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-114454-05 date june x state ---------------------------- legend ------------------------------------------------------------------------------ dear ---------------- for a written_determination granting relief under sec_1362 of the internal_revenue_code --------------------- ------------- date facts this letter is in response to your request on behalf of x dated date x was incorporated under the laws of state on date the shareholder of x intended that x elect to be treated as an s_corporation effective date however the election to be treated as an s_corporation effective date was not timely filed law and analysis sec_1362 of the code provides that a small_business_corporation can elect to be treated as an s_corporation sec_1362 of the code provides guidance on when the s election becomes effective if an s election is made within the first two and one-half months of a corporation s taxable_year then that corporation will be treated as an s_corporation for the year in which the election was made if the corporation makes an election after the plr-114454-05 first two and one-half months of a corporation s taxable_year then the corporation will generally not be treated as an s_corporation until the following taxable_year sec_1362 of the code provides that if no election is made pursuant to sec_1362 or if the election is made after the date prescribed for making such an election and the secretary determined reasonable_cause existed for the failure to timely make the election then the secretary can treat such an election as being timely made for that taxable_year and effective as of the first day of that taxable_year x did not file a timely election to be treated as a s_corporation under sec_1362 x has however established reasonable_cause for not making a timely s election therefore x is entitled to relief under sec_1362 conclusion based solely on the facts submitted and representations made and provided that x otherwise qualifies as a subchapter_s_corporation we conclude that x will be recognized as an s_corporation effective date an original form_2553 along with a copy of this letter must be forwarded to the relevant service_center within sixty days from the date of this letter except as expressly provided herein no opinion is expressed or implied this ruling is directed only to the taxpayer s requesting it sec_6110 of concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter the code provides that it may not be used or cited as precedent this ruling to your representative pursuant to the power_of_attorney on file with this office we will send a copy of sincerely dianna k miosi branch chief branch passthroughs special industries enclosures cc copy of this letter copy of this letter for sec_6110 purposes


internal_revenue_service number release date department of the treasury washington dc index number --------------------------------------------------------- ------------------------------- -------------------------------------------- ---------------------------- person to contact ------------------------- id no ------------- telephone number --------------------- refer reply to cc psi b01 - plr-154513-07 date may x --------------------------------------------------- ------------------------------------------------------------- ---------------- -------------------------- ---------------------- --------------------------------------------------- ---------------------------------------------- date date date trust trust dear ---------- this responds to a letter dated date submitted on behalf of x requesting a ruling under sec_1362 of the internal_revenue_code for an inadvertent termination of an s_corporation_election facts x elected to be treated as an s_corporation for federal tax purposes effective date on date trust and trust became shareholders of x the shareholders of x incorrectly believed that trust and trust were grantor trusts however trust and trust were ineligible shareholders of x as a result x's s_corporation_election terminated on date on or before date the terms of trust and trust were reformed to comply with the grantor_trust provisions in addition trust and trust plr-154513-07 terminated and all of the shares held by trust and trust were transferred to eligible s_corporation shareholders x represents that there was no intent to terminate x’s s_corporation_election and that the transfer to ineligible shareholders trust and trust was not motivated by tax_avoidance or retroactive tax planning x and its shareholders agree to make any adjustments required by the secretary consistent with the treatment of x as an s_corporation law and analysis sec_1361 provides that the term s_corporation means with respect to any taxable_year a small_business_corporation for which an election under sec_1362 is in effect for such year sec_1361 defines a small_business_corporation as a domestic_corporation which is not an ineligible_corporation and which 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_1362 provides that an election under sec_1362 shall be terminated whenever at any time on or after the first day of the taxable_year for which the corporation is an s_corporation the corporation ceases to be a small_business_corporation sec_1361 provides that for purposes of sec_1361 a_trust all of which is treated under subpart e of part i of subchapter_j of chapter as owned by an individual who is a citizen or resident_of_the_united_states may be a shareholder sec_1362 provides in relevant part that if an election under sec_1362 by any corporation was not effective for the taxable_year for which made determined without regard to sec_1362 by reason of a failure to meet the requirements of sec_1361 b or to obtain shareholder consents the secretary determines that the circumstances resulting in such termination were inadvertent no later than a reasonable period of time after discovery of the circumstances resulting in ineffectiveness steps were taken so that the corporation is once more a small_business_corporation and the corporation and each person who was a shareholder of the corporation at any time during the period specified pursuant to sec_1362 agrees to make any adjustments consistent with the treatment of the corporation as an s_corporation as may be required by the secretary with respect to the period then plr-154513-07 notwithstanding the circumstances resulting in the ineffectiveness the corporation shall be treated as continuing to be an s_corporation during the period specified by the secretary conclusion based solely on the representations made and the information submitted we conclude that x’s s election terminated on date because trust and trust were ineligible shareholders we further conclude however that the termination was an inadvertent termination within the meaning of sec_1362 pursuant to the provisions of sec_1362 x will be treated as continuing to be an s_corporation on and after date unless x’s s election is otherwise terminated under sec_1362 except as specifically set forth above we express no opinion concerning the federal tax consequences of the facts described above under any other provision of the code this ruling is directed only to the taxpayer s 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 representative the rulings contained in this letter are based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in support of the request for rulings it is subject_to verification on examination sincerely david r haglund david r haglund senior technician reviewer office of associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes cc


internal_revenue_service number release date index number -------------- ------------------------------ ---------------------------- ---------------------------- ------------------------------------ department of the treasury washington dc third party communication none date of communication not applicable_person to contact -------------------- id no ------------- telephone number --------------------- refer reply to cc corp plr-118171-08 date date legend parent ----------------------------------------------------------------------------- ------------------------------------------------------------------------------------ ------------------------------------------------------------------------ ---------------------------- sub1 ------------------------------------------------------------------- ----------------------------------------------------------- ---------------------- sub2 ------------------------------------------------------------------- ----------------------------------------------------------- --------------------------------- sub3 ----------------------------- ------------------------------------------------------------------- ----------------------------------------------------------- statea date1 date2 date3 year company official ------------- -------------------------- --------------------------- ------------------ ------- -------------- plr-118171-08 ------------------------------------------------------------------ ---------------------------------------------------------------- tax professionals ---------------------------------------------- ------------------------------------------------------------ -------------------------- ---------------------------------------------- ---------------------------------------------------------- ------------------ --------------------------------------------------------- ---------------------------------------------------------- ------------------ dear ------------- this letter responds to a letter dated date submitted on behalf of parent requesting an extension of time under sec_301_9100-3 of the procedure and administration regulations to file an election the extension is being requested for parent and its includible subsidiaries to make an election to file a consolidated federal_income_tax return with parent as the common parent under sec_1_1502-75 of the income_tax regulations the election effective for the taxable_year ended date1 additional information was received in a letter dated date the material information is summarized below parent is a limited_liability_company under the laws of statea parent has elected to be treated as a corporation for federal_income_tax purposes by filing a form_8832 entity classification election parent as of the end of year directly held all of the stock of its affiliated_group of includible subsidiaries sub1 sub2 and sub3 an election under sec_1_1502-75 for the parent affiliated_group to file a consolidated_return for year was due on date2 however for various reasons a valid election was not timely filed subsequently this request was submitted under sec_301_9100-3 for an extension of time to file the election the period of limitations on assessment under sec_6501 of the internal_revenue_code code has not expired for parent's or its subsidiaries’ taxable years for which they desire to make the election or for any taxable_year that would be affected by the election had it been timely filed sec_1_1502-75 provides that a group which did not file a consolidated_return for the immediately preceding_taxable_year may file a consolidated_return in lieu of separate returns for the taxable_year provided that each corporation which has been a member of the group during any part of the taxable_year for which the consolidated plr-118171-08 return is to be filed consents to the regulations under sec_1502 if a group wishes to exercise its privilege of filing a consolidated_return such consolidated_return must be filed not later than the last day prescribed by law including extensions of time for filing the common parent’s return under sec_301_9100-1 the commissioner has discretion to grant a reasonable extension of time to make a regulatory election or a statutory election but no more than six months except in the case of a taxpayer who is abroad under all subtitles of the code except subtitles e g h and i sec_301_9100-1 through provide the standards the commissioner will use to determine whether to grant an extension of time to make a regulatory election sec_301_9100-1 sec_301_9100-2 provides automatic extensions of time for making certain elections sec_301_9100-3 provides extensions of time for making regulatory elections that do not meet the requirements of sec_301_9100-2 requests for relief under sec_301_9100-3 will be granted when it is established 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 in this case the time for filing the election is fixed by the regulations ie sec_1_1502-75 therefore the commissioner has discretionary authority under sec_301_9100-3 to grant an extension of time for parent and its subsidiaries to file the election provided parent and its subsidiaries acted reasonably and in good_faith that the requirements of sec_301_9100-1 and sec_301_9100-3 are satisfied and granting relief will not prejudice the interests of the government information representations and affidavits submitted by parent company official and tax professionals explain the circumstances that resulted in the failure to timely file the election the information establishes that parent reasonably relied on qualified_tax professionals who failed to make or advise parent to make the election see sec_301_9100-3 based on the facts and information submitted including the affidavits submitted and representations that have been made we conclude that parent and its subsidiaries have shown they acted reasonably and in good_faith the requirements of sec_301_9100-1 and sec_301_9100-3 are satisfied and granting relief will not prejudice the interests of the government accordingly an extension of time is granted under sec_301_9100-3 until date3 for parent and its subsidiaries to file the election by filing a consolidated_return with parent as the common parent and attaching a form_1122 for each of the subsidiaries for the year taxable_year the above extension of time is conditioned on the taxpayers' parent's and its subsidiaries' tax_liability if any being not lower in the aggregate for all years to which plr-118171-08 the election applies than it would have been if the election had been made timely taking into account the time_value_of_money no opinion is expressed as to the taxpayers' tax_liability for the years involved a determination thereof will be made by the director's office upon audit of the federal_income_tax returns involved in addition no opinion is expressed as to the federal_income_tax effect if any if it is determined that the taxpayers’ tax_liability is lower sec_301_9100-3 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 further we express no opinion as to the tax consequences of filing the election late under the provisions of any other section of the code and regulations or as to the tax treatment of any conditions existing at the time of or resulting from filing the election late that are not specifically set forth in the above ruling specifically no opinion is provided as to whether in fact parent and its subsidiaries qualify substantively to file a consolidated_return for purposes of granting relief under sec_301_9100-3 we relied on certain information and affidavits provided by parent company official and tax professionals under penalties of perjury however the director should verify all essential facts moreover notwithstanding that the extension is granted under sec_301_9100-3 to file the election any penalties and interest that would otherwise be applicable still apply 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 pursuant to a power_of_attorney on file with this office a copy of this letter is being sent to your authorized representatives sincerely _______________________________ ken cohen senior technician reviewer branch office of associate chief_counsel corporate


cca_2014051410155503 id uilc number release date from sent wednesday date am to cc bcc subject re review rights after rescinding oic or ia on grounds of fraud ------------this is in response to your email request for advice regarding a taxpayer’s available administrative and or judicial review rights in connection with certain offer-in- compromise oic or installment_agreement i a situations we have coordinated this matter with ------ with respect to your question as to whether the taxpayer tp would have any direct administrative appeal rights if the service rescinds the tp’s previously accepted oic due to fraud we agree that the tp is not entitled to any such rights in this regard we note that while sec_7122 requires the service to provide the tp with administrative review rights in connection with any rejection of a proposed oic including the right for review by appeals there are no such rights provided under sec_7122 or any other provision authority policy when the previously accepted oic has been rescinded terminated or modified while the tp has no direct administrative appeal rights when an oic is rescinded terminated or modified by the service we agree as referenced in your email that the tp could potentially raise the issue with appeals in connection with a cdp hearing as for i as we point out that in addition to the right to administratively appeal a proposed rejection see sec_7122 the tp may also administratively appeal the modification or termination of a previously accepted i a to appeals pursuant to sec_6159 and the applicable regulations thus unlike oics the tp has a direct administrative appeal opportunity with respect to modified or terminated i as the tp could also raise these issues with appeals during a cdp hearing outside of the cdp context a tp may have other opportunities for judicial review under these circumstances for example the tp could potentially challenge the termination of an oic by paying the tax_liability in full and ultimately filing a refund_suit based on a claim that the previously accepted oic conclusively settled the tax_liability for less than the full amount of the liability and that the service erroneously terminated the oic alternatively the tp arguably may be able to pursue a damages claim against the service for breach of contract for erroneous improper termination of the oic in the court of federal claims finally your email recognizes that irc sec_7433 provides an independent basis for a suit to collect damages for unauthorized collection actions and asks whether a tp could bring a sec_7433 suit to argue that the service remains bound by its agreement to compromise the liabilities under these circumstances such as the improper rescission of an oic in addressing this issue we first note that sec_7433 is a limited waiver of sovereign immunity for damages to the extent an officer_or_employee of the service recklessly or intentionally or by reason of negligence disregards the irc or related regulations in connection with the collection of federal tax_liabilities sec_7433 see eg 723_f3d_795 7th cir 66_f3d_220 9th cir although a court could award damages as defined in sec_7433 caused by for example the service’s reckless rescission or termination of an oic it is our view that sec_7433 does not provide a federal district_court with a broad grant of equitable power to reinstate a terminated or rescinded oic if you have any additional questions or would like to discuss this matter further please feel free to give me a call --------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- ---------------------


department of the treasury employer_identification_number person to contact - id contact telephone numbers vil internal_revenue_service p o box cincinnati oh number release date date date legend b state c year d name e name x dollars amount dear we have considered your date request for recognition of an unusual grant under sec_1_170a-9 and related provisions based on the information provided we have concluded that the proposed grant constitutes an unusual grant under sec_1_170a-9 and related provisions of the regulations the basis for our conclusion is set forth below facts you were formed in the state of b in c you are a nonprofit corporation exempt from taxation under sec_501 of the internal_revenue_code and classified as a public charity under sec_509 and sec_170 of the code you primarily provide scholarships to professionals in the d industry for pursuing additional training and education obtaining professional credentials and certifications as well as for attending various regional and national programs you are asking for approval of an unusual grant in the amount of x dollars the grant will come from e and be in the form of cash the grant is to be used for the purpose of funding your scholarship programs the grant is unusual in relation to the donations that you normally receive because it greatly surpasses your annual budget and the size of grants you normally receive this grant was not expected there will be no restrictions placed on the use of the grant other than it is to be used for your stated purpose letter catalog number 58230y e is not a creator of your organization and e does not stand in a position of authority over you in addition you have a large board_of directors and do not share any board members with e you are also operated by volunteers you are supported by donations membership and proceeds from events such as raffles and dinners and you have consistently met the public support_test your current officers and directors plan to strengthen your fundraising efforts to build new scholarship funds resulting in awarding more scholarships law sec_1_170a-9 and sec_1_509_a_-3 set forth the criteria for an unusual grant sec_1_170a-9 states that for purposes of applying the 2-percent limitation to determine whether the percent-of-support test is satisfied one or more contributions may be excluded from both the numerator and the denominator of the applicable percent-of-support fraction the exclusion is generally intended to apply to substantial contributions or bequests from disinterested parties which e e are attracted by reason of the publicly supported nature of the organization are unusual or unexpected with respect to the amount thereof and would by reason of their size adversely affect the status of the organization as normally being publicly supported sec_1_509_a_-3 states that all pertinent facts and circumstances will be taken into consideration to determine whether a particular contribution may be excluded no single factor will necessarily be determinative such factors may include e whether the contribution was made by a person who a b c d e created the organization previously contributed a substantial part of its support or endowment stood in a position of authority with respect to the organization such as a foundation_manager within the meaning of sec_4946 directly or indirectly exercised control_over the organization or was ina relationship described in internal_revenue_code sec_4946 through a g with someone listed in bullets a b c or d above a contribution made by a person described in a - e is ordinarily given less favorable consideration than a contribution made by others not described above e e whether the contribution was a bequest or an inter_vivos transfer a bequest will ordinarily be given more favorable consideration than an inter_vivos transfer whether the contribution was in the form of cash readily marketable_securities or assets which further the exempt purposes of the organization such as a gift of a painting to a museum letter catalog number 58230y e e e e e whether except in the case of a new organization prior to the receipt of the particular contribution the organization a has carried on an actual program of public solicitation and exempt_activities and b has been able to attract a significant amount of public support whether the organization may reasonably be expected to attract a significant amount of public support after the particular contribution continued reliance on unusual grants to fund an organization's current operating_expenses as opposed to providing new endowment funds may be evidence that the organization cannot reasonably be expected to attract future public support whether prior to the year in which the particular contribution was received the organization met the one-third support_test described in sec_1_509_a_-3 without the benefit of any exclusions of unusual grants pursuant to sec_1 whether the organization has a representative governing body as described in sec_1_509_a_-3 and whether material restrictions or conditions within the meaning of sec_1_507-2 have been imposed by the transferor upon the transferee in connection with such transfer application of law the grant meets the requirements of sec_1_170a-9 because the grant is from a disinterested party and the grant was attracted by reason of your publicly supported nature the grant is unusual or unexpected with respect to the amount the grant will adversely affect your status as normally being publicly supported the grant meets the requirements of sec_1_509_a_-3 based on the following facts and circumstances a the grant was not made by a person who created you or who previously contributed the grantor also does not stand in a position a substantial amount of your support of authority with respect to you and does not exercise control_over you b the grant is in the form of cash c you have carried on an actual program of public solicitation have exempt_activities and have attracted a significant amount of public support over the years d you have met the public support_test in past years e because you have relied on public support in the past it can be assumed that you will be able to maintain that level of public support in the future you have a large representative governing body f letter catalog number 58230y in addition no material restrictions or conditions within the meaning of sec_1_507-2 have been imposed by the transferor upon the transferee in connection with such transfer for all the forgoing reasons the grant should be characterized as an unusual grant within the meaning of sec_1_509_a_-3 if you have any questions please contact the person listed in the heading of this letter sincerely stephen a martin director exempt_organizations rulings and agreements letter catalog number 58230y


internal_revenue_service number release date index number ---------------- ------------------------------ ------------------------------------------ -------------------------------- in re -------------------------- ------------------------ -------------------------- --------------------------- 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-141808-04 date date legend taxpayer taxpayer date trust a_trust b_trust c child a child b child c z accounting firm year year dear ------------- ----------------------------------------------------------------------------------------- ------------------------ ----------------------------------------------------------------------------------------- ------------------------- -------------------------- ----------------------------------------------- --------------------------------------- -------------------------------- ------------------------------- ----------------------- ---------------- ----------- ------------------------------ ------- ------- this is in response to your letter dated date on behalf of taxpayer and taxpayer requesting an extension of time under ' g of the internal_revenue_code and ' sec_301_9100-1 and sec_301_9100-3 of the procedure and administration regulations to make allocations of generation-skipping_transfer gst tax exemption the facts and representations submitted are summarized as follows on date taxpayer and taxpayer established trust a_trust b and trust c irrevocable trusts for the primary benefit of child a child b and child c respectively article i of trust a provides that during the lifetime of child a all of the net_income of the trust shall be paid to child a at least quarter annually the trustees shall plr-141808-04 pay to or apply for the benefit of child a as much of the principal of the trust as the trustees other than taxpayer and taxpayer determine to be necessary for the health support maintenance and education of child a on child a’s death any accrued or undistributed_income shall be distributed to child a’s estate any then remaining principal shall be paid to or in trust for such one or more of child a’s descendants in such amounts or proportions as child a may appoint by will any principal not effectively appointed by child a shall be distributed to child a’s then living descendants per stirpes or if none to taxpayer and taxpayer 2’s other then living descendants per stirpes the dispositive provisions of trust b and trust c are identical to those contained in trust a except for the identity of the beneficiaries also on date taxpayer and taxpayer transferred dollar_figurez cash to each of trust a_trust b and trust c it is represented that no other contributions have been made to the trusts taxpayer and taxpayer relied on accounting firm to prepare and file form sec_709 united_states gift and generation-skipping_transfer_tax returns gift_tax returns for year taxpayer and taxpayer each elected under sec_2513 to treat the gifts made by them to third parties during the calendar_year as made one-half by each of them taxpayer and taxpayer 2’s transfers to trust a_trust b and trust c were reported on the gift_tax returns however due to an oversight accounting firm did not allocate any of taxpayer and taxpayer 2’s respective gst exemptions to the transfers made to the trusts in year accounting firm conducted a review of all estate_planning documents executed by taxpayer and taxpayer and discovered that no allocation of taxpayer 1’s and taxpayer 2’s respective gst exemptions had been made to the trusts on the year gift_tax returns taxpayer and taxpayer have requested the following rulings an extension of time under ' g and and to make allocations of taxpayer s and taxpayer 2’s respective gst exemptions with respect to the year transfers to trust a_trust b and trust c that the allocations will be made based on the value of the property transferred to the trusts as of the date of the original transfers and that if relief is granted and if such allocations are made trust a_trust b and trust c will each have an inclusion_ratio of zero as of date sec_2601 imposes a tax on every gst a gst is defined under ' a as a taxable_distribution a taxable_termination and a direct_skip sec_2602 provides that the amount of the tax is the taxable_amount multiplied by the applicable_rate sec_2641 defines aapplicable rate as the product of the maximum_federal_estate_tax_rate and the inclusion_ratio with respect to the transfer plr-141808-04 sec_2631 provides that for purposes of determining the inclusion_ratio every individual shall be allowed a gst_exemption of dollar_figure adjusted for inflation under ' c that 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_exemption under ' a 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_26_2632-1 of the generation-skipping_transfer_tax regulations provides in part that an allocation of gst_exemption to property transferred during the transferor s lifetime other than in a direct_skip is made on form_709 an allocation of gst_exemption to a_trust is void to the extent the amount allocated exceeds the amount necessary to obtain an inclusion_ratio of zero with respect to the trust sec_2642 provides that except as provided in ' f if the allocation of the gst_exemption to any transfers of property is made on a gift_tax_return filed on or before the date prescribed by ' b for such transfer or is deemed to be made under ' b or c the value of such property for purposes of ' a shall be its value as finally determined for purposes of chapter within the meaning of ' f or in the case of an allocation deemed to have been made at the close of an estate_tax_inclusion_period its value at the time of the close of the estate_tax_inclusion_period and such allocation shall be effective on and after the date of such transfer 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_exemption described in ' b or and an election under ' b or c such regulations shall include procedures for requesting comparable relief with respect to transfers made before the date of the enactment of ' g which was enacted into law on date 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 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 ' g b the time for allocating the gst_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 plr-141808-04 as a generation-skipping_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 ' b or b or an election described in ' b or c under the provisions of ' sec_301_9100-1 provides that the commissioner has discretion to grant a reasonable extension of time under the rules set forth in and 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_9100-3 provides the standards used to determine whether to grant an extension of time to make an election whose due_date is prescribed by a regulation and not expressly provided by statute under ' b a regulatory election includes an election whose due_date is prescribed by a notice published in the internal_revenue_bulletin in accordance with ' g b and notice_2001_50 taxpayers may seek an extension of time to make an allocation described in ' b or b or an election described in ' b or c under the provisions of ' requests for relief under ' 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 advise the taxpayer to make the election based on the facts submitted and the representations made we conclude that the requirements of ' have been satisfied therefore taxpayer and taxpayer are granted an extension of time of days from the date of this letter to make allocations of their respective available gst exemptions with respect to the transfers to trust a_trust b and trust c the allocations will be effective as of the date of the transfers and the gift_tax value of the transfers to the trusts will be used in determining the amount of gst_exemption to be allocated to the trusts if allocations of gst_exemption are made pursuant to the grant of relief in this letter_ruling and provided the amount of gst_exemption allocated to each of the trusts is equal to the gift_tax value of the transfer to the trusts on date each of the trusts will have an inclusion_ratio of zero as of date the allocations should be made on form sec_709 filed with the internal_revenue_service center cincinnati oh a copy of this letter should be attached to each supplemental form_709 copies are enclosed for this purpose plr-141808-04 the rulings contained in this letter are based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in support of the request for rulings it is subject_to verification on examination except as specifically ruled herein we express or imply no opinion on the federal tax consequences of the transaction under the cited provisions or under any other provisions of the code in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to taxpayer and taxpayer this ruling is directed only to the taxpayer requesting it sec_6110 provides that it may not be used or cited as precedent sincerely heather c maloy associate chief_counsel passthroughs special industries enclosures copy for sec_6110 purposes copies of letter


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 b02 plr-142253-09 date january legend x country date dear -------------- ------------------------------------------------ ------- --------------- --------------------- -------------------------- this responds to your letter dated date submitted on behalf of x requesting an extension of time under sec_301_9100-3 of the procedure and administration regulations to file an election to be classified as a partnership for federal tax purposes the information submitted states that x was formed in country on date x represents that as a foreign eligible_entity x was eligible to elect to be treated as a partnership for federal tax purposes effective date however x inadvertently failed to timely file a form_8832 entity classification election sec_301_7701-3 of the income_tax regulations provides that so long as a business_entity is not classified as a corporation under sec_301_7701-2 or an eligible_entity it may elect its classification for federal tax purposes sec_301_7701-3 further provides that an eligible_entity with at least two members can elect to be classified as either an association and thus a corporation under plr-142253-09 sec_301_7701-2 or as 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 sec_301_7701-3 provides that unless the entity elects otherwise a foreign eligible_entity is a partnership if it has two or more members and at least one member does not have limited_liability except as provided in sec_301_7701-3 sec_301_7701-3 provides that an eligible_entity may elect to be classified other than as provided under sec_301_7701-3 by filing a form_8832 with the appropriate service_center under sec_301_7701-3 this election will be effective on the date specified by the entity on form_8832 or on the date filed if no such date is specified on the election form the date specified on form_8832 cannot be more than days prior to the date on which the election is filed and cannot be more than months after the date on which the election is filed sec_301_9100-1 provides that the commissioner may grant a reasonable extension of time to make a regulatory election or a statutory election but no more than six months except in the case of a taxpayer who is abroad under all subtitles of the code except subtitles e g h and i sec_301_9100-1 defines the term regulatory election as including an election with a deadline prescribed by a regulation 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 an election sec_301_9100-2 provides automatic extensions of time for making certain elections sec_301_9100-3 provides extensions of time for making elections that do not meet the requirements of sec_301_9100-2 sec_301_9100-3 provides that request for relief under sec_301_9100-3 will be granted when the taxpayer provides evidence to establish that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government based solely on the facts submitted and representations made we conclude that the requirements of sec_301_9100-3 have been satisfied accordingly x is granted an extension of sixty days from the date of this letter to elect to be classified as a partnership for federal tax purposes effective date the election should be made by filing form_8832 with the appropriate service_center a copy of this letter should be attached to the election 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 plr-142253-09 this ruling is directed only to the taxpayer requesting it sec_6110 of the internal_revenue_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 will be sent to x's authorized representative sincerely curt g wilson associate chief_counsel passthroughs special industries enclosure copy of this letter copy for sec_6110 purposes


t c memo united_states tax_court ella louise wooten petitioner v commissioner of internal revenue respondent docket no 7128-02l filed date ella louise wooten pro_se john f driscoll for respondent memorandum opinion beghe judge respondent has moved pursuant to rule for summary_judgment that respondent may proceed to collect petitioner’s outstanding liabilities for federal income taxes and interest for tax years through 1unless otherwise indicated all rule references are to the tax_court rules_of_practice and procedure and all section references are to the internal_revenue_code as amended summary_judgment is intended to expedite litigation and avoid unnecessary and expensive trials fla peach corp v commissioner 90_tc_678 summary_judgment may be granted where there is no genuine issue of material fact and decision may be rendered as a matter of law rule a and b see 98_tc_518 affd 17_f3d_965 7th cir 90_tc_753 the moving party bears the burden of proving there is no genuine issue of material fact factual inferences will be made most favorably to the party opposing summary_judgment 85_tc_812 79_tc_340 when however a motion for summary_judgment is made and properly supported the party opposing summary_judgment may not rely on mere allegations or on denials of the movant's pleadings but must set forth specific facts in dispute and show that there is a genuine issue for trial rule d as discussed below we conclude that no material fact is in dispute and that respondent is entitled to summary_judgment as a matter of law accordingly we shall grant respondent’s motion background for each of her taxable years and petitioner timely filed a federal_income_tax return claiming head-of-household filing_status dependency deductions under sec_151 for her two children and the earned_income_credit under sec_32 on each return petitioner claimed she was entitled to a refund in accordance with sec_6402 and d respondent transferred the refund claimed by petitioner on her federal_income_tax return to the mississippi department of human services and to the u s department of agriculture in partial satisfaction of petitioner’s respective unpaid child_support and food stamp obligations in accordance with sec_6402 respondent also transferred the refunds claimed by petitioner on her and federal_income_tax returns to the mississippi department of human services in partial satisfaction of unpaid child_support_obligations respondent thereafter examined petitioner's returns for the years in issue and determined that she was not entitled to head-of-household filing_status or the dependency deductions that the earned_income_credit for and should be disallowed and that the earned_income_credit petitioner claimed for should be reduced to reflect that she was not entitled to treat the children as her dependents respondent issued a deficiency_notice to those effects petitioner timely petitioned this court for a redetermination and respondent filed an answer respondent and petitioner lodged pretrial memoranda with the court and there was a trial on the merits in which petitioner participated meaningfully as confirmed by our examination of the transcript of the trial proceedings this court sustained the deficiencies determined by respondent--which exceeded the refunds petitioner had claimed--and entered decision for respondent wooten v commissioner tcmemo_2000_54 appeal dismissed 5th cir in so doing this court did not adjudicate petitioner's complaints that she had never agreed to the transfer of her refunds to the department of human services and the department of agriculture nor did the court adjudicate her dispute over the existence and amounts of her obligations to those agencies this the court explained was because it lacked jurisdiction to restrain or review any credit or reduction by the commissioner under sec_6402 citing sec_6512 and 112_tc_46 on or about date respondent assessed the deficiencies and related interest against petitioner in the following amounts tax_year totals deficiency dollar_figure dollar_figure dollar_figure dollar_figure interest dollar_figure dollar_figure dollar_figure dollar_figure totals dollar_figure dollar_figure dollar_figure dollar_figure on or about date respondent applied a dollar_figure refund claimed by petitioner on her taxable_year tax_return to the balance then due on her tax_year account on or about date respondent prepared a notice_of_federal_tax_lien to assist in the collection of the cumulative unpaid balance then accrued on petitioner’s through tax_liabilities on date respondent sent petitioner an irs letter lt-11 - final notice notice_of_intent_to_levy and notice of your right to a hearing on date respondent sent petitioner an irs letter do - notice_of_federal_tax_lien filing and your right to a hearing under sec_6320 on date the notice_of_federal_tax_lien prepared by respondent on date was filed with the chancery court clerk hinds county - district jackson mississippi on date petitioner mailed respondent irs form - request for a collection_due_process_hearing in response to both the date irs letter lt-11 and the date irs letter do referred to above the form was received by respondent on date in the form petitioner alleged that respondent without petitioner’s prior consent acted improperly in transferring overpayment credits in her through tax accounts to the department of human 2respondent's lien notice in the amount of dollar_figure appears to be incorrect in two respects it contains a typographical error in the statement of the deficiency and accrued interest which causes the lien amount set forth in the notice to be dollar_figure less than the total assessed liabilities summarized in the table above and it fails to give petitioner credit for the application of her refund for the tax_year against the balance due on her tax_year account services in partial satisfaction of outstanding child_support_obligations and that respondent also acted improperly in transferring an overpayment credit in her tax account to the department of agriculture during respondent’s consideration of the form described above respondent’s appeals officer obtained an irs txmoda - transcript of account in regard to each of petitioner’s and tax years from those transcripts the appeals officer verified that all applicable laws and administrative procedures were satisfied in no document relevant to this case and at no hearing relevant to this case did petitioner with the exception of the disputed issue described above allege either that respondent failed to meet all applicable law and administrative procedures or that respondent’s appeals officer failed to verify that respondent satisfied all applicable laws and administrative procedures as required by sec_6330 nor did petitioner raise any spousal defenses any challenges to the appropriateness of collection actions or any offers of collection alternatives to respondent’s appeals officer respondent held a hearing in regard to the form filed by petitioner after that hearing respondent sent petitioner an irs form_3193 - notice_of_determination concerning collection action s under sec_6320 and or dated date sustaining the filing of the notice_of_federal_tax_lien and the determination to levy thereunder on date petitioner timely mailed this court a letter that on date the court filed as her imperfect petition for lien or levy action under code sec_6320 or sec_6330 initiating the present action under sec_6330 in the amended petition to perfect her case which the court filed on date petitioner again alleged that in the absence of a judicial determination or petitioner’s express consent respondent acted improperly in transferring overpayment credits in her through tax accounts to the department of human services and the department of agriculture at the times of filing her petition and amended petition petitioner was a resident of jackson mississippi in her written objections to respondent’s motion petitioner amplifies her allegations by casting aspersions on the continued existence of the chancery courts in mississippi and of their power to grant divorces and of the validity or existence of her divorce under mississippi law as well as the existence and amounts of her child_support and food stamp obligations petitioner's objections do not dispute any of the allegations in the affidavit of respondent's appeals officer in support of respondent's motion discussion in her petition and amended petition in this case and in her objections to respondent's motion petitioner attempts to challenge the existence or amounts of her underlying tax_liabilities for the years in issue by bringing up again and elaborating on allegations and arguments she made in the prior case in this court that upheld the deficiencies determined by respondent wooten v commissioner tcmemo_2000_54 appeal dismissed 5th cir in an effort to give this pro_se petitioner the benefit of the doubt we broadly interpret petitioner's form request for a hearing her petition to this court and her objections to respondent's motion as embodying both an effort to dispute the deficiencies determined by respondent and upheld by this court in wooten v commissioner supra and objections to respondent's actions pursuant to sec_6402 in paying the refunds claimed on her returns to the mississippi department of human services and the u s department of agriculture issue petitioner's tax_liabilities petitioner's tax_liabilities cannot be put in issue in this case because they were decided in the prior case in this court that redetermined petitioner's tax_liabilities for the years in issue sec_6330 provides in relevant part certain issues precluded --an issue may not be raised at the hearing if-- a the issue was raised and considered at a previous hearing under sec_6320 or in any other previous administrative or judicial proceeding and b the person seeking to raise the issue participated meaningfully in such hearing or proceeding as we observed in 118_tc_488 sec_6330 expressly provides that taxpayers at collection hearings before respondent's appeals_office may not raise issues that were previously raised by taxpayers and considered in any other administrative or judicial proceeding in which the taxpayers meaningfully participated see sec_301_6320-1 sec_301_6330-1 proced admin regs we take judicial_notice of the opinion and record in wooten v commissioner supra that the claims petitioner wishes to make in this case were raised by her in that prior case and that she participated meaningfully in that case sec_6330 in effect codifies the legal doctrines of res_judicata and collateral_estoppel in their application to collection proceedings even in the absence of sec_6330 this situation would be governed by the legal doctrine_of res_judicata which means a matter adjudged under this doctrine a final judgment rendered by a court of competent jurisdiction on the merits is conclusive as to the rights of the same parties and as to them constitutes an absolute bar to a subsequent action involving the same claim demand or cause of action see black's law dictionary 7th ed citing restatement second of judgments secs wright law of federal courts sec 100a pincite 5th ed in application to the case before us this means that the party ms wooten who lost the prior case wooten v commissioner supra is precluded in this later collection case from making the same claim the court rejected in the prior case finally insofar as petitioner seeks to put her tax_liabilities in issue she is also precluded from doing so by sec_6330 which provides 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 of course petitioner did receive a statutory_notice_of_deficiency for the liabilities in issue and she had an opportunity which she took advantage of by filing a petition and participating meaningfully in the tax_court proceeding to dispute the liabilities issue payments to other agencies pursuant to sec_6402 and d the commissioner is legally required to transfer any existing federal_income_tax overpayments of a taxpayer to satisfy any obligations of the taxpayer identified in that section viz amounts of past-due_support owed by that person of which the secretary has been notified by a state in accordance with sec_464 of the social_security act and amounts owed to federal agencies under sec_6402 no court of the united_states shall have jurisdiction to hear any_action brought to restrain or review a reduction authorized by subsection c or d no such reduction shall be subject_to review by the secretary in an administrative_proceeding no action brought against the united_states to recover the amount of any such reduction shall be considered to be a suit_for_refund of tax this subsection does not preclude any legal equitable or administrative action against the federal_agency or state to which the amount of such reduction was paid petitioner's arguments that respondent's payments to the department of human services and the department of agriculture were improper cannot be adjudicated in this case sec_6402 forbids her to sue the commissioner in any court to recover the payments the tax_court has no jurisdiction to entertain any such suit sec_6402 makes it clear that if petitioner has any claim to recover the payments petitioner is required to make her claims directly against the recipient agencies issue respondent's administrative determinations where as in this case the taxpayer's underlying tax_liabilities are not in issue we review the commissioner' sec_3in making this observation we do not wish to mislead petitioner into thinking we are holding she has valid claims against the agencies even if the statutory time periods for making any such claims against the agencies have not already expired determination for abuse_of_discretion 114_tc_604 114_tc_176 with exception of the issues identified and disposed of above by the application of sec_6330 sec_6330 and sec_6402 petitioner has raised no other issue in this case respondent's appeals officer verified that respondent met all applicable laws and administrative procedures thereby satisfying the requirements of sec_6330 petitioner has not challenged that determination except for the above- mentioned claims we have already disposed of all the other requirements of sec_6330 were satisfied because petitioner did not raise any issue described in sec_6330 spousal defenses or ii challenges to the appropriateness of collection actions the requirements of sec_6330 are satisfied in this case inasmuch as petitioner failed to offer any specific collection alternatives as described in sec_6330 respondent's appeals officer determined that the disputed actions of respondent properly balanced the need for the efficient collection_of_taxes with the legitimate concern that any collection be no more intrusive than necessary petitioner has failed to assert specifically that the appeals officer's balancing determination was erroneous or to allege any specific facts in support of any assertion to that effect we conclude as a matter of law that respondent did not abuse his discretion in determining to sustain the notice of lien and to proceed with collection of the tax_liabilities and interest assessed against petitioner there are no genuine issues of material fact summary_judgment is appropriate see rule b and we shall therefore grant respondent's motion for summary_judgment an appropriate order and decision will be entered


t c summary opinion united_states tax_court nancy l and gerald l harper petitioners v commissioner of internal revenue respondent docket no 17561-05s filed date nancy l harper and gerald l harper pro sese vicki l miller for respondent goldberg special_trial_judge this case was heard pursuant to the provisions of sec_7463 of the internal_revenue_code in effect at the time the petition was filed pursuant to sec_7463 the decision to be entered is not reviewable by any other court and this opinion shall not be treated as precedent for any other case unless otherwise indicated subsequent section references are to the internal_revenue_code in effect for the year in issue and all rule references are to the tax_court rules_of_practice and procedure respondent determined a deficiency in petitioners’ federal_income_tax for the year of dollar_figure the issues for decision are whether petitioners failed to report nonemployee compensation of dollar_figure on their federal_income_tax return whether petitioners are liable for self-employment_tax on that amount and whether petitioners are entitled to a corresponding deduction for one-half of the self-employment_tax to be paid background the stipulation of facts and the attached exhibits are incorporated herein by reference at the time the petition was filed petitioners resided in paola kansas petitioner wife mrs harper worked as an independent insurance agent selling life and mortgage refinancing insurance policies with primerica financial services inc primerica from date through date until her affiliation with primerica mrs harper had no prior experience as an insurance agent during the course of its affiliation with mrs harper primerica paid her cash in two forms first upon receipt of an application_for insurance primerica would advance mrs harper a portion of the commissions that were expected to become earned assuming that a policy would be issued and remain in force for year the second form of payment was in the form of net earned commissions these earned commissions were calculated on a policy-by-policy basis as premiums were paid_by policyholders earned commissions were applied in the following order to recover outstanding debits in the form of advance commissions to reimburse primerica for advanced business_expenses such as license fees etc and to cover any outstanding amounts that had been charged to a sales representative’s account chargeback recovery primerica would report any net earned commissions credited during the taxable_year to a sales representative’s account to the irs on form 1099-misc miscellaneous income upon selling an insurance_policy mrs harper received an immediate advance equal to a percentage of the premiums due on the policy and was entitled to keep this amount if and only if the policy was held by the insured for year these advances were not reported to the irs as income until the 1-year mark elapsed and mrs harper had an unconditional right to the funds or their equivalent primerica recorded monthly commission account statements for mrs harper for each month of consistent with the dates of her affiliation with primerica the last monthly statement showing policy sales was dated date the final monthly summary is dated date and reports the following tax reporting summary year to date dollar_figure personal sales dollar_figure base shop override ica escrow contribution dollar_figure ica escrow used released gross earned commissions dollar_figure imputed_interest dollar_figure total reportable income dollar_figure accounting activity summary advance recovery balance chargeback recovery balance business_expenses other adjustments intercompany recovery dollar_figure big_number previous earns owed total primerica issued two forms 1099-misc to mrs harper for the taxable_year the first reflecting nonemployee compensation in the amount of dollar_figure dollar_figure in gross earned commissions and dollar_figure in imputed_interest and the second reflecting nonemployee compensation in the amount of dollar_figure intercompany recovery although respondent has not raised the latter amount dollar_figure as an issue in this case as detailed above this amount was applied to mrs harper’s outstanding commission account balance petitioners did not report either amount reflected on the aforementioned forms 1099-misc on their income_tax return mrs harper did however attach a letter to petitioners’ return in which she contested the inclusion of these amounts in petitioners’ gross_income on the grounds that they never received any payments checks from primerica during the year at issue and because she ended her affiliation with primerica in late the monthly figures for submitted to her and respondent by primerica had to have been falsified discussion the determinations of the commissioner in a notice_of_deficiency are presumed correct and the burden is on the taxpayer to prove that the determinations are in error rule a 290_us_111 as the issue in this case is legal that is whether income generated by petitioner wife’s commission account is includable in petitioners’ gross_income we decide this case without consideration of the burden_of_proof sec_7491 the first issue presented in this case is whether mrs harper earned_income based on commissions that were not paid directly to her in a check but rather were diverted or applied to offset a negative balance in her commission account sec_61 provides that gross_income includes all income from whatever source derived including but not limited to compensation_for services including fees commissions fringe_benefits and similar items unless otherwise provided the supreme court has consistently given this definition of gross_income a liberal construction in recognition of the intention of congress to tax all gains except those specifically exempted 348_us_426 moreover sec_1_61-2 income_tax regs provides that wages salaries commissions paid salesmen commissions on insurance premiums are income to the recipients unless excluded by law in the context of insurance agents who receive advances based on future commission income whether those advances constitute income depends on whether at the time of the making of the payment the agent had unfettered use of the funds and whether there was a bona_fide obligation on the part of the agent to make repayment dennis v commissioner tcmemo_1997_275 in many instances repayment is simply made out of future earned commissions where the repayments will be taken only from future commissions earned and the agent will not become personally liable in the event that the future income does not cover the repayment schedule the payments will constitute income to the agent for each year to the extent he received them 26_tc_666 these payments are nothing more than disguised salary 55_tc_85 however in the situation where the advances are actually loans when the repayments are offset directly by the future earned commissions then the agent will have either commission income or cancellation_of_indebtedness_income at the time of the offsets cox v commissioner tcmemo_1996_241 cf warden v commissioner tcmemo_1988_165 in this case mrs harper continued to earn commissions on policies that she had sold during her affiliation with primerica through august of however instead of paying these commissions to mrs harper by check primerica diverted the commissions to accounts showing balances owed by mrs harper for the advances and expenses payments previously described we believe that based on all of the evidence presented that when primerica previously made advances to mrs harper she was not taxed on those advances because the advances were loans secured and payable through future earned commissions beaver v commissioner supra diers v commissioner tcmemo_2003_229 although the record before us is devoid of any contract that may have existed between mrs harper and primerica we are convinced from our review of the detailed monthly statements of accounting maintained by primerica and illustrated at exhibit j that under the system that primerica used to account for its agents’ commissions advances primerica paid to mrs harper were actually loans to be offset directly by future earned_income as evidence for this conclusion we point to the fact that mrs harper carried over a negative balance in her commission account from and had a negative balance in her chargeback recovery account for each month of for each month of primerica would apply mrs harper’s accumulated earnings for that month to her negative balance this process was repeated through november of when primerica applied the remaining amount of mrs harper’s earnings to zero out her commission account at the end of mrs harper’s commission account including recovery_of advances made and chargeback amounts owed had a negative yearend balance of dollar_figure the monthly records show that primerica applied dollar_figure from mrs harper’s earnings recorded throughout that year to essentially pay back the negative balance in her account we believe despite the lack of any contract stating otherwise that this accounting shows that mrs harper was under an obligation according to her affiliation with primerica to rectify any outstanding balance in her commission account and to that end her advances were not taxed upon receipt but her actual earnings were taxed in this case those earnings were used to pay back a deficit accumulated in her commission account at the end of mrs harper’s commission account was credited with dollar_figure primerica however did not pay mrs harper this amount by check but rather applied it to a then- existing deficiency in her commission account before applying the funds mrs harper’s commission account had a total negative balance of dollar_figure after crediting the account with dollar_figure in institutional recovery and applying the dollar_figure credit from earnings to mrs harper’s commission account the result was that her existing account deficiency was eliminated and her obligation to pay back this amount was settled this reduction referred to in income_tax parlance as cancellation of indebtedness resulted in mrs harper’s receipt of gross_income irrespective of the fact that in her words she never received an actual check for dollar_figure diers v commissioner supra at trial petitioners stated that they refused to include the amounts as listed on the aforementioned form_1099 on their return as they had not received any check for that amount from primerica during while we are sympathetic to petitioners’ confusion as to why they must include in their gross_income moneys that they actually did not get a check for our review of the entire record in this case including the copious statements of tax and accounting submitted by respondent as a result of a subpoena served on primerica show that the amount in issue was in fact applied to a then-existing deficiency in mrs harper’s chargeback account and when received was based on the reasons previously discussed taxable this conclusion also comports with the explanation provided in a letter sent by primerica to respondent that is included as part of the record in that letter primerica explained that in mrs harper’s case since income was applied to both negative advance recovery and chargeback recovery balances a check was not issued to the agent based on the foregoing and under the relevant tax law mrs harper would have had cancellation_of_indebtedness_income at the time that monthly premiums were reclassified as earned_income and or any preexisting deficiency in her commission account was offset see diers v commissioner supra cox v commissioner tcmemo_1996_241 cf warden v commissioner tcmemo_1988_ therefore the court holds that petitioners received commission income in the amount of dollar_figure in petitioners also contest inclusion of the amounts listed on the form_1099 at issue on the grounds that mrs harper had stopped selling policies for primerica sometime in the fall of and accordingly she could not have made any sales from which commissions could be generated in petitioners testified that despite their repeated requests to primerica regarding the exact circumstances by which the figures reflected in the monthly statements were derived they had not been able to ascertain the exact nature of these amounts based on the entire record before us we are not convinced either that mrs harper ended her affiliation with primerica in november of or that assuming that she did not actually sell any policies in primerica did not account for policies that she sold in on its monthly reports first mrs harper could not provide the court with an exact date on which she terminated her affiliation with primerica she testified that she told her regional director in person that she was quitting sometime in november of mrs harper claimed that she had not put her intentions in writing to primerica or any of its employees at any time because it was her regional director’s responsibility to do that second mrs harper confirmed at trial the figures contained in the records provided by primerica showing that she received commissions on policy sales in date since mrs harper also testified that she had sold her last policy in date we conclude that it was possible that primerica did not make the initial advances to its agents including mrs harper until several months after the date on which the policy was actually sold finally because agents were required to repay advanced amounts if policies were terminated before a 1-year period elapsed it is possible assuming that the last contract sold by mrs harper was received by primerica in date that there would be activity on her commission account through the end of all of these reasons lead us to the reasonable conclusion that mrs harper could have been credited commissions in taxable_year for policies sold in that year as well as policies sold in the last issues before us concern whether petitioners are liable for the self-employment_tax and whether petitioners are entitled to a corresponding deduction for one-half of the self- employment_tax to be paid sec_1401 imposes a tax upon the self-employment_income of every individual in general self-employment_income consists of the net_earnings derived from an individual other than a nonresident_alien from a trade_or_business carried on by such an individual sec_1402 and b sec_1_1401-1 income_tax regs an individual is subject_to self-employment_tax if his or her net_earnings_from_self-employment exceed dollar_figure for the taxable_year sec_1402 in this case although petitioners dispute that mrs harper was an independent insurance agent with primerica during the taxable_year in issue they do not disagree that mrs harper was at one time an agent for primerica moreover and based on our foregoing discussion we believe that the income received by mrs harper in was derived directly from her work as an independent insurance agent with primerica either in or accordingly the court holds that mrs harper earned_income in and is therefore both liable for self- we note that no argument or evidence was presented as to whether mrs harper was an employee or statutory_employee under sec_3121 employment_tax on that income and entitled to a corresponding deduction for one-half of the self-employment_tax to be paid accordingly and based on the foregoing facts and discussion we hold that petitioners failed to report nonemployee compensation in the amount of dollar_figure on their federal_income_tax return are liable for self-employment_tax on that amount and are entitled to a corresponding deduction for one-half of the self-employment_tax to be paid decision will be entered for respondent


department of the treasury washington dc third party communication none date of communication not applicable_person to contact --------------------------- id no --------------- ----------------- telephone number ---------------------- refer reply to cc psi b04 plr-110314-16 date date internal_revenue_service number release date index number ---------------------------- ---------------- ---------------------------------- re ------------------------------------ legend decedent spouse date date --------------------------- ------------------------ ------------------ ----------------------- dear ------------------- this letter responds to your personal representative’s letter of date requesting an extension of time pursuant to sec_301_9100-3 of the procedure and administration regulations to make the election under sec_2010 of the internal_revenue_code portability election to allow a decedent’s surviving_spouse to take into account that decedent’s deceased spousal unused exclusion dsue amount the facts and representations are as follows decedent died on date survived by spouse date is a date after the effective date of the amendment to sec_2010 which provides for portability of a dsue amount to a surviving_spouse to obtain the benefit of portability of decedent’s dsue amount to spouse decedent’s estate was required to file form_706 united_states estate and generation-skipping_transfer_tax return on or before the date that is nine months after decedent’s date of death or the last day of the period covered by an extension decedent’s form_706 was due on date but the estate did not file a form_706 to make the portability election the estate discovered its failure to elect portability after the due_date for making the election it is represented that the value of decedent’s gross_estate is less than the basic exclusion amount in the year of decedent’s death including any taxable_gifts made during her lifetime plr-110314-16 you request an extension of time pursuant to sec_301_9100-3 to elect portability of decedent’s dsue amount pursuant to sec_2010 law and analysis sec_2001 imposes a tax on the transfer of the taxable_estate of every decedent who is a citizen or resident_of_the_united_states sec_2010 provides that a credit of the applicable credit_amount shall be allowed to the estate of every decedent against the tax imposed by sec_2001 sec_2010 provides that the applicable credit_amount is the amount of the tentative_tax that would be determined under sec_2001 if the amount with respect to which such tentative_tax is to be computed were equal to the applicable_exclusion_amount on date congress amended sec_2010 effective for estates of decedents dying and gifts made after date to allow portability of a decedent’s unused applicable_exclusion_amount between spouses tax relief unemployment insurance reauthorization and job creation act of pub_l_no sec_303 124_stat_3296 sec_2010 provides that the applicable_exclusion_amount is the sum of the basic exclusion amount and in the case of a surviving_spouse the dsue amount sec_2010 generally provides that the basic exclusion amount is dollar_figure to be adjusted for inflation annually after calendar_year sec_2010 defines the dsue amount to mean the lesser_of a the basic exclusion amount or b the excess of -- i the applicable_exclusion_amount of the last deceased spouse of the surviving_spouse over ii the amount with respect to which the tentative_tax is determined under sec_2001 on the estate of such deceased spouse sec_2010 provides that a dsue amount may not be taken into account by a surviving_spouse under sec_2010 unless the executor of the estate of the deceased spouse files an estate_tax_return on which such amount is computed and makes an election on such return that such amount may be so taken into account the election once made shall be irrevocable no election may be made if such return is filed after the time prescribed by law including extensions for filing such return sec_2010 provides that the secretary shall prescribe regulations as may be necessary or appropriate to implement sec_2010 plr-110314-16 sec_20_2010-2t a of the estate_tax regulations as in effect on date provides that to allow a decedent’s surviving_spouse to take into account that decedent’s dsue amount the executor of the decedent’s estate must elect portability of the dsue amount on a timely-filed form_706 under sec_20_2010-2t a the due_date of an estate_tax_return required to elect portability is nine months after the decedent’s date of death or the last day of the period covered by an extension if an extension of time for filing has been granted under sec_20_2010-2t a the portability election is made by timely filing a complete and properly prepared estate_tax_return unless the executor satisfies the requirements for the election not to apply in sec_20_2010-2t a i sec_301_9100-1 provides that the commissioner may 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 taxpayer who is abroad under all subtitles of the code except subtitles e g h and i sec_301_9100-1 provides that the term statutory election means an election whose due_date is prescribed by statute the term regulatory election means 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_9100-3 provides the standards the commissioner will use to determine whether to grant an extension of time to make an election whose due_date is prescribed by a regulation and not expressly provided by statute a request for relief under sec_301_9100-3 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 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 failed to make the election because after exercising reasonable diligence taking into account the taxpayer’s experience and the complexity of the return or issue the taxpayer was unaware of the necessity for the election the due_date for the portability election is prescribed by statute in the case of an estate required to file an estate_tax_return under sec_6018 see sec_2010 sec_6075 and sec_6018 in the case of an estate that is not required to file an estate_tax_return under sec_6018 the due_date is prescribed by regulation see sec_20_2010-2t a see also sec_20_2010-2 and revproc_2014_18 2014_7_irb_513 sec_2 accordingly in the latter case a taxpayer may seek an extension of time to elect portability under the provisions of sec_301_9100-3 plr-110314-16 sec_6018 requires the filing of an estate_tax_return in all cases where the gross_estate exceeds the basic exclusion amount in effect under sec_2010 for the calendar_year which includes the date of death for purposes of this determination under sec_6018 the basic exclusion amount is reduced but not below zero by the sum of -- a the amount of the adjusted_taxable_gifts within the meaning of sec_2001 made by the decedent after date plus b the aggregate amount allowed as a specific exemption under sec_2521 as in effect before its repeal by the tax reform act of with respect to gifts made by the decedent after date it is represented that based on the value of the gross_estate and taking into account any taxable_gifts decedent’s estate is not required to file an estate_tax_return under sec_6018 under these facts the commissioner has discretionary authority under sec_301_9100-3 to grant to decedent’s estate an extension of time to elect portability based on the facts submitted and the representations made we conclude that the requirements of sec_301_9100-3 have been satisfied accordingly we grant an extension of time of days from the date of this letter in which to elect portability under sec_2010 the election should be made by filing a complete and properly-prepared form_706 and a copy of this letter within days from the date of this letter to the cincinnati service_center at the following address internal_revenue_service cincinnati service_center stop cincinnati oh for purposes of electing portability a form_706 filed by decedent’s estate within days from the date of this letter will be considered to be timely filed the rulings contained in this letter are based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in support of the request for rulings it is subject_to verification on examination if it is later determined that based on the value of the gross_estate and taking into account any taxable_gifts decedent’s estate is required to file an estate_tax_return pursuant to sec_6018 the commissioner is without authority under sec_301_9100-3 to grant to decedent’s estate an extension of time to elect portability and the grant of the extension referred to in this letter is deemed null and void this ruling is directed only to the taxpayer requesting it sec_6110 provides that it may not be used or cited as precedent plr-110314-16 in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative sincerely associate chief_counsel passthroughs special industries by lorraine e gardner lorraine e gardner senior counsel branch office of associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes


internal_revenue_service cor-115820-00 number info release date uil the honorable roscoe g bartlett u s house of representatives washington d c dear mr bartlett date thank you for your letter of date signed by you and a number of your colleagues encouraging the internal_revenue_service to immediately readjust the business standard mileage rate to reflect the recent increase in gasoline prices you note that the increased cost has particularly burdened self-employed taxpayers who use automobiles for business purposes gasoline prices we realize increased gasoline prices are an economic burden however the cost of gasoline is only one part of the business standard mileage rate which includes fixed and operating automobile costs these costs include depreciation or lease payments maintenance and repairs insurance and license and registration fees in addition to gasoline and oil less than one-third of the cents per mile rate comes from the cost of gasoline and oil thus an immediate adjustment in the rate taking into account the recent increase in gasoline prices might not be significant setting the business standard mileage rate the rate is a national average amount determined by an annual study performed by an independent_contractor who is an expert in the cost analysis of business use of automobiles the contractor uses recent data from each state on the component costs of operating the most popular automobiles the contractor then combines this data to achieve a national composite cents-per-mile rate advantages of using the business standard mileage rate reducing a taxpayer’s record-keeping burden is the principal advantage of using the rate gasoline prices rise and fall during the year but taxpayers may continue to use the same rate without having to keep records of actual expenses although rising gasoline prices can be a disadvantage for taxpayers who use the rate falling prices can work to their advantage for example although gasoline prices fell in for all of and through date taxpayers were able to use the rate that reflected the earlier higher prices taxpayer’s options to deduct the ordinary and necessary expenses of using an automobile for business purposes a taxpayer must substantiate the cost date place and business_purpose of each use of the automobile by adequate_records for the cost the taxpayer has two options cid substantiate actual cost by keeping records or by other_sufficient_evidence cid use the business standard mileage rate using the rate gives approximate not actual costs taxpayers can deduct the actual business_expenses of using a personally-owned automobile and this may be advantageous when automobile costs are rising publication travel entertainment gift and car expenses contains further information on how taxpayers should substantiate expenses i have enclosed the relevant pages from that publication i am sending a similar letter to your colleagues i hope this information is helpful please call me at or robert a berkovsky at if you have any questions sincerely charles o rossotti enclosure


internal_revenue_service department of the treasury number release date index number ty dear washington dc person to contact telephone number refer reply to cc intl br 1-plr-135471-01 date date this is in response to your letter dated date and subsequent submission dated date on behalf of a concerning a request for a ruling under sec_877 of the internal_revenue_code_of_1986 code that a’s loss of u s citizenship did not have for one of its principal purposes the avoidance of u s taxes under subtitle a or subtitle b of the code the information submitted for consideration is substantially as set forth below the rulings contained in this letter are based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in support of the request for rulings it is subject_to verification on examination a’s father was born in country c and a’s mother was born in country d on date b a was born in the united_states and became a citizen of both the united_states and country c at birth a and his family moved back to europe in year g when a was a boy a has not lived or attended school in the united_states since that time since graduation from college a has been living and working in country f a was married to a citizen of country e and they reside in country f a has no direct family or personal ties in the united_states apart from business related interactions with contacts here a has never been employed in the united_states voted in an election or registered to vote in the united_states a has never had a u s drivers license all of a’s family and social ties are located in country f country c and country e a’s personal possessions and real_estate are in country f and a administers his bank accounts from there and holds a drivers license from there a is fully liable to tax as a resident in country f although a is liable to tax in country c on income from sources within country c the tax is eliminated by foreign_tax_credit under the treaty between country c and country f a has represented that a will not relinquish his country c citizenship for a period of at least five years following a’s expatriation from the united_states sec_877 generally provides that a citizen who loses u s citizenship or a u s long-term_resident who ceases to be taxed as a lawful permanent resident individuals who expatriate within the 10-year period immediately preceding the close of the plr-135471-01 taxable_year will be taxed under sec_877 and the special rules of sec_877 for such taxable_year unless such loss did not have for one of its principal purposes the avoidance of u s taxes sec_2107 and sec_2501 a provide special estate and gift_tax regimes respectively for individuals who expatriate with a principal purpose to avoid u s taxes a former citizen or former long term-resident will be treated as having expatriated with a principal purpose to avoid u s taxes for purposes of sec_877 sec_2107 and sec_2501 a if the individual’s average income_tax_liability or the individual’s net_worth on the date of expatriation exceed certain thresholds see sec_877 sec_2107 and sec_2501 a b a former u s citizen or former long term-resident whose net_worth or average tax_liability exceeds these thresholds however will not be presumed to have a principal purpose of tax_avoidance if that former citizen is described within certain statutory categories and submits a request for a ruling within one year of the date of loss of u s citizenship for the secretary’s determination as to whether such loss had for one of its principal purposes the avoidance of u s taxes see sec_877 sec_2107 and sec_2501 under notice_98_34 1998_2_cb_29 modifying notice_97_19 1997_1_cb_394 an eligible former citizen will not be presumed to have a principal purpose of tax_avoidance if that former citizen submits a complete and good_faith request for a ruling as to whether such loss had for one of its principal purposes the avoidance of u s taxes notice_98_34 requires that certain information be submitted with a request for a ruling that an individual’s expatriation did not have for one of its principal purposes the avoidance of u s taxes a is eligible to request a ruling pursuant to notice_97_19 because a became a citizen at birth of the united_states and a citizen of country c and continues to be a citizen of country c see sec_877 a submitted all the information required by notice_98_34 including any additional information requested by the service after review of the submission accordingly based solely on the information submitted and the representations made we conclude that a has made a complete and good_faith submission in accordance with sec_877 and notice_98_34 and therefore a will not be presumed to have expatriated with a principal purpose of tax_avoidance however because the information submitted does not clearly establish the existence or lack of a principal purpose to avoid taxes under subtitle a or b of the code no opinion is expressed as to whether a’s expatriation had for one of its principal purposes the avoidance of such taxes while this ruling rebuts the presumption of tax_avoidance under sec_877 it is not conclusive as to whether a subsequently may be found plr-135471-01 to have a principal purpose of tax_avoidance under sec_877 sec_2107 or sec_2501 based on all the facts and circumstances see sec_877 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 in addition no opinion is expressed as to a’s u s tax_liability for taxable periods prior to a’s loss of u s citizenship or for taxable periods after a’s loss of u s citizenship under sections of the code other than sec_877 sec_2107 and sec_2501 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 in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your representative sincerely senior technical reviewer branch office of the associate chief_counsel international