statements a check for the user_fee and any documents that substantiate your intent to be an s_corporation from inception please refer your request to our office by adding the following to the address attn cc pa t p o box ben franklin station washington dc direct to cc psi room in addition the irs has developed two new cd-roms to help educate small_business owners on their tax responsibilities introduction to federal taxes for small_business self-employed and a virtual small_business workshop these two cd- roms are free and can be ordered by calling the irs also provides a special website www irs gov smallbiz which is dedicated to providing information to small_business taxpayers please keep this letter with your tax records and feel free to provide a copy of it to your authorized representative we hope that the above information proves helpful sincerely yours s dianna k miosi dianna k miosi chief branch associate chief_counsel passthroughs and special industries enclosures announcement revproc_2003_1 copy of submission


office_of_chief_counsel internal_revenue_service memorandum number release date ----------- -------------- filen-148479-09 third party communication date of communication month dd yyyy uilc date december to mark everett acting director field systemic advocacy from susan l hartford technical advisor to the special counsel national_taxpayer_advocate subject disallowance of credit for federal_income_tax withholding when ssn itin mismatch occurs this chief_counsel_advice responds to your request for assistance dated date this advice may not be used or cited as precedent federal_law requires individuals with u s income regardless of immigration status to pay u s taxes sec_6109 of the internal_revenue_code provides that if a person is required to file a return statement or other document with the irs the person must include an identifying number in general an individual required to furnish a taxpayer identifying number must use a social_security_number ssn sec_6109 see also sec_301_6109-1 a person who has a filing obligation but is ineligible for a social_security_number may apply for and receive an individual_taxpayer_identification_number itin from the irs sec_301_6109-1 an itin is a taxpayer identifying number issued to an alien individual by the internal_revenue_service upon application_for use in connection with filing_requirements under this title for purposes of this section the term alien individual means an individual who is not a citizen or national of the united_states sec_301_6109-1 an undocumented worker is not eligible to obtain an ssn to fulfill his or her filing obligation the undocumented worker must apply for an itin the irs’s issuance of an itin to a taxpayer does not change that taxpayer’s work status and the itin cannot be used for employment purposes filen-148479-09 sec_3402 provides that every employer making a payment of wages must deduct and withhold income taxes from wages commonly referred to as federal_income_tax withholding when filing any returns and statements with the irs the employer is required to identify each employee by the employee’s ssn sec_31 b - c thus in order to obtain work an individual must provide an ssn to the employer which the employer can then use when reporting the amount of federal_income_tax withheld from the individual’s wages when an employer withholds federal_income_tax pursuant to sec_3402 the amount withheld is allowed to the recipient of the income as a credit against any income_tax due to the irs sec_31 the term recipient for purposes of receiving credit for federal_income_tax withholding is defined as the person subject_to tax imposed under subtitle a upon the wages from which the tax was withheld sec_1_31-1 you have asked for advice on whether the irs is entitled to disallow the sec_31 credit for federal_income_tax withheld in the following situation the taxpayer is an undocumented worker not eligible for an ssn however the taxpayer provides someone else’s ssn in order to obtain employment the taxpayer receives wages from his employer and the employer withholds federal_income_tax under that ssn the taxpayer wishes to fulfill his tax_return filing and payment responsibilities so he obtains an itin and files a tax_return using the itin the w-2 however attached to the return contains the ssn the taxpayer provided his employer the irs processes the return under the itin even though it is accompanied by a w-2 containing an ssn during an audit of the return the mismatch between the ssn and itin causes the irs to disallow the federal_income_tax withholding credit the taxpayer claimed on his return until the irs can determine if the taxpayer truly earned the wages for which the withholding credit is being claimed when the irs disallows the federal_income_tax withholding credit for a taxpayer using an itin the irs is not saying that itin holders are not entitled to the credit as a matter of law rather the irs is saying that it does not have sufficient information in its records to determine if the itin holder is the recipient within the meaning of sec_31 the irs explains the disallowance as follows the federal_income_tax withheld reported on your federal tax_return has been disallowed because we do not have a record that this tax was paid or reported on your behalf by your employer irm the irs is not precluded by the code or the treasury regulations from ascertaining that the itin holder truly earned the wages for which the withholding credit is being claimed before allowing the claimed withholding credit the procedures the irs uses to ascertain whether the itin holder is entitled to the credit instruct irs employees to research the claimed withholding as follows filen-148479-09 research integrated data retrieval system idrs using command_code irptrl to verify if the employer reported the wages and withholding per the reporting requirements for employers if there is no record of any withholding shown for the itin do not allow the federal_income_tax withholding if the taxpayer used an invalid ssn and the withholding for your taxpayer has been reported under the invalid ssn and no other taxpayer has filed under the ssn allow the withholding as reported by the employer see irm for mixed entity procedures irm the mixed entity procedures then provide as follows if the taxpayer provides form w-2’s form 1099’s and other income supporting documents and the forms are all under the assigned itin for this taxpayer allow the information even if there are no records on irptrl this does not apply to federal_income_tax withholding which must be verified as reported and paid to the u s treasury emphasis added irm a we believe the irm needs clarification in several respects and suggest that you pursue revisions to the irm first irm is misleading in that it implies that an itin holder is only entitled to the sec_31 credit if no other taxpayer has filed a return using the ssn provided by the itin holder to his her employer in a situation where the itin holder’s w-2 or form_1099 reflects income_tax withheld and the only irs records under the ssn used on the w-2 or form_1099 reflect that same amount of withholding the irm should indicate that there is no need for any further inquiry before allowing the withholding the wording of the irm further suggests that a taxpayer filing a return with an itin but claiming withholding tied to an ssn will get the credit so long as the itin holder files a return before the true owner of the ssn also irm a suggests that form w-2’s form 1099’s and other income supporting documents will contain an itin employers are not allowed to use itins when filing returns statements and other documents with the irs see sec_31_6109-1 see also circular_e employer’s tax guide it is our understanding that the irs will allow the credit if the taxpayer can verify withholding in fact in the taxpayers’ cases you asked us to review in connection with this request for a legal opinion the irs generally corresponded with the taxpayers to give the taxpayers an opportunity to provide documentation that they were the true recipient of the wages within the meaning of sec_31 the act of asking for further documentation eg another copy of form_w-2 paystubs earnings statement or a statement from the employer from the itin holder is a precaution the irs takes to ensure that the itin holder earned the wages from which the tax was withheld thus we would suggest that irm should be revised along the following lines for itin holders who electronically file their returns the irs does not have a paper copy in its records of the w-2 containing the ssn thus the irs may often ask the itin holder to produce a copy of the w- for itin holders who file paper returns it is our understanding that the irs may also ask the taxpayer for a copy of the w-2 even though the irs already has a copy because it may take longer to request the original return from files filen-148479-09 research integrated data retrieval system idrs using command_code irptrl to verify if the employer reported the wages and withholding per the reporting requirements for employers if there is a record of the withholding shown for the itin you should allow the federal_income_tax withholding credit if however there is no record of any withholding shown for the itin do not allow the federal_income_tax withholding credit without additional documentation from the taxpayer if the taxpayer used an ssn that is invalid and the withholding for the taxpayer has been reported under the invalid ssn once you are able to verify that the withholding belongs to the taxpayer allow the withholding you may need to refer to the mixed entity procedures in irm if the true owner of the ssn has already filed a return we would also suggest that irm a be revised to read something like this even if there are no records on irptrl a taxpayer with an itin should be entitled to the federal_income_tax withholding credit if the taxpayer provides documentation eg form_w-2 form_1099 a paystub earnings statement statement from employer to verify the amount of federal_income_tax withheld in conclusion tentative disallowance and requests for documentation of the credit for federal_income_tax withholding when an itin ssn mismatch occurs is a business decision to be made by the irs rather than a decision dictated by anything in sec_31 or sec_6109 of the internal_revenue_code while there may be a burden on itin holders to produce documentation in order to receive the credit and some itin holders may choose not to respond to the irs’s correspondence those consequences must be balanced with the risk to the irs if the credit was automatically allowed without verification 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 in providing this advice we coordinated with the sec_31 and sec_6109 experts in the office_of_chief_counsel cc tege eoeg et2 and cc pa b01 respectively in addition we coordinated with cc wi as the itin program is part of the wage_and_investment_division please call --------------------- if you have any further questions