internal_revenue_service number release date index number -------------------------- -------------------------------- ------------------------------------------------ ----------------------------------- ----------------------------------- legend department of the treasury washington dc third party communication none date of communication not applicable_person to contact ----------------- id no ------------- telephone number ---------------------- refer reply to cc fip b02 plr-132867-12 date date taxpayer ------------------------------------------------------------ ------------------------------------------------ state a year date -------------- ------- ---------------------- dear ------------------ this is in reply to a letter in which taxpayer requests rulings in connection with its intent to elect to be taxed as a real_estate_investment_trust reit under sec_856 and sec_305 of the internal_revenue_code taxpayer is a publicly traded state a corporation that intends to elect to be taxed as a reit taxpayer and its direct and indirect subsidiaries taxpayer group currently own correctional and detention facilities the facilities taxpayer represents that the facilities are predominantly real_property and that the personal_property used in the facilities represents less than percent of the value of each facility following its election to be taxed as a reit taxpayer intends to create one or more taxable reit subsidiaries trss to operate and provide services that it presently provides in connection with the facilities taxpayer has requested rulings that the facilities are not lodging_facilities as defined in sec_856 or health care facilities in whole or in part under sec_856 the amounts received under taxpayer reit’s as defined later contracts with government tenants for the facilities will be treated as rents from real plr-132867-12 property for purposes of sec_856 the payments taxpayer reit collects on behalf of its trss for the services as defined later the trss provide at a financed facility as defined later will not be disqualified_income for purposes of the reit income tests and taxpayer reit’s cash and stock_distribution election will be treated as a distribution_of_property with respect to its stock under sec_301 taxpayer’s current business taxpayer group contracts with federal state and local correctional and detention authorities government tenants that use the facilities to house their inmates and for certain other administrative purposes the terms of the contracts range from one year to years depending on whether renewal options are included taxpayer group’s contracts with government tenants generally fall into one of three categories owned and managed facilities financed facilities and managed- only facilities owned and managed facilities in most cases taxpayer group enters into an agreement with a government tenant the agreement that identifies the facility allows a government tenant to use the facility to house its inmates and use space for administrative purposes and provides for the provision of incarceration services under a typical agreement taxpayer group is compensated for providing both space and services at a facility at a per_diem rate for each inmate based upon actual occupancy levels or in some cases based on a minimum guaranteed occupancy level with incremental per_diem payments for any occupancy exceeding the guaranteed level the per-diem rate may be adjusted annually to take into account the effects of inflation the agreements typically require taxpayers group to provide certain incarceration-related services services to its government tenants including security related_services including inmate security detention and surveillance which are generally provided through correctional officers food service for inmates rudimentary medical and dental services for inmates vocational educational and religious programming for inmates certain mental health services including drug rehabilitation and counseling and inmate transportation as mentioned above the services required by the contracts include some level of medical dental and mental health services to avoid the security risk and expense of taking an occupant offsite to receive these services taxpayer group’s employees perform routine medical dental and mental health services in a segregated area of the plr-132867-12 facility the space is generally not licensed for any medical purpose and includes only basic medical office equipment due to more stringent licensing requirements in some states three of the facilities have space that is licensed as an infirmary however the medical_care provided is no more extensive than at other facilities none of the facilities are licensed as medical facilities that are operated by a provider that is eligible for participation in medicare financed facilities at a small minority of the facilities taxpayer group enters into an agreement with a government tenant that is substantially_similar to the agreement or may be in the form of a lease of the facility to a government tenant along with a separate services agreement except that the agreement either i allows the government tenant to purchase the facility during the contract term at a price which may be below the fair_market_value of the facility or ii provides that ownership of the facility shall be transferred to the government tenant at no cost at the end of the contract term financed facilities managed facilities in other cases taxpayer group enters into a management agreement with a government agency that provides that taxpayer group will provide incarceration services to the agency at the agency’s own facility management agreement proposed reit election taxpayer intends to elect to be treated as a reit taxpayer reit for the taxable_year beginning on date taxpayer reit has one class of common_stock outstanding which is publicly traded taxpayer’s corporate structure will be adapted to include one or more qualified reit subsidiaries qrss in addition taxpayer reit will form at least one trs taxpayer reit expects to continue entering into contracts with government tenants on substantially the same terms and conditions as its current practice the services will be provided by taxpayer reit’s trs in the manner required by the particular government tenant’s contract except where taxpayer reit engages a third party to provide certain services taxpayer reit’s trs will use its own employees and bear all of its costs related to the services provided to the government tenants including paying its employees’ salarie sec_1 in certain cases similar arrangements have been treated as loans rather than lease arrangements see eg 435_us_561 plr-132867-12 and the costs of equipment and supplies taxpayer reit represents that it will compensate its trss on arm’s-length terms taxpayer group expects to assign all of its rights and obligations under each of its management agreements to its trs and the trs will provide all services required to be provided under each management agreement in connection with each assignment taxpayer reit will likely remain liable to the applicable governmental agency for the performance of those services or may be required to guaranty taxpayer reit’s trs’s obligations to perform those services in favor of the applicable agency in all cases taxpayer reit’s trs will indemnify and hold harmless taxpayer reit for any liabilities associated with taxpayer reit’s trs’s failure to perform those services following the effective date of such assignment new management agreements will either be entered in directly by taxpayer reit’s trs or by taxpayer reit and assigned to taxpayer reit’s trs as described above in connection with the reit election taxpayer reit intends to make a distribution on its taxpayer reit stock of all of its accumulated_earnings_and_profits from non-reit years in year the proposed distribution pursuant to the proposed distribution each taxpayer reit shareholder may elect to receive its share of the proposed distribution in the form of either a cash b taxpayer reit stock or c a combination of both cash and taxpayer reit stock if a shareholder fails to make a valid election by the election deadline that shareholder will be deemed to have made an election to be determined by taxpayer reit in its sole discretion the total number of shares of common_stock to be received by any shareholder in the proposed distribution will be determined over a period of up to two weeks ending as close as practicable to the record_date of the proposed distribution based upon a formula using market prices and designed to equate the value of the number of shares to be received with the amount of cash that could be received instead taxpayer reit will limit the total amount of the cash in the proposed distribution to percent of the value of the proposed distribution the maximum cash distribution if the total number of shares of taxpayer reit stock for which an election to receive cash is made would result in the payment of cash in an aggregate amount that is less than or equal to the maximum cash distribution then all shares for which such cash election is made will receive the distribution entirely in cash if the total number of shares of taxpayer reit stock for which an election to receive cash is made would otherwise result in the payment of cash in an aggregate amount in excess of the maximum cash distribution then each shareholder electing to receive cash will receive a prorated amount of cash with the remainder of its distribution paid in the form of shares of taxpayer reit stock but in no event will any shareholder electing to receive cash receive less than percent of its entire plr-132867-12 distribution in cash any cash paid in lieu of fractional shares will not count towards the maximum cash distribution in no event will the total amount of cash available in the proposed distribution be less than the maximum cash distribution law and analysis sec_856 provides that at least percent of a reit’s gross_income must be derived from specified sources that include rents_from_real_property and sec_856 provides that at least percent must be derived from more limited sources that likewise include rents_from_real_property sec_856 provides that rents_from_real_property include subject_to exclusions provided in sec_856 a rents from interests_in_real_property b charges for services customarily furnished or rendered in connection with the rental of real_property whether or not such charges are separately_stated and c rent attributable to personal_property leased under or in connection with a lease of real_property but only if the rent attributable to the personal_property for the taxable_year does not exceed percent of the total rent for the tax_year attributable to both the real and personal_property leased under or in connection with the lease with respect to each lease of real_property_rent attributable to personal_property for the taxable_year is that amount which bears the same ratio to total rent for the taxable_year as the average of the fair market values of the personal_property at the end of the taxable_year bears to the average of the aggregated fair market values of both the real_property and the personal_property at the beginning and at the end of such taxable_year sec_1_856-4 provides that subject_to the exceptions in sec_856 and sec_1_856-4 the term rents_from_real_property means generally the gross amounts received for_the_use_of or the right to use real_property of the reit sec_1_856-4 provides that the term rents_from_real_property includes charges for services customarily furnished or rendered in connection with the rental of real_property whether or not the charges are separately_stated services furnished to tenants of a particular building will be considered as customary if in the geographic market in which the building is located tenants in buildings of a similar class are customarily provided with the service where it is customary in a particular geographic marketing area to furnish electricity or other utilities to tenants in buildings of a particular class the submetering of utilities to tenants in such buildings will be considered a customary service sec_856 provides that any impermissible_tenant_service_income is excluded from the definition of rents_from_real_property sec_856 defines impermissible_tenant_service_income to mean with respect to any real or personal_property any amount received or accrued directly or indirectly by the reit for services furnished or rendered by the reit to tenants at the property or for managing or operating the property plr-132867-12 sec_856 provides certain exclusions from impermissible_tenant_service_income sec_856 provides that for purposes of sec_856 services furnished or rendered or management or operation provided through an independent_contractor from whom the reit does not derive or receive any income or through a trs of such trust shall not be treated as furnished rendered or provided by the reit and any amount which would be excluded from unrelated_business_taxable_income under sec_512 if received by an organization described in sec_511 shall not be taken into account sec_512 provides in part that there shall be excluded from the computation of unrelated_business_taxable_income all rents_from_real_property and all rents from personal_property leased with such real_property if the rents attributable to such personal_property are an incidental amount of the total rents received or accrued under the lease determined at the time the personal_property is placed_in_service sec_1_512_b_-1 provides that payments for the use or occupancy of rooms and other space where services are also rendered to the occupant such as for the use or occupancy of rooms or other quarters in hotels boarding houses or apartment houses furnishing hotel services or in tourist camps or tourist homes motor courts or motels or for the use or occupancy of space in parking lots warehouses or storage garages do not constitute rents_from_real_property generally services are considered rendered to the occupant if they are primarily for his convenience and are other than those usually or customarily rendered in connection with the rental of rooms or other space for occupancy only the supplying of maid service for example constitutes such service whereas the furnishing of heat and light the cleaning of public entrances exits stairways and lobbies and the collection of trash are not considered as services rendered to the occupant sec_856 provides that if the amount of impermissible_tenant_service_income exceeds one percent of all amounts received or accrued during the tax_year directly or indirectly by the reit with respect to the property the impermissible_tenant_service_income of the reit will include all of the amounts received or accrued with respect to the property in revrul_2002_38 2002_2_cb_4 a reit pays its trs to provide noncustomary services to tenants the reit does not separately state charges to tenants for the services thus a portion of the amounts received by the reit from tenants represents an amount received for services provided by the trs trs employees perform all of the services and trs pays all of the costs of providing the services the trs also rents space from the reit for carrying out its services to tenants the revenue_ruling concludes that the services provided to the reit’s tenants are considered to be rendered by the trs rather than the reit for purposes of sec_856 accordingly the services do not give rise to impermissible tenant plr-132867-12 service income and do not cause any portion of the rents received by the reit to fail to qualify as rents_from_real_property under sec_856 sec_856 provides that a reit and a corporation other than a reit may treat such corporation as a trs if the reit directly or indirectly owns stock in the corporation and the reit and the corporation jointly elect such treatment sec_856 provides that a trs cannot directly or indirectly operate or manage a lodging_facility or a health_care_facility sec_856 provides that the term health_care_facility has the meaning given such term in sec_856 a health_care_facility is defined in sec_856 as a hospital nursing facility assisted living facility congregate care facility qualified_continuing_care_facility as defined in sec_7872 or other licensed facility which extends medical or nursing or ancillary services to patients and which was operated by a provider of such services that is eligible for participation in the medicare program under title xviii of the social_security act with respect to the facility sec_856 defines lodging_facility as a hotel motel or other establishment more than one-half of the dwelling units in which are used_on_a_transient_basis the term transient is not defined in sec_856 or the regulations thereunder however for other purposes of the code a renter has generally been treated as transient if the rental period is less than days see sec_1_48-1 which concerned definitions under sec_48 for purposes of the investment_credit under former sec_38 shirley v commissioner t c memo ruling the facilities are not lodging_facilities as defined in sec_856 or health care facilities in whole or in part under sec_856 the facilities are not hotels or motels and the terms range from to years including extensions which is not considered transient therefore the facilities are not lodging_facilities as defined in sec_856 for purposes of sec_856 the facilities are not hospitals nursing facilities assisted living facilities qualifying continuing care facilities or other licensed facilities that are eligible for participation in medicare therefore unless they are congregate care facilities the facilities are not health care facilities although the term congregate care facility is not defined in either the statute or the regulations there are commonly used definitions of congregate care the common theme among these definitions is the sharing of living space dining space transportation and group activities the definitions do not describe any level of medical plr-132867-12 or health care services nevertheless further refinement to these definitions is needed for sec_856 definitional purposes congregate care facility must be read in context sec_856 and sec_856 describe various facilities that provide health care not as an auxiliary function but as part of the primary function of the facility eg hospitals and nursing facilities or in connection with a facility that has the primary function of providing health care eg assisted living facilities we conclude that it is not enough that a facility that meets the general definitions of congregate care offers medical services to be a congregate care facility under sec_856 the facility’s health care concerns must be part of the primary function of the facility or sufficiently related to the provision of health care as implied under sec_856 in the present case the facilities are not related to a health_care_facility and the medical_care provided by those facilities is not part of the primary function of those facilities taxpayer reit is obligated to provide space that government tenants use to incarcerate prisoners and detainees as part of its operations taxpayer reit through its trs provides a certain level of shared dining and living space and group activities the contracts require taxpayer reit to provide the services including some level of medical dental and mental health services as required by the prisoners and detainees while taxpayer reit’s correctional facilities may provide a certain level of medical_care these services are not part of the primary function of the facilities and thus these facilities are not congregate care facilities within the meaning of e d i ruling the amounts received under taxpayer reit’s contracts with government tenants for the facilities excluding the financed facilities will be treated as rents_from_real_property for purposes of sec_856 under taxpayer reit’s facilities contracts government tenants pay to use specific real_property to house their inmates the contract payments received by taxpayer reit are payments for the right to use space within a specific building therefore the contract payments received by taxpayer reit will be treated as rents_from_real_property under sec_856 furthermore taxpayer reit has represented that the aggregate fair_market_value of the personal_property owned by the reit in the facilities is less than percent of the aggregate fair_market_value of all property provided under the contracts because less than percent of the contract fees is attributable to personal_property under sec_856 the entire contract fee will be treated as rents_from_real_property within the meaning of sec_856 the services provided to government tenants will be provided by a trs of taxpayer reit the fees for the services will be included in the rent received by taxpayer reit but taxpayer reit will compensate the trs on an arm’s-length basis for providing the services all costs associated with providing the services will be paid plr-132867-12 by the trs accordingly income from the services provided by the trs to government tenants will be excepted from the definition of impermissible_tenant_service_income and the amounts received by taxpayer from government tenants will not be treated as other than rents_from_real_property under sec_856 ruling the payments taxpayer reit collects on behalf of its trss for the services the trss provide at a financed facility2 are considered to be rendered by the trs rather than taxpayer reit and do not cause any portion of the payments received by taxpayer reit that otherwise qualify under sec_856 to be disqualified for purposes of the reit income tests taxpayer represents that it will assign the service components of its financed facilities contracts to its trss which will be fully responsible for directly providing the services in those facilities taxpayer reit will collect the amounts that government tenants pay for the services in the financed facilities on behalf of the trss and remit those amounts to the trss therefore the payments taxpayer reit collects on behalf of its trss for the services the trss provide at a financed facility are considered to be rendered by the trs and do not cause any portion of the payments received by taxpayer reit from government tenants to the extent they otherwise qualify under sec_856 to be disqualified for purposes of the reit income tests ruling any cash and taxpayer reit stock distributed in the proposed distribution by taxpayer reit will be treated as a distribution of cash and property with respect to its stock to which sec_301 applies sec_301 and sec_305 provided that taxpayer reit elects to be taxed as and qualifies as a reit as of year the amount of any distribution of taxpayer reit stock received by any shareholder that receives taxpayer reit stock in the proposed distribution will be considered equal to the amount of cash which could have been received instead by such shareholder sec_1_305-1 and sec_1_305-2 ex in this case each taxpayer reit shareholder may elect to receive its share of the proposed distribution in the form of cash taxpayer reit stock or a combination of both cash and stock because shareholders elect what they would receive in the proposed distribution it will be treated as a distribution to which sec_305 applies as a result the proposed distribution will be treated as a distribution to which sec_301 applies sec_305 the amount of the distribution will be the amount of cash a shareholder could have received in lieu of electing stock sec_1_305-1 conclusion this includes payments made in connection with a lease arrangement that may be recharacterized as a loan plr-132867-12 based on the facts as represented we rule that the facilities will not be treated as lodging_facilities as defined in sec_856 or health care facilities in whole or in part under sec_856 the amounts received under taxpayer reit’s contracts with government tenants for the facilities will be treated as rents_from_real_property for purposes of sec_856 the payments taxpayer reit collects on behalf of its trss for the services the trss provide at a financed facility are considered to be rendered by the trs rather than taxpayer reit and do not cause any portion of the payments received by taxpayer reit that otherwise qualify under sec_856 to be disqualified for purposes of the reit income tests and any cash and taxpayer reit stock distributed in the proposed distribution by taxpayer reit will be treated as a distribution of cash and property with respect to its stock to which sec_301 applies sec_301 and sec_305 provided that taxpayer reit elects to be taxed as and qualifies as a reit as of the amount of any distribution of taxpayer reit stock received by any shareholder that receives taxpayer reit stock in the proposed distribution will be considered equal to the amount of cash which could have been received instead by such shareholder sec_1_305-1 and sec_1_305-2 ex except as specifically ruled upon above no opinion is expressed concerning any federal_income_tax consequences relating to the facts herein under any other provision of the code specifically we do not rule on whether taxpayer otherwise qualifies as a reit under part ii of subchapter_m of chapter of the code we also do not rule on whether a contract for a financed facility is treated in part as a loan from taxpayer to a government tenant with respect to the financed facility furthermore we do not rule whether payments received by the reit on behalf of its trs at a financed facility constitute gross_income under sec_61 in addition we do not rule on whether taxpayer’s trss are adequately compensated for the services this ruling is directed only to the taxpayer requesting it taxpayer should attach a copy of this ruling to each tax_return to which it applies sec_6110 of the code provides that this ruling may not be used or cited as precedent plr-132867-12 in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representatives sincerely jonathan d silver ___________ jonathan d silver assistant branch chief branch office of associate chief_counsel financial institutions products


third party communication date of communication month dd yyyy cca_2015011516001825 id uilc number release date from sent thursday date pm to cc bcc subject re nli request there may be other issues on the return so rather than confirm that no adjustments should be made to the 1120pc i’ll summarize the discussion we had yesterday according to the general_rule at the end of ty2009 taxpayer will have an unearned_premium_reserve equal to the portion of the gross premium written that is attributable insurance coverage for the unexpired period of any pre-2010 contract and unless the taxpayer uses the advance premium method for gross premiums received in for contracts that begin in at the end of ty2009 the taxpayer retains its loss reserve for a fair and reasonable estimate of the amount it will be required to pay on pre-2010 contracts also as we discussed my comments are based on ------- advise that sec_265 does not allow a deduction for expenses_incurred with respect to tax exempt_income in addition i am not a tax exempt_organization specialist and do not know whether any special rules apply when a taxable organization becomes tax exempt


department of the treasury internal_revenue_service washington d c tax_exempt_and_government_entities_division dec sec_2013 uniform issue list xxx xxx legend taxpayer ira y financial_institution c amount a dear xxx xxx xxx xxx xxx tep rat this letter is in response to your request dated date as supplemented by correspondence dated date date and date in which you request a waiver of the 60-day rollover period contained in sec_408 of the internal_revenue_code the code the following facts and representations have been submitted under penalty of perjury in support of the ruling requested taxpayer represents that his failure to accomplish a rollover of amount a from ira y within the 60-day period prescribed by sec_408 of the code was due to his lack of intent to receive a distribution from ira y and subsequent lack of preparation to complete the rollover taxpayer asserts that amount a has not been used for any purpose taxpayer maintained ira y at financial_institution c taxpayer asserts that he did not intend to receive a distribution from ira y on date financial_institution c notified taxpayer that he was delinquent in the payment of custodial fees for ira y on date financial_institution c distributed_amount a from ira y to taxpayer financial_institution c then sent notice of the distribution to taxpayer dated date taxpayer asserts that because he lacked intent to take a distribution of amount a from ira y he also lacked preparation to complete the rollover within the relevant 60-day period and failed to complete a rollover during that time taxpayer represents that amount a has not been used for any other purpose based on the facts and representations taxpayer requests a ruling that the internal_revenue_service waive the 60-day rollover requirement contained in sec_408 of the code with respect to the distribution of amount a sec_408 of the code provides that except as otherwise provided in sec_408 any amount_paid or distributed out of an ira shall be included in gross_income by the payee or distributee as the case may be in the manner provided under sec_72 of the code sec_408 of the code defines and provides the rules applicable to ira_rollovers sec_408 of the code provides that sec_408 of the code does not apply to any amount_paid or distributed out of an ira to the individual for whose benefit the ira is maintained if-- i the entire amount received including money and any other_property is paid into an ira for the benefit of such individual not later than the 60th day after the day on which the individual receives the payment or distribution or ii the entire amount received including money and any other_property is paid into an eligible_retirement_plan other than an ira for the benefit of such individual not later than the 60th day after the date on which the payment or distribution is received except that the maximum amount which may be paid into such plan may not exceed the portion of the amount received which is includible in gross_income determined without regard to sec_408 sec_408 of the code provides that sec_408 does not apply to any amount described in sec_408 received by an individual from an ira if at any time during the 1-year period ending on the day of such receipt such individual received any other amount described in sec_408 from an ira which was not includible in gross_income because of the application of sec_408 sec_408 of the code provides a similar 60-day rollover period for partial rollovers sec_408 of the code provides that the rollover provisions of sec_408 do not apply to any amount required to be distributed under sec_408 sec_408 of the code provides that the secretary may waive the 60-day requirement under sec_408 of the code where the failure to waive such requirement would be ' against equity or good conscience including casualty disaster or other events beyond the reasonable control of the individual subject_to such requirement only distributions that occurred after date are eligible for the waiver under sec_408 of the code revproc_2003_16 2003_4_irb_359 date provides that in determining whether to grant a waiver of the 60-day rollover requirement pursuant to sec_408 of the code the service will consider all relevant facts and circumstances including errors committed by a financial_institution inability to complete a rollover due to death disability hospitalization incarceration restrictions imposed by a foreign_country or postal error the use of the amount distributed for example in the case of payment by check whether the check was cashed and the time elapsed since the distribution occurred the service has the authority to waive the 60-day rollover requirement for a distribution from an ira where the individual failed to complete a rollover to another ira within the 60-day rollover period but was prevented from doing so because of one of the factors enumerated in revproc_2003_16 for example errors committed by a financial_institution death hospitalization postal error incarceration and or disability the taxpayers have asserted that credit_union e did not inform them of the 60-day rollover requirement however the taxpayers also acknowledge that credit_union e had them complete withdrawal forms that stated the 60-day rollover requirement accordingly we find that the taxpayers have not alleged that any of the factors enumerated in revproc_2003_16 prevented them from timely completing the rollover therefore the service hereby declines to waive the 60-day rollover requirement with respect to the distribution of amount a from ira y no opinion is expressed as to the tax treatment of the transaction described herein under the provisions of any other section of either the code or regulations which may be applicable thereto this letter is directed only to the taxpayer who requested it sec_6110 of the code provides that it may not be used or cited as precedent if you wish to inquire about this ruling contact xxx at xxx xxx-xxxx please address all correspondence to se t ep ra t3 sincerely yours ph whem laura b warshawsky manager employee_plans technical group enclosures deleted copy of ruling letter notice of intention to disclosure


internal_revenue_service index no number release date cc ebeo - plr-105902-99 date employer plan a plan b_trust c state x this is in reply to your letter of date and subsequent correspondence requesting a ruling that the deferred_compensation plan plan and trust fund of state x constitute an eligible_deferred_compensation_plan and trust within the meaning of sec_457 of the internal_revenue_code_of_1986 the code and the income_tax regulations in addition you have requested rulings concerning the status of trust c as a group trust under sec_401 of the code and the proper treatment under sec_3402 of the code of elective contributions made on behalf of employees of plan a employer state x is an eligible_employer within the meaning of sec_457 of the code the state personnel board board’ is a statutory body in state x responsible for the establishment of nonqualified plans such as sec_457 deferred_compensation plans effective date the board established plan b plan b is meant to be an eligible_deferred_compensation_plan under sec_457 of the code the employee_benefit_plan council council is a statutory body responsible for the establishment of qualified_retirement_plans enacted by state x’s legislature the council established plan a effective on date it is represented that plan a is a defined_contribution_plan with a cash_or_deferred_arrangement and meets the requirements of sec_401 and sec_401 of the code a favorable determination_letter was issued by the internal_revenue_service on date plan a was plr-105902-99 subsequently amended and received its most recent favorable determination_letter on date plan a allows certain employees of state x to make pre-tax contributions of up to ten percent of their compensation in addition plan a provides for discretionary matching_contributions and other employer contributions if appropriated by the legislature although state and local governments may not currently adopt sec_401 plans plan a was adopted prior to date and state x may continue to maintain plan a the council and the trustees of plan a established trust a to hold the assets of plan a for the exclusive benefit of plan a participants and beneficiaries it is represented that trust a meets the requirements of sec_401 of the code and is exempt from tax under sec_501 of the code in order to comply with the trust requirements for sec_457 plans under sec_457 the board and the trustees of plan b established the state x deferred_compensation plan trust agreement trust b effective date to hold the assets of plan b for the exclusive benefit of plan b participants and beneficiaries subsequently trust c was established by appropriate governmental authorities to pool the assets of trust a and the assets of trust b to improve the overall investment return it is represented that after the pooling of assets trust a and trust b will each continue to retain its own accounting system and the assets of each trust will be held for the exclusive benefit of the respective participants and beneficiaries in plan a and plan b the first ruling requested is that plan b as amended constitutes an eligible_deferred_compensation_plan within the meaning of sec_457 under plan b the amounts of compensation that may be deferred under the annual maximum limitation are within the limitations of sec_457 including the sec_457 coordinated deferral provision and the catch-up computation for amounts deferred for one or more of the participant’s last three taxable years ending before he or she attains normal_retirement_age the participant’s election to defer compensation must be filed prior to the beginning of the month in which his or her salary reduction agreement becomes effective the plan does not provide that a loan may be made from assets held by the plan to any participant or beneficiary under the plan with certain limitations a participant may elect the manner in which his or her deferred amounts will be distributed the election must be made prior to the date any amounts become payable to the participant under plan b if the participant fails to make a timely election distribution will commence at the time and in the manner set forth in plan b under plan b no amounts will be made available to the participant or beneficiary earlier than the calendar_year the participant attains age ½ when the participant is separated from service with state x or when the participant is faced with plr-105902-99 an unforeseeable_emergency as defined under plan b in accordance with the requirements of sec_457 the manner and time of benefit payout must meet the distribution_requirements of sec_401 and sec_457 of the code however plan b does permit one exception to the above distribution_requirements the plan in accordance with sec_457 includes a provision permitting an in-service distribution of dollar_figure or less from a participant’s account within the requirements of that section plan b further provides that all amounts of compensation deferred pursuant to plan b all property and rights purchased with such amounts and all income attributable to such amounts property or rights shall be held in trust for the exclusive benefit of participants and beneficiaries under plan b for the exclusive benefit of the participants and beneficiaries of plan b the trust under plan b is established pursuant to a writing that constitutes a valid trust under the laws of state x and is represented to be a valid trust under state law the rights of any participant or beneficiary to payments pursuant to plan b are generally nonassignable and not subject in any manner to anticipation alienation sale transfer assignment pledge encumbrance attachment or garnishment by creditors of the participant or the participant's beneficiary the terms of trust b make it impossible prior to the satisfaction of all liabilities with respect to plan participants and their beneficiaries for any part of the assets and income of the trusts to be used for or diverted to purposes other than the exclusive benefit of plan participants and their beneficiaries sec_457 of the code provides rules for the deferral of compensation by an individual participating in an eligible_deferred_compensation_plan as defined in sec_457 sec_457 of the code provides that in the case of a participant in an eligible_deferred_compensation_plan any amount of compensation deferred under the plan and any income attributable to the amounts so deferred shall be includible in gross_income only for the taxable_year in which such compensation or other income is paid or otherwise made available to the participant or beneficiary sec_457 provides that for a sec_457 plan to be an eligible_plan the plan must have distribution_requirements providing that under the plan amounts will not be made available to participants or beneficiaries earlier than i the calendar_year in which the participant attains age ½ ii when the participant is separated from service with the employer or iii when the participant is faced with an unforeseeable_emergency as determined under treasury regulations however sec_401 generally allows plans to postpone the required_beginning_date until april of the calendar_year following the later of the calendar_year in which the plr-105902-99 employee retires or in which he attains age ½ a basic requirement prescribed by sec_457 is that an eligible sec_457 plan must meet the sec_457 distribution_requirements described above in order to retain its tax-deferred eligible status a sec_457 plan would violate these provisions of sec_457 and the regulations thereunder if the participant or anyone else received a distribution earlier than the earliest date established in sec_457 sec_457 provides that the total amount payable to a participant under the plan will not be treated as made available merely because the participant may elect to receive such amount or the plan may distribute such amount without the participant's consent if i such amount does not exceed dollar_figure and ii such amount may be distributed only if-- i no amount has been deferred under the plan with respect to such participant during the 2-year period ending on the date of the distribution and ii there has been no prior distribution under the plan to such participant under this option sec_1_457-2 of the income_tax regulations defines an unforeseeable_emergency as severe financial hardship to the participant resulting from a sudden and unexpected illness or accident of the participant or of a dependent loss of the participant's property due to casualty or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the participant sec_457 provides that a plan maintained by an eligible governmental employer shall not be treated as an eligible_deferred_compensation_plan unless all assets and rights purchased with such deferred_compensation amounts and all income attributable to such amounts property or rights of the plan are held in trust for the exclusive benefit of participants and their beneficiaries sec_457 provides that a_trust described in sec_457 shall be treated as an organization exempt from tax under sec_501 sec_457 provides that the amounts in the trust are treated as includible in the gross_income of participants and beneficiaries only to the extent and at the time provided in sec_457 under the terms of plan b and trust b the trustee must hold all of the sec_457 plan assets for the exclusive benefit of the participants and their beneficiaries and all amounts deferred under the plan must be transferred to a_trust meeting the requirements of sec_457 of the code within an administratively reasonable_time period based upon the provisions of the amended plan summarized above the other documents presented and the representations made we conclude as follows plr-105902-99 the deferred_compensation plan established by state x is an eligible_deferred_compensation_plan as defined in sec_457 of the internal_revenue_code_of_1986 all assets and income of the plan described in sec_457 will be held in trust for the exclusive benefit of participants and their beneficiaries plan b satisfies the requirements of sec_457 and assuming that plan a otherwise satisfies the requirements of sec_401 the pooling of assets of trust a with the assets of trust b in trust c will not result in plan b failing to satisfy the requirements of sec_457 the next ruling requested is whether since plan b satisfies the requirements of sec_457 and assuming plan a otherwise satisfies the requirements of sec_401 trust c meets the definition of a group trust as stated in sec_401 of the code and is exempt from tax under sec_501 of the code sec_401 of the code provides that any group trust which otherwise meets the requirements of sec_401 shall not be treated as meeting such requirements on account of the participation or inclusion in such trust of the moneys of any plan or governmental_unit described in sec_818 sec_818 of the code describes the following plans and governmental units a a governmental_plan within the meaning of sec_414 or an eligible_deferred_compensation_plan within the meaning of sec_457 or b the government of the united_states the government of any state or political_subdivision thereof or any agency_or_instrumentality of the foregoing or any organization other than a government unit exempt from tax under this subtitle for use in satisfying an obligation of such government political_subdivision agency_or_instrumentality or organization to provide a benefit under a plan described in subparagraph a the committee report pertaining to sec_401 of the code contained in rep no 97th cong 2d sess reprinted in 1982_2_cb_600 states as follows under the conference agreement the tax-exempt status of a group trust will not be adversely affected merely because the trust accepts monies from a a retirement_plan of a state_or_local_government whether or not the plan is a qualified_plan and whether or not the assets are held in trust b any state_or_local_government monies intended for use in satisfying an obligation of such state_or_local_government to provide a retirement benefit under a governmental_plan thus sec_401 and sec_818 of the code would permit the assets of a sec_401 plan and a sec_457 plan to be pooled in a group trust in addition the committee report indicates that the intent of congress in enacting sec_401 was to allow the group trust in which governmental_plan assets are pooled to retain the tax-exempt status under sec_501 plr-105902-99 in this case employer indicates that trust a and trust b will be held together in a common group trust trust c in order to obtain economies of scale in the investment of the trust assets it has been represented that each plan’s trust has separate_accounting and that the assets are pooled in group trust for investment purposes only in addition it is stated that the assets of both plans are held for the exclusive benefit of the participants and beneficiaries of each plan respectively based upon the information provided the documents submitted and the representations made we conclude as follows since plan b satisfies the requirements of sec_457 and assuming plan a otherwise satisfies the requirements of sec_401 trust c meets the definition of a group trust as stated in sec_401 of the code and is exempt from tax under sec_501 of the code the final ruling requested is assuming that plan a otherwise satisfies the requirements of sec_401 and sec_401 that the elective contributions made by its participants in the manner represented will not constitute wages subject_to income_tax_withholding under sec_3402 of the code sec_401 states in part that a qualified_cash_or_deferred_arrangement is any arrangement which is part of a profit-sharing or stock_bonus_plan a pre-erisa_money_purchase_plan or a rural_cooperative_plan which meets the requirements of sec_401 under which a covered_employee may elect to have the employer make payments as contributions to a_trust under the plan on behalf of the employee or to the employee directly in cash such arrangements must meet special standards governing withdrawals forfeitures and discrimination in order to qualify for tax benefits the tax_reform_act_of_1986 public law added sec_401 which provides that a cash_or_deferred_arrangement shall not be treated as a qualified_cash_or_deferred_arrangement if it is part of a plan maintained by a state_or_local_government or political_subdivision thereof or any agency_or_instrumentality thereof however a transition rule included in section f b of the tax_reform_act_of_1986 states that sec_401 added above shall not apply to any cash_or_deferred_arrangement adopted by a state_or_local_government or political_subdivision thereof before date sec_402 provides that contributions made by an employer on behalf of an employee to a_trust which is a part of a qualified_cash_or_deferred_arrangement as defined in sec_401 shall not be treated as distributed or made available to the employee nor as contributions made to the trust by the employee merely because the arrangement includes provisions under which the employee has an election whether the contribution will be made to the trust or received by the employee in cash plr-105902-99 sec_1_401_k_-1 of the income_tax regulations provides that generally a cash_or_deferred_arrangement is an arrangement under which an eligible_employee may make a cash or deferred election with respect to contributions to or accruals or other_benefits under a plan that is intended to satisfy the requirements of sec_401 sec_1_401_k_-1 provides that a cash or deferred election is any election or modification of an earlier election by an employee to have the employer either- a provide an amount to the employee in the form of cash or some other taxable benefit that is not currently available or b contribute an amount to a_trust or provide an accrual or other benefit under a plan deferring the receipt of compensation a cash or deferred election includes a salary reduction agreement between an employee and employer under which a contribution is made under a plan only if the employee elects to reduce cash compensation or to forgo an increase in cash compensation sec_1_401_k_-1 provides that a cash or deferred election can only be made with respect to an amount that is not currently available to the employee on the date of the election further a cash or deferred election can only be made with respect to an amount that would but for the cash or deferred election become currently available after the later of the date on which the employer adopts the cash_or_deferred_arrangement or the date on which the arrangement first becomes effective sec_1_401_k_-1 provides that cash or another taxable_amount is currently available to the employee if it has been paid to the employee or if the employee is able currently to receive the cash or other taxable_amount at the employee’s discretion an amount is not currently available to an employee if there is a significant restriction or limitation on the employee’s right to receive the amount before a particular time in the future the determination of whether an amount is currently available to an employee does not depend on whether it has been constructively received by the employee for purposes of sec_451 sec_1_401_k_-1 of the regulations provides that a qualified_cash_or_deferred_arrangement is a cash_or_deferred_arrangement that satisfies the requirements of paragraphs b c d and e of sec_1_401_k_-1 and that is part of a plan that otherwise satisfies the requirements of sec_401 sec_1_401_k_-1 of the regulations provides that except as provided in sec_1_401_k_-1 elective contributions under a qualified_cash_or_deferred_arrangement are treated as employer contributions sec_1_401_k_-1 of the regulations provides that except as provided in sec_402 and in sec_1_401_k_-1 elective contributions under a qualified_cash_or_deferred_arrangement are neither includible in an employee’s gross_income at the time the cash or other taxable amounts would have been includible in the plr-105902-99 employee’s gross_income but for the cash or deferred election nor at the time the elective contributions are contributed to the plan federal_income_tax withholding under sec_3402 is imposed on wages as defined in sec_3401 sec_3401 excepts from the definition of wages remuneration paid to or on behalf of an employee or his beneficiary from or to a_trust described in sec_401 which is exempt from tax under sec_501 at the time of such payment unless such payment is made to an employee of the trust as remuneration for services rendered as such employee and not as a beneficiary of the trust sec_31_3401_a_12_-1 of the regulations further provides that the term wages does not include any payment made by an employer on behalf of an employee or his beneficiary into a_trust or to or on behalf of an employee or his beneficiary from a_trust if at the time of such payment the trust is exempt from tax under sec_501 as an organization described in sec_401 based on the information provided the documents presented and the representations made we conclude as follows the elective contributions made on behalf of an employee under plan a will not constitute wages subject_to income_tax_withholding under sec_3402 this ruling is based on the assumption that plan a will otherwise be qualified under sec_401 and sec_401 this ruling letter is directed only to state x and the participants of state x’s plan and applies only to the plans and trusts originally submitted and revised including the amended plan submitted on date sec_6110 of the internal_revenue_code provides that it may not be used or cited as precedent temporary or final regulations pertaining to one or more of the issues addressed in this ruling have not yet been adopted therefore this ruling may be modified or revoked if the adopted temporary or final regulations are inconsistent with any conclusion in the ruling see section dollar_figure of revproc_99_1 1999_1_irb_6 however when the criteria in section dollar_figure of revproc_99_1 are satisfied a ruling is not revoked or modified retroactively except in rare or unusual circumstances sincerely yours robert d patchell assistant chief branch office of the associate chief_counsel employee_benefits and exempt_organizations enclosure 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 b01 plr-145836-10 date date legend x -------------------------------------------------- ------------------------------------------------------------------------------------------ country d dear ----------- ----------- -------------------------- this responds to a letter dated ------------------------and subsequent correspondence submitted on behalf of x requesting that the service grant x an extension of time under sec_301_9100-3 of the procedure and administration regulations to file an election under sec_301_7701-3 to be treated as a disregarded_entity for federal tax purposes facts according to the information submitted x was formed under the laws of country x intended to elect be treated as a disregarded_entity for federal tax purposes effective d however x inadvertently failed to timely file form_8832 entity classification election to elect to be treated as a disregarded_entity for federal tax purposes law and analysis sec_301_7701-3 provides in part that a business_entity that is not classified as a corporation under sec_301_7701-2 or an eligible_entity can elect its classification for federal tax purposes an eligible_entity with at least two members can elect to be classified as either an association or a partnership and an plr-145836-10 eligible_entity with a single owner can elect to be classified as an association or to be disregarded as an entity separate from its owner sec_301_7701-3 provides guidance on the classification of a foreign eligible_entity for federal tax purposes generally a foreign eligible_entity is treated as an association if all members have limited_liability unless the entity makes an election to be treated otherwise a foreign eligible_entity with a single member having limited_liability may elect to be treated as a disregarded_entity pursuant to the rules of sec_301_7701-3 sec_301_7701-3 provides that an entity classification election must be filed on form_8832 and can be effective up to days prior to the date the form is filed or up to months after the date the form is filed sec_301_7701-3 provides that such an election must be signed by either a each member of the electing entity who is an owner at the time the election is filed or b any officer manager or member of the electing entity who is authorized under local law or the entity’s organization documents to make the election and who represents to having such authorization under penalties of perjury sec_301_9100-1 provides that the commissioner may grant a reasonable extension of time to make a regulatory election or a statutory election but no more than months except in the case of a taxpayer who is abroad under all subtitles of the internal_revenue_code except subtitles e g h and i sec_301_9100-1 defines the term regulatory election as an election whose due_date is prescribed by a regulation published in the federal_register or a revenue_ruling revenue_procedure notice or announcement published in the internal_revenue_bulletin sec_301_9100-1 through provide the standards the commissioner will use to determine whether to grant an extension of time to make the election sec_301_9100-2 provides the rules governing automatic extensions of time for making certain elections sec_301_9100-3 provides the standards the commissioner will use to determine whether to grant an extension of time for regulatory elections that do not meet the requirements of sec_301_9100-2 under sec_301_9100-3 a request for relief will be granted when the taxpayer provides evidence to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and granting relief will not prejudice the interests of the government conclusion based solely on the information submitted and the representations made we conclude that the requirements of sec_301_9100-3 have been satisfied as a result x is granted an extension of time of days from the date of this letter to file a form_8832 with the appropriate service_center to elect to be treated as a disregarded_entity for plr-145836-10 federal tax purposes effective d a copy of this letter should be attached to the form_8832 a copy is enclosed for that purpose this ruling is contingent on the owner of x filing within days of this letter all required returns for all open years consistent with the requested relief these returns may include but are not limited to the following forms i forms information_return of u s persons with respect to certain foreign_corporations ii forms return of u s persons with respect to certain foreign_partnerships and iii forms information_return of u s persons with respect to disregarded entities such that these forms reflect the consequences of the relief granted in this letter a copy of this letter should be attached to any such returns except as specifically set forth above no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter specifically no opinion is expressed regarding the application of sec_1503 and the regulations thereunder to the transactions described in this ruling this ruling is directed only to the taxpayer requesting it sec_6110 provides that it may not be used or cited as precedent pursuant to a power_of_attorney on file with this office a copy of this letter is being sent to x's authorized representative sincerely associate chief_counsel passthroughs special industries david r haglund by david r haglund branch chief branch passthroughs special industries enclosures copy of this letter copy of this letter for sec_6110 purposes


cca_2014041614151266 id uilc number release date third party communication none date of communication not applicable from sent wednesday date pm to cc bcc subject re request for assistance -- ----------------------- --------- we agree with your memorandum we have a few comments in the first full paragraph on the second page the memo repeats the phrase pursuant to the twice delete the repetitive phrase the form_1065 should not be referred to as a partnership tax_return the is not a tax_return - it is an information_return thus it should be referred to as the form_1065 or the partnership return we assume that the llc partner is a pass-thru_entity under sec_7701 check-the-box_regulations however it could have elected c corp status the form k-1 on the partnership return probably characterizes the partner as a partnership box i or j and you can rely on that form to conclude that the entity is a pass-thru_entity please edit your memorandum to clarify that the llc is actually a pass-thru_entity if you have any questions please let me know thanks ------------------------- ----------- ------------------------------------ --------------------------------------------------- --------------------


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 plr-117511-09 date october legend parent --------------------------------------------------------------------- ----------------------------------------------------------- date date date date date date ---------------------- -------------------------- ------------------------- -------------------------- -------------------------- ---------------------- former qsubs --------------------------------------------------------------------- ---------------------------------------------- ---------------------- --------------------------------------------------------------------- ------------------ ------------------------------------------------------------------------------------------ --------------------------------------------------------------------- ------------------------------------------------------------------------------------------------ --------------------------------------------------------------------- plr-117511-09 ----------------------------------------------------------------------------- --------------------------------------------------------------------- --------------------------------- --------------------------------------------------------------------- -------------------------------------------------------------------------- --------------------------------------------------------------------- ----------------------------------------------------------------------------- --------------------------------------------------------------------- ------------------------------------------------------------------------------------------- --------------------------------------------------------------------- --------------------------------------------------------------------------------------- --------------------------------------------------------------------- ------------------------------------------------------------------ --------------------------------------------------------------------- ------------------------------------------------------------------------------- ------------------------- ------------------------------------------------------------------------------------------------ --------------------------------------------------------------------- ------------------------------------------------------------------------- --------------------------------------------------------------------- ---------------------------------------------------------------------------- --------------------------------------------------------------------- -------------------------------------------------------------------------- --------------------------------------------------------------------- --------------------------------------------------------------------------- --------------------------------------------------------------------- ---------------------------------------------------------------------- --------------------------------------------------------------------- -------------------------------------------------------------------------------------------------- --------------------------------------------------------------------- plr-117511-09 ------------------------------------------------------------------- --------------------------------------------------------------------- --------------------------------------------------------------------- ------------------------------------ ------------------------------------------------------------------------------------------------- --------------------------------------------------------------------- regional subsidiary --------------------------------------------------------------------- --------------------------------------------------- regional subsidiary --------------------------------------------------------------------- ---------------------------------------------------- regional subsidiary --------------------------------------------------------------------- ------------------------------------------------------------ regional subsidiary ----------------------------------------------------------------------- --------------------------------------------------------------------------------------------------- --------------------------------------------------------------------- dear ----------- this letter responds to your date request for a ruling on certain federal_income_tax consequences of the transactions described below the information submitted in that request and in later correspondence is summarized below summary of facts prior to date parent was the common parent of an affiliated_group_of_corporations that filed a consolidated federal_income_tax return on a calendar_year basis the old group effective date parent elected to be taxed as an s_corporation under sec_1361 of the internal_revenue_code the code for federal_income_tax purposes and made qualified_subchapter_s_subsidiary qsub elections for most but not all of its subsidiaries as a result of parent’s s_corporation_election the old group terminated for federal_income_tax purposes effective at the end of the day on date effective date parent revoked its s_corporation_election by filing a letter with the internal_revenue_service in accordance with the procedures set forth in sec_1362 and the applicable federal_income_tax regulations parent’s revocation of its s_corporation_election caused each qsub election to terminate as of the end of the day on date as a result of the termination of the qsub elections parent was treated plr-117511-09 for federal_income_tax purposes as transferring the assets of its qsubs to newly formed corporations as set forth in sec_1361 and the federal_income_tax regulations the regulations thereunder those newly formed corporations are referred to in this ruling letter as the former qsubs immediately before such deemed asset transfer the aggregate tax basis of parent’s assets including the assets legally owned in the qsubs exceeded their aggregate fair_market_value as a result of parent’s revocation of its s_corporation_election parent each of the former qsubs regional subsidiary regional subsidiary regional subsidiary and regional subsidiary became members of an affiliated_group with parent as its common parent collectively the new group parent requested a ruling for a waiver under sec_1504 permitting parent and each other member of the new group to be included in the new group’s consolidated federal_income_tax return for the short tax period date through date rulings based solely on the information submitted and the representations set forth above we rule as follows parent is denied a waiver under sec_1504 for it to be included in a consolidated federal_income_tax return for new group for the short tax period date through date accordingly the new group may not file a consolidated_return with parent as the common parent until the expiration of the period described in sec_1504 provided parent and each other member of the new group properly elect to file a consolidated_return the new group may begin filing a consolidated federal_income_tax return for the tax_year beginning date any loss recognized with respect to an asset owned by parent or any of the former qsubs on date will not be treated as subject_to sec_1_1502-15 within the new group see sec_1_1502-15 caveats we express no opinion about the tax treatment of any of the above-described transactions under any other provisions of the code or regulations or about the tax treatment of any conditions existing at the time of or effects resulting from these transactions that are not specifically covered by the above rulings plr-117511-09 procedural matters this ruling letter is directed only to the taxpayer who requested it sec_6110 provides that it may not be used or cited as precedent a copy of this letter must be attached to any federal_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 this letter_ruling in accordance with the power_of_attorney on file in this office a copy of this letter is being sent to your authorized representative sincerely ____________________________________ lewis k brickates chief branch office of associate chief_counsel corporate


internal_revenue_service index no number release date cc dom p si - plr-110587-99 date x ein a date year dear this is in reply to a letter dated date and subsequent correspondence submitted on behalf of x by x’s authorized representative requesting a ruling under sec_1362 of the internal_revenue_code the information submitted states that x began doing business on date a as x's president represents that it was the intent of x's shareholders that x elect to be an s_corporation effective for year x's first taxable_year this intent is evidenced in x’s form ss-4 application_for employer_identification_number however a form_2553 election by a small_business_corporation was not timely filed for that year by x due to confusion between x’s accountant and attorney as to who was responsible for handling the election x filed a form_1120s for year and x’s shareholders filed their individual returns consistent with x’s having made a timely s election for year sec_1362 of the code provides that if -- a an election under sec_1362 is made for any taxable_year after the date prescribed by sec_1362 for making such election for such taxable_year or no such election is made for any taxable_year and b the secretary determines that there was reasonable_cause for the failure to timely make such election the secretary may treat such an election as timely made for such taxable_year based solely on the facts and the representations submitted we conclude that x has established reasonable_cause for failing to make a timely election to be an s_corporation for x’s first taxable_year accordingly provided x makes an election to be an s_corporation by filing a completed form_2553 with the appropriate service_center effective for its year taxable_year within days following the date of this letter then such election will be treated as timely made for x’s year taxable_year a copy of this letter should be attached to the form_2553 except as specifically set forth above no opinion is expressed concerning the federal tax consequences of the facts described above under any other provision of the code including whether x was or is a small_business_corporation under sec_1361 of the code this ruling is directed only to the taxpayer who requested it sec_6110 of the code provides that it may not be used or cited as precedent pursuant to the power_of_attorney on file with this office a copy of this letter is being sent to x’s authorized representative sincerely yours j thomas hines senior technician reviewer branch office of the assistant chief_counsel passthroughs and industries enclosures copy of this letter copy for sec_6110 purposes