department of the treasury - internal_revenue_service washington d c date may s w 5p7- contact person danny smith identification_number telephone number t gb ba employer_identification_number coe dear sir or madam this is in response to your letter dated date in which you requested certain tulings with respect to a proposed transfer of all of the assets of b to c b and c are exempt under sec_501 of the internal_revenue_code and are classified as private_foundations under sec_509 b was originally organized and funded by d it has always operated exclusively for charitable purposes exclusively for charitable purposes c was originally organized and funded by e it has always operated d and e recently merged resulting in the creation of f the directors of f want to use one foundation rather than two to assist f in conducting its charitable activities member board_of directors these three individuals also serve on the four member board_of c b and c now share the same officers the officers and directors of b and c believe that the merger of b and c will simplify operations and reduce overhead expenses filing_requirements and fees therefore b and c propose to merge c will be the surviving entity after the merger c will succeed to all of the assets and liabilities of b and will continue the charitable mission of b b has a three b has not notified the service that it intends to terminate its private_foundation_status nor has b ever received notification that its status as a private_foundation has been terminated furthermore b has stated that it has not committed willful repeated acts or failures to act or a willful and flagrant act or failure to act giving rise to liability for tax under chapter d e sec_507 of the code provides for the voluntary and involuntary termination of private_foundation_status it states in part that except for transfers described in sec_507 an organization's private_foundation_status will be terminated only if the organization notifies the service of its intent to terminate or there have been either willful repeated acts or failures to act or a willful and flagrant act or failure to act giving rise to liability for tax under chapter sec_507 of the code provides that when a private_foundation transfers assets to another private_foundation pursuant to any liquidation merger redemption recapitalization or other adjustment organization or reorganization the transferee foundation shall not be treated as a new organization sec_507 of the code imposes a tax on an organization that terminates its private_foundation_status under sec_507 of the code sec_1_507-3 of the income_tax regulations provides that a transferor private_foundation is required to meet its charitable distribution_requirements under sec_4942 of the code even for any taxable_year in which it makes a transfer of its assets to another private_foundation such transfer shall itself be counted toward satisfaction of such requirements to the extent the amount transferred meets the requirements of sec_4942 of the code however where the transferor has disposed of all of its assets the record-keeping requirements of sec_4942 of the code shall not apply during any period in which it has no assets sec_1_507-1 of the regulations provides that if a private_foundation transfers all or part of its assets to one or more other private_foundations pursuant to a transfer described in sec_507 of the code such transferor foundation will not have terminated its foundation status under sec_507 sec_1_507-1 of the regulations provides that neither a transfer of all of the assets of a private_foundation nor a significant disposition of assets as defined in sec_1_507-3 by a private_foundation whether or not any portion of such disposition of assets is made to another private_foundation shall be deemed to result in a termination of the transferor private_foundation under sec_507 of the code unless the transferor private_foundation elects to terminate pursuant to sec_507 or sec_507 is applicable sec_1_507-1 of the regulations provides that a private_foundation which transfers all of its assets is not required to file annual information returns required by sec_6033 of the code for its tax years after the tax_year of its transfer when it has no assets or activities sec_1_507-3 of the regulations provides that in the case of a significant disposition of assets to one or more private_foundations within the meaning of paragraph c of this subsection the transferor organization shall not be treated as a newly created organization sec_1_507-3 of the regulations provides that a transferee organization in the case of a transfer described in sec_507 of the code shall succeed to the aggregate tax s benefit of the transferor organization in an amount equal to the amount of such aggregate tax_benefit of the transferor organization multiplied by a fraction the numerator of which is the fair_market_value of the assets less encumbrances transferred to such transferee and the denominator of which is the fair_market_value of the assets of the transferor less encumbrances immediately before the transfer fair_market_value is determined at the time of transfer sec_1_507-3 of the regulations provides that if a transferor private_foundation transfers assets to a private_foundation which is effectively controlled within the meaning of sec_1_482-1a directly or indirectly by the same person or persons who effectively control the transferor private_foundation the transferee foundation will be treated as if it were the transferor foundation for purposes of sec_4940 through and sec_507 through of the code the transferee is treated as the transferor in the proportion which the fair_market_value of the transferor’s assets that were transferred bears to the fair_market_value of all of the assets of the transferor immediately before the transfer sec_1_507-3 of the regulations provides that unless a private_foundation gives notice under sec_507 of the code a transfer of assets described in sec_507 of the code will not constitute a termination of the transferor’s private_foundation_status sec_1_507-4 of the regulations provides that the tax on termination of private_foundation_status under sec_507 of the code does not apply to a transfer of assets pursuant to sec_507 of the code unless the provisions of a become applicable sec_4940 of the code imposes a tax on the net_investment_income of private_foundations sec_4941 of the code imposes a tax on each act of self-dealing between a disqualified_person and a private_foundation sec_4942 of the code requires a private_foundation to make specified distributions of income for each taxable_year including the year in which it transfers substantial assets to another private_foundation under sec_507 sec_4942 of the code defines a qualifying_distribution as any amount including that portion of reasonable and necessary administrative expenses paid to accomplish one or more purposes described in sec_170 other than any contribution to i an organization controlled by the foundation or one or more disqualified persons or ii a private_foundation which is not an operating_foundation except as otherwise provided or b any amount_paid to acquire an asset used directly in carrying out one or more purposes described in sec_170 sec_4942 of the code requires that a grantor private_foundation in order to have a qualifying_distribution for its grant to another private_foundation which is not an operating_foundation under sec_4942 of the code must have adequate_records as required by sec_4942 of the code to show that the grantee private_foundation in fact subsequently made qualifying distributions that were equal to the amount of the grant and that were paid out of the grantee’s own corpus within the meaning of sec_4942 of the code such grantee foundation’s qualifying distributions out of corpus must be expended before the close of the grantee’s first tax_year after its tax_year in which it received the grant sec_4944 of the code imposes tax upon a private_foundation which invests any amount in such a manner as to jeopardize the carrying out of any of its exempt purposes sec_4945 of the code imposes tax upon a private foundation's making of any taxable_expenditure under sec_4945 sec_4945 of the code defines the term taxable_expenditure to include any amount_paid or incurred by a private_foundation as a grant to an organization unless a the organization is described in subparagraphs or of sec_509 of the code or is an exempt_operating_foundation as defined in sec_4940 of the code or b the private_foundation exercises expenditure_responsibility with to such grant in accordance with sec_4945 of the code the exercise of expenditure_responsibility requires the foundation that makes the transfer to keep detailed records of the way the payment is spent by the recipient foundation sec_4945 of the code provides that expenditure_responsibility referred to in subsection d means that the private_foundation is responsible to exert all reasonable efforts and to establish adequate procedures to see that the grant is spent solely for the purpose for which made to obtain full and detailed reports with respect to such expenditures and to make full and detailed reports to the secretary sec_4946 of the code defines the term disqualified_person as a person who is a substantial_contributor to a private_foundation a foundation_manager an owner of more than of a corporation or partnership which is a substantial_contributor to the private_foundation a family_member of persons described above or a corporation partnership trust or estate of which persons described above own more than of the combined voting power sec_53_4945-5 of the foundation and similar excise_taxes regulations refers to the rules relating to the extent to which the expenditure_responsibility_rules contained in sec_4945 and h and this section apply to transfers of assets described in sec_507 sec_53_4945-6 of the regulations provides that any expenditures_for unreasonable administrative expenses including compensation consultant fees and other fees for services rendered will ordinarily be taxable_expenditures under sec_4945 unless the foundation can demonstrate that such expenses were paid_or_incurred in the good_faith belief that they were reasonable and that the payment or incurrence of such expenses in such amounts was consistent with ordinary business care and prudence the determination whether an expenditure is unreasonable shall depend upon the facts and circumstances of the particular case sec_53_4945-6 of the regulations provides that a transfer of assets of a private_foundation under sec_507 of the code is not a taxable_expenditure if such transfer is to -5- an organization described in sec_501 other than an organization described in sec_509 or treated as so described under sec_4947 sec_53_4946-1 of the regulations provides that for purposes of sec_4941 the term disqualified_person does not include any organization described in sec_501 c other than an organization described in sec_509 based on the above facts the transfer of ail of b’s assets to c will allow c to continue the charitable activities previously conducted by b c will be controlled by the same officers and directors that controlled b therefore the transfer of assets from b to c will not endanger the tax exempt status of either entity under sec_501 c under sec_507 of the code in the case of a transfer of assets of any private_foundation to another private_foundation pursuant to any liquidation merger redemption recapitalization or other adjustment organization or reorganization the transferee foundation shall not be treated as newly created organization thus the transfer by b to c the aggregate an adjustment organization or reorganization within the meaning of sec_507 accordingly the transfer by b to c will not be treated as a transfer to a newly created organization will constitute in because b is not terminating its existence and assuming there has been no willful repeated or flagrant act giving rise to liability under chapter no tax will be imposed on b under sec_507 as a result of the transfer of assets from b to c because the individuals who comprise the governing bodies of b and c are almost identical and the officers of b and c are currently the same b and c should be treated as being effectively controlled by the same persons within the meaning of sec_1_507-3 of the regulations because b and c are effectively controlled by the same persons c should be treated as if it were b for purposes of sec_507 through and chapter of the code therefore the rulings requested under sec_4940 sec_4941 sec_4942 and sec_4944 would be provided because these rulings are consistent with the approach in sec_1_507-3 of the regulations which is in effect to disregard the change in form of the organization for purposes of chapter because b is transferring all of its assets to c pursuant fo a merger and b and c are controlled by the same persons c will be treated as b the transfer will be treated as not having taken place for expenditure_responsibility purposes under sec_4945 of the code thus the transfer will not be a taxable_expenditure under sec_4945 therefore b need not exercise expenditure_responsibility with regard to the merger subsequent to the merger c will be treated as if it were b therefore c will succeed to b's duties to exercise expenditure_responsibility and b would be relieved of any duty to exercise expenditure_responsibility after the merger as a result of the merger c will be treated as b for purposes of chapter therefore the y e distribution_requirements of sec_4942 for the year of transfer should be regarded as satisfied by both b and c if treating b and c as a single organization the aggregate qualifying distributions for such year by b and c would satisfy its distribution requirement because c is treated as taking over b’s obligations as of the date of merger it follows that as of that date b will no longer have any such obligations because b and c are controlled by the same persons for purposes of chapter of the code and sec_507 through of the code c will be treated subsequent to the transfer of all of b’s assets as if it were b in proportion which the fair_market_value of the assets less encumbrances transferred bears to the fair_market_value of b ‘s assets less encumbrances immediately before the transfer thus c can succeed to b's excess qualifying distributions carryover for purposes of sec_4942 of the code and in proportions determined in accordance with sec_1_507-3 of the regulations consistent with succeeding to b’s tax_attributes under sec_1_507-3 of the regulations c will be treated as if it were b for purposes of chapter including sec_4940 accordingly c would be allowed to report all of the net_income subject_to tax under sec_4940 during the year of merger whether earned by b or c and pay all of the sec_4940 taxes on such income for that year provided the expenses_incurred by b and c in the transfer of assets to c meet the good_faith standard of sec_53_4945-6 b of the regulations such expenses will not constitute taxable_expenditures under sec_4945 of the code and will be considered qualifying distributions under sec_4942 because c is treated as b for purposes of chapter c will be allowed to pay b’s outstanding grants and treat the qualifying distributions just as b could have if it had made the payments because b as an organization described in sec_501 of the code is not a disqualified_person with respect to c the transfer of assets to c will not constitute an act of self- dealing within the meaning of sec_4941 of the code further because c is treated as if it were b the payment by c of a liability of b will be viewed as a payment of c's own liability and not as a direct or indirect transfer to or for the benefit of some separate_entity thus any payment of b’s liabilities by c should not be treated as an act of self-dealing because b and c are exempt under sec_501 and are organized for purposes described in sec_170 and the reason for the transfer is to carry out more efficiently such exempt purposes the transfer would not be a jeopardizing investment under sec_4944 under sec_4940 of the code capital_gains_and_losses are defined as gains and losses from the sale_or_other_disposition of certain property because the asset transfer from b to c will lack consideration no sale_or_other_disposition will have occurred thus there will be no gain and the assets transfer will not give rise to tax under sec_4940 of the code further because the transfer of assets to c is disregarded because in turn c is treated as if it were b for purposes of chapter c’s basis in the assets transferred to it pursuant to the merger should be the same as the basis of b ov because b will have no assets after the proposed transfer to c it will not be required to file any information returns under sec_6033 for any taxable_year after the transfer because b will dispose_of all of its assets the recordkeeping requirements of sec_4942 will not apply during any period in which it has no assets therefore b’s recordkeeping under sec_4942 will not apply after the merger since b will have disposed of all of its assets under sec_507 of the code the value of b’s assets after it has transferred all of its assets to c will be zero thus b’s voluntary notice termination of its private_foundation_status pursuant to sec_509 will not result in tax under sec_507 of the code accordingly based on the information furnished we rule as follows the transfer of all of b's assets to c will not adversely affect either b or c’s status as an organization described in sec_501 of the code the transfer of assets will constitute a transfer pursuant to a merger described in sec_507 of the code and therefore c will not be treated as a newly created organization for purposes of sec_507 through the merger will not result in the termination of b’s private_foundation_status under sec_507 of the code and will not subject b to the tax imposed by sec_507 b and c are effectively controlled by the same person or persons as the concept of effective_control is used in sec_1 a a formally sec_1_482-1 and sec_1_507-3 of the regulations c will be treated as if it were b for purposes of chapter and sec_507 through of the code as a result the transfer will not subject b to taxes imposed by sec_4941 through of the code the transfer of assets pursuant to the proposed merger will not be a grant subject_to the expenditure_responsibility provisions of sec_4945 and h therefore b will not have to exercise expenditure_responsibility within the meaning of sec_4945 and h with respect to the transfer of its assets to c pursuant to the merger also b will not have to comply with the expenditure_responsibility_rules subsequent to the merger the transfer of the assets of b to c will not constitute a taxable_expenditure under sec_4945 of the code c will succeed to b’s aggregate tax benefits the provisions of sec_4942 of the code will apply to c in the year the merger occurs as if it were b therefore c will- succeed to b's distribution_requirements for that taxable_year and any taxable_year prior to that taxable_year and c will be responsible for reporting all undistributed_income determined under sec_4942 for that taxable_year and any taxable_year prior to that taxable_year because c succeeds to b's distribution_requirements b will not be required to meet the distribution_requirements of sec_4942 for the taxable_year in which the merger occurs or any later taxable_year c may for the purposes of determining its distribution_requirements under sec_4942 reduce its distributable_amount by b's excess qualifying_distribution carryover if any determined as of the end of the taxable_year immediately preceding the taxable_year of the merger the provisions of sec_4940 of the code will apply to c in the taxable_year in which the merger occurs as if it were b therefore b will not be subject_to the excise_tax imposed by sec_4940 for that portion of its taxable_year occurring after the transfer of all of its assets to c pursuant to the merger further b will not be subject_to the excise_tax imposed by sec_4940 for that portion of its taxable_year occurring before the transfer of ail of its assets to c pursuant to the merger if c reports b’s net_investment_income from that portion of b's taxable_year and pays any excise_tax imposed by sec_4940 with respect to such investment_income c may pay any excise_tax imposed sec_4940 of the code with respect to b’s net_investment_income for the portion of b’s taxable_year occurring before the merger as well as reasonable accounting and legal expenses relating to b’s termination without creating liability for any excise_tax imposed under chapter of the code including but not limited to the tax imposed by sec_4945 the payment by c of any excise_tax imposed by sec_4940 with respect to the taxable_year of the merger that otherwise would have to be paid_by b may be taken into account by c under sec_4942 for purposes of determining c's distributable_amount and the payment by c of reasonable accounting and legal expenses related to the termination of b may be treated by c as a qualifying_distribution under sec_4942 c may satisfy any grants approved for future payment by b and each payment of such a grant by c will be classified as a qualifying_distribution under sec_4942 of the code by c and will not be treated as an act of self-dealing under sec_4941 the transfer will not be treated as an act of self-dealing within the meaning of section d of the code because it will be made for the exempt purposes of c the transfer will not constitute a willful and flagrant act or failure to act that would result in tax under chapter of the code similarly any payment by c to or on b’s behalf with respect to any liabilities including any currently unknown liabilities under chapter of the code that are neither paid nor provided for will not constitute acts of self-dealing under sec_4941 the transfer pursuant to the proposed merger will not be treated as an investment jeopardizing the charitable purpose of b or c under sec_4944 of the code the transfer of all of b’s net assets to c pursuant to the merger will not trigger gross_investment_income or capital_gain income within the meaning of sec_4940 of the code and therefore the transfer will not result in imposition of tax under sec_4940 l oe b’s basis in its assets will carry over to c for purposes of sec_4940 of the code b will not be required to file the annual return described in sec_6033 of the code for any taxable years subsequent to the year of merger b will not be required to comply with the recordkeeping requirements of sec_4942 of the code subsequent to the merger this ruling_request does not constitute a notice of intent to terminate b’s private_foundation_status under sec_507 a voluntary termination of b's private_foundation_status wiil occur when b notifies the service of its intent to terminate its private_foundation_status and such voluntary termination will not occur until after the transfer of all of b's assets to c pursuant to the merger on the date of that voluntary termination because the value of b’s net assets will then equal zero b will not be liable for any termination_tax under sec_507 we are informing the ohio te_ge office of this action please keep a copy of this ruling in your organization’s permanent records this ruling is directed only to the organization that requested it sec_61 k of the code provides that it may not be used or cited as precedent if you have any questions about this ruling please contact the person whose name and telephone number are shown in the heading of this letter sincerely merveto v becck gerald v sack manager exempt_organizations technical group


number release date id office uilc cca-903153-08 ------------------------------ from --------------------------- sent september pm to ------------------------- cc ---------------------------- subject final adverse in ------ --------- ----------- a private_shareholder_or_individual aka insider is a person that has a personal and private interest in the activities of an organization reg a -1 c not too helpful sec_4958 defines disqualified_person as any person who at any time within a five year period is in a position to exercise substantial influence over the affairs of the organization the term also includes such person's family members as determined under sec_4946 and under that section includes children the seventh circuit united cancer council case includes family members of founders and officers as insiders ------- -------------------


department of the treasury internal_revenue_service washington d c oe l ef ea government rietities division dec uil no legend taxpayer a amount c amount d date date plan x ray dear this is in response to your letter dated date supplemented by correspondence dated date arid date submitted on your behalf by your authorized representative in which you request a waiver of the 60-day rollover requirement contained in sec_402 a of the internal_revenue_code the cade under penalty of perjury taxpayer a submits the following facts and fepresentations in support of the ruling_request taxpayer a age received a distribution totaling amount d from plan x taxpayer a asserts that her failure to accomplish a rollover within the 60-day period prescribed by sec_402 of the code was due to plan x's failure to provide proper written notice regarding the rollover rules and tax consequences of plan x distributions as required under sec_402 of the gode ‘taxpayer a's former husband was a participant in plan x a plan that is treated as a qualified_plan under sec_7701 of the code as a result of a divorce settlement taxpayer a was entitled to receive a distribution from plan x taxpayer a represents that at the time the agreement was negotiated she was advised to establish an individual_retirement_account ira and that the transfer of assets would be accomplished through a direct trustee to trustee transfer on date taxpayer a established ira y on or about date taxpayer a received a check for amount c amount d less federal_income_tax withholding from plan x taxpayer a asserts that she did not receive written notice regarding the rollover rules and tax consequences of plan x distributions with the check as required under sec_402 of the code taxpayer a further represents that she made repeated attempts to contact her financial advisor following her receipt of the check from plan x but was not able to discuss with him how to proceed with the check until after the 60-day period had expired taxpayer a represents that she had limited experience dealing with her own financial affairs documentation submitted with this letter_ruling request is consistent with taxpayer a’s representations based on the facts and representations taxpayer a requests that the interna revenue service the service waive the day rollover requirement contained in sec_402 of the code with respect to the distribution of amount d from plan x sec_402 of the code provides that except as otherwise provided in this section any amount distributed to any distribute by an employees’ trust described in sec_401 which is exempt from tax under sec_501 a shall be taxable to the distributee in the taxable_year of the distribute in which distributed under sec_72 of the code sec_402 of the code provides that if any portion of the balance_to_the_credit of an employee in a qualified_trust is paid to the employee in an eligible_rollover_distribution and the distributee transfers any portion of the property received in such distribution to an eligible_retirement_plan and in the case of a distribution_of_property other than money the amount so transferred consists of the property distributed then such distribution to the extent transferred shall not be includible in gross_income for the taxable_year in which paid sec_402 c a states that such rollover must be accomplished within days following the day on which the distribute received the property an individual_retirement_arrangement ira constitutes one form of eligible_retirement_plan sec_402 of the code provides in relevant part that the secretary may waive the 60-day rollover requirement under sec_402 where the failure to waive such requirement would be against equity or good conscience including casualty disaster or other events beyond the reasonable control of the individual subject_to such requirement only distributions that occurred after date are eligible for the waiver under sec_402 of the code a4 sec_401 a xa of the code provides the rules for governing direct transfers of eligible rollover distributions sec_401 of the code provides that for purposes of cade sec_401 a the term eligible_retirement_plan generally has the meaning given such term by sec_402 8xb pursuant to sec_402 b an ira is an eligible_retirement_plan thus a direct transfer defined an ira in code sec_401 may be made to sec_1_401_a_31_-1 of the income_tax regulations question and ‘ answer-15 provides in relevant part that an eligible rollover described in code sec_401 a is a distribution and rollover of the eligible_rollover_distribution and not a transfer of assets and liabilities sec_402 of the code requires the plan_administrator to provide a written notice to recipiénts of distributions eligible for rollover treatment this notice must explain the provisions under which the recipient may have the distribution directly transferred to another eligible_retirement_plan must explain that the withholding of tax on the distribution is required if transferred to another eligible_retirement_plan and must explain that the recipient will not be subject_to tax if the distribution is transferred to an eligible_retirement_plan within days after the date on which the recipient received the distribution it is not directly revproc_2003_16 2003_4_irb_359 date provides that in determining whether fo grant a waiver of the 60-day rollover fequirement pursuant to sec_408 the service will consider all relevant facts and circumstances including errors committed by a financial_institution inability to complete a rollover due to death disability hospitalization incarceration restrictions imposed by a foreign_country or postal error the use of the amount distributed for example in the case of payment by check whether the check was cashed and the time elapsed since the distribution occurred the information presented and documentation submitted by taxpayer a demonstrates that plan x did not provide taxpayer a with proper notice of the 60-day rollover rule as required under sec_402 of the code and that taxpayer a’s attempts to obtain advice as to how to proceed were unsuccessful as a result the failure to deposit amount d into ira y within the 60-day period was beyond the reasonable control of taxpayer a therefore pursuant to sec_402 c b of the code the service hereby waives the 60-day rollover requirement with respect to the rollover of amount d from plan x to ra y taxpayer a is granted a period of days from the issuance of this ruling letter to deposit amount d into ira y or some other eligible rollover ira provided all other requirements of sec_402 of the code except the day rollover requirement are met with respect to such contribution the transaction will be considered a valid rollover within the meaning of sec_402 c of the code no opinion is expressed as to the tax treatment of the transaction described herein under the provisions of any other section of either the code or regulations which may be applicable thereto this letter is directed only to the taxpayer who requested it sec_6110 of the code provides that it may not be used or cited as precedent a copy of this ruling is being sent to your authorized representative in accordance with a power_of_attorney on file with this office if you wish to inquire about this ruling please contact i d no or fax please address ail correspondence to se t ep ra t4 wn atte sincerely yours aden bo lie oe donzelt h littlejohn manager employee_plans technical group ‘ enclosures deleted copy of ruling letter notice of intention to disclose


department of the treasury internal_revenue_service washington d c oovthnenr estes significant index no feb im xxxxxxxxxxxxxxxxxxkkxkkk xxxxdookkkxxxoook jt ep laf legend decedent taxpayer a taxpayer b taxpayer c taxpayer d taxpayer e county state j trust m trust n plan account v ira y ira z xxxxkxxkxkkkkkkkk kkk xxxkxkxkkxxkkkkxk kkk xxkxkxkkxkkxkkxkkk kkk mk xxxkxxkxkkxkkxxxkxkxkkkmk xxkkxxxxkxkkxkkkkkkkkk xxxxxxkxkxxkxkxkkxkxkxkkk xxxxxkxxkkkkxkkxkkkmk xxxxxxxxxxxxxxkxkxkkk xxxxkkxkkxxkxkkxkkkxkkkk xxxxkxxxkxkxkkxkkkkkkkk xxxxxkxxkxkxkkxkxkxkkkkkk xxxxxxxxxkxxkxkxkkxkkkk xkxkkxkxkkxkxkxkkkkkkkkk xxxxxxxxxxxxkxkxkkkkk xxxkxkxkxkkxkxkkkk kk kkk xxkxkxkkxxkxkxkkxkxkkkkk custodian m xxxxkxkxkxkkkkxkkkkkkkk dear xxxxxx this is in response to your request for a private_letter_ruling dated date as supplemented by correspondence dated december and date representations in support of your request you have submitted the following facts and in decedent owned plan account v a qualified_retirement_plan account with a balance of approximately dollar_figure account with a balance of approximately dollar_figure estate was the sole beneficiary of the ira and the plan account v decedent received a complete distribution from the plan account v that he rolled over tax-free into ira y a separate ira rollover account and an individual retirement at that time decedent’s in january decedent attained the age of in decedent's required_beginning_date under sec_401 of the internal_revenue_code code for purposes of required minimum distributions was date on prior to his required_beginning_date decedent named his three daughters - - as designated beneficiaries of ira y minimum required taxpayers a b and c distributions were made to decedent through calendar_year over the joint life expectancy of decedent and the oldest named designated_beneficiary taxpayer a on date trust m was created by written_agreement executed by decedent as sole settlor and as one of the co-trustees decedent transferred ira y to ira z and executed a new beneficiary designation form naming trust m as the beneficiary of ira z you represent that on or about date decedent furnished a complete copy of trust m to custodian m the custodian of ira z beginning in decedent began to receive annual distributions from ira z calculated using his individual recalculated life expectancy annual distributions continued to be made from ira z through calendar_year on september decedent died on decedent’s last will and testament will gives his residuary_estate to trust m residuary_estate as defined in decedent a's will means all property in which may have any interest that is disposed of under the provisions of this will decedent's will was admitted to probate in county of state j on trust m provides that all assets which are subject_to the terms of this agreement shall be held administered and distributed as an irrevocable_trust paragraph of trust m named decedent as the sole beneficiary of trust m during his lifetime paragraph of trust m specified that trust m would xxxxxxxxxxkkkxxkkkkxk terminate upon the death of decedent and that the trust estate would be disposed of as specified in paragraph of trust m sec_112 of the state j property code provides that a_trust terminates if by its terms the trustee is to continue only until the expiration of a certain period or until the happening of a certain event and the period of time has elapsed or the event has occurred if an event of termination occurs the trustee may continue to exercise the powers of the trustee for the reasonable period of time required to wind up the affairs of the trust and to make distribution of its assets to the appropriate beneficiaries the continued exercise of the trustee’s powers after an event of termination does not affect the vested rights of beneficiaries of the trust section of trust m provides that the trust estate shall be disposed of to taxpayer e certain partnership interests to decedent's descendants as follows a specific_bequest of dollar_figure dollar_figure who survive him a gift of decedent's principal_residence and dollar_figure n and the remaining trust estate to decedent's descendants decedent's descendants as defined by article are his adult daughters taxpayers a b and c to taxpayer d a specific_bequest of to trust - thus including dollar_figure of liquid_assets including ira z remained in trust m for documentation submitted shows that decedent's total gross_estate was of liquid_assets such as stocks bonds cash dollar_figure notes life_insurance_proceeds and ira z cash required for administration_expenses debts and marital and charitable_bequests totaled dollar_figure over dollar_figure distribution to taxpayers a b and c as residuary beneficiaries of trust m after satisfaction of bequests to taxpayer d taxpayer e and trust n the value of decedent's ira z at his date of death was approximately dollar_figure the iraz proceeds were not applied to the payment of marital and charitable_bequests debts or administration_expenses required to be funded by trust m article of trust m protection and collection of proceeds from life_insurance and employee benefit plans provides in pertinent part at sec_3 that a third party shall have no right to enforce any claim against assets distributed under the provisions of this article employee benefit plans as described in article includes individual_retirement_accounts such as ira z further you have asserted that under state j statutes neither taxpayer d nor taxpayer e had the right to draw on the assets of ira z for their interests the remaining dollar_figure of liquid_assets has been partially distributed and will continue to be distributed in equal portions to taxpayers a b and c over the balance of trust m’s administration period based on the foregoing facts and representations you request the following rulings xxxxxkxxxxxxxxkxkxxk trust m satisfies the requirements of proposed_regulations sec_1_401_a_9_-1 q a d-5 such that taxpayers a b and c beneficiaries of trust m with respect to trust m's interest in ira z may be considered designated beneficiaries of ira z for purposes of determining the distribution period under sec_401 of the code decedent's daughters taxpayers a b and c are the beneficiaries of trust m's interest in ira z and are the sole individuals whose life expectancies need to be considered for purposes of determining who is the designated_beneficiary of ira z under sec_401 of the code and for purposes of satisfying the minimum_required_distribution rules of sec_401 of the code made applicable to iras pursuant to sec_408 of the code distributions from ira z to taxpayers a b and c as beneficiaries of ira z may be distributed based on the life expectancy of taxpayer a the oldest beneficiary code sec_408 defines an ira as a_trust which meets the requirements of sec_408 through a sec_408 of the code generally provides that under regulations prescribed by the secretary_of_the_treasury rules similar to the rules of sec_401 of the code and the incidental death_benefit requirements of sec_401 shall apply to the distribution of the entire_interest of an individual for whose benefit the trust is maintained sec_1_408-8 q a a-1 of the proposed income_tax regulations proposed_regulations states that individual retirement plans are subject_to the distribution rules for qualified_plans provided in sec_401 of the code and sec_1_401_a_9_-1 of the proposed_regulations sec_401 of the code generally provides that a plan will not be qualified under sec_401 unless that plan provides that the entire_interest of each employee i will be distributed to such employee not later than the required_beginning_date or ii will be distributed beginning not later than the required_beginning_date in accordance with regulations over the iife of such employee or over the joint lives of such employee and a designated_beneficiary or over a period not extending beyond the life expectancy of such employee or the joint life expectancies of such employee and a designated_beneficiary sec_401 of the code provides in relevant part that for purposes of this paragraph the term required_beginning_date means april of the calendar_year following the calendar_year in which the employee ira holder attains age xxxxxkxkxxxkxkxkkkkk sec_401 of the code provides that where distributions have begun over life expectancies in accordance with subparagraph a ii a_trust shall not constitute a qualified_trust under this section unless the pian provides that if the employee dies before his her entire_interest has been distributed to him her the remaining portion of such interest will be distributed at least as rapidly as under the method of distribution being used under subparagraph a ii as of the date of death sec_401 -1 of the proposed_regulations q a d-3 provides that for purposes of calculating the distribution period for distributions that begin prior to death the designated beneficiaries will be determined as of the plan participant's ira holder's required_beginning_date sec_1_401_a_9_-1 of the proposed_regulations q a d-2 a provides in pertinent part that designated beneficiaries are only individuals who are designated as beneficiaries under the plan individual may be designated as a beneficiary under the plan either by the terms of the plan or if the plan provides by an affirmative election by the employee or the employee's surviving_spouse specifying the beneficiary a beneficiary designated as such under the plan is an individual who is entitled to a portion of an employee's benefit contingent on the employee's death or another specified event in general it provides that an sec_1_401_a_9_-1 of the proposed_regulations q a d-5 provides in part a a pursuant to d-2a of this section only an individual may be a designated_beneficiary for purposes of determining the distribution period under sec_401 of the code consequently a_trust itself may not be the designated_beneficiary even though the trust is named as a beneficiary however if the requirements of paragraph b of this d-5a are met distributions made to the trust will be treated as paid to the beneficiaries of the trust with respect to the trust's interest in the employee's benefit and the beneficiaries of the employee_trust will be treated as having been designated as beneficiaries of the employee under the plan for purposes of determining the distribution period under sec_401 if as of any date on or after the employee's required_beginning_date a_trust is a named beneficiary of the employee and the requirements in paragraph b of this d-5a are not met the employee will be treated as not having a designated_beneficiary under the plan for purposes of sec_401 consequently for calendar years beginning after that date distribution must be made over the employee's life or over the period which would have been the employee’s remaining life expectancy determined as if no beneficiary had been designated as of the emptoyee’s required_beginning_date xxxxxxxxxxxxxkxxxxkk b the requirements of this paragraph b are met if as of the later of the date on which the trust is named as a beneficiary of the employee or the employee's required_beginning_date and as of all subsequent periods during which the trust is named as a beneficiary the following requirements are met the trust is a valid trust under state law or would be but for the fact that there is no corpus the trust is irrevocable or will by its terms become irrevocable upon the death of the employee the beneficiaries of the trust who are beneficiaries with respect to the trust’s interest in the employee's benefit are identifiable from the trust instrument within the meaning of d-2 the documentation described in d-7 of this section has been provided to the plan_administrator c in the case of payments to a_trust having more than one beneficiary see e-5 of this section for the rules for determining the designated_beneficiary whose life expectancy will be used to determine the distribution period sec_1_401_a_9_-1 q a d-6 of the proposed_regulations provides in part that in the case in which a_trust is named as the beneficiary of an employee all beneficiaries of the trust with respect to the trust's interest in the employee's benefit are treated as designated beneficiaries of the employee under the plan for purposes of determining the distribution period under sec_401 and iv if the requirements in paragraph a of d-5 above are satisfied as of the date of the employee's death or in the case of the documentation described in d-7 of this section by the end of the ninth month beginning after the employee's death with respect to your first and second ruling requests decedent named trust m as the beneficiary of ira z after his required_beginning_date however if the requirements of sec_1_401_a_9_-1 of the proposed_regulations q a d-5a b are met distributions made to a_trust will be treated as paid to the beneficiaries of the trust with respect to the trust's interest in the employee's benefit and the beneficiaries of the employee_trust will be treated as having been designated as beneficiaries for purposes of determining the distribution period under sec_401 of the code trust m is a valid trust under the laws of state j trust m by its terms provides that all assets subject_to the terms of the trust agreement shall be held administered and distributed as an irrevocable_trust in addition trust m except for the period of time needed to wind up the affairs of the trust by its terms xxxxxxxkxxxxxxkxkxk terminated upon decedent's death the ira z account balance was not used to pay any expenses or specific bequests of the decedent taxpayer a taxpayer b and taxpayer c were referenced and identifiable in trust m as the beneficiaries of decedent's residuary_trust estate finally you represent that a complete copy of trust m was given to custodian m within nine months of the decedent's death in accordance with sec_1 a -1 q a d-7 b of the proposed_regulations based on the above we conclude with respect to your first and second ruling requests that trust m is a see-through trust described in sec_1_401_a_9_-1 of the proposed_regulations q a d-5 and d-6 as discussed above and is a named beneficiary of ira z as of the date of decedent's death and that taxpayer a taxpayer b and taxpayer c the beneficiaries of trust m with respect to trust m's interest in ira z may be considered designated beneficiaries for purposes of determining the distribution period for payment of benefits from ira z under sec_401 of the code and that taxpayer a taxpayer b and taxpayer c are the individuals whose life expectancies need to be considered for purposes of determining the distribution period under sec_401 with respect to your third ruling_request sec_1_401_a_9_-1 of the proposed_regulations q a e-5 provides in pertinent part that if more than one individual is designated as a beneficiary with respect to an employee as of the applicable_date for determining the designated_beneficiary the designated_beneficiary with the shortest life expectancy will be the designated_beneficiary for purposes of determining the distribution period sec_1_401_a_9_-1 of the proposed_regulations q a f-3a provides in part that with respect to individual_account_plans from which distributions have commenced prior to the employee's death post death distributions will comply with the at least as rapidly as under the method of distribution being used under sec_401 ii rule if said distributions are made in accordance with q a f-1 sec_401 of the code permits an employee and his her spouse to recalculate their life expectancies annually sec_1_401_a_9_-1 of the proposed_regulations q a e-8 a provides guidance on how an employee's life expectancy is recalculated and provides that upon the death of the employee the recalculated life expectancy of the employee or the employee's spouse will be reduced to zero in the calendar_year following the calendar_year of death reduced to zero the plan must distribute the remaining interest prior to the last day of such year in order to satisfy sec_401 in any calendar_year in which the last applicable life expectancy is xxxxxxxxxxkxxxxxxkk sec_1_401_a_9_-1 of the proposed_regulations q a e-8 b provides guidance on calculating the applicable life expectancy when the employee's life expectancy is recalculated and the life expectancy of the employee or his her beneficiary is not being recalculated it provides in relevant part that if the designated_beneficiary is not the employee's spouse and the life expectancy of the employee is being recalculated annually the applicable life expectancy for determining the minimum distribution for each distribution calendar_year will be determined by recalculating the employee's life expectancy but not recalculating the beneficiary's life expectancy such applicable life expectancy is the joint life and last survivor expectancy using the employee’s attained age as of the employee's birthday in the distribution calendar_year and an adjusted age of the designated_beneficiary the adjusted age of the designated_beneficiary is determined as follows the beneficiary's applicable life expectancy is calculated based on the beneficiary's attained age as of the beneficiary's birthday in the calendar_year described in sec_1_401_a_9_-1 of the proposed_regulations q a e-1 reduced by one for each calendar_year which has elapsed since that calendar_year the age rounded if necessary to the higher age in table v of sec_1_72-9 is then located which corresponds to the designated beneficiary's applicable life expectancy such age is the adjusted age of the designated_beneficiary as provided in paragraph a upon the death of the employee the recalculated life expectancy of the employee is reduced to zero in the calendar_year following the calendar_year of the employee’s death thus for determining the minimum distribution for such calendar_year and subsequent calendar years the applicable life expectancy is the applicable life expectancy of the designated_beneficiary determined under this paragraph sec_1_401_a_9_-1 of the proposed_regulations q a e-1 a provides generally that for required distributions under sec_401 of the code life expectancies are calculated using the employee's and the designated beneficiary's attained age as of the employee's birthday and the designated beneficiary's birthday in the calendar_year in which the employee attains sec_1_401_a_9_-1 of the proposed_regulations q a f-5 provides generally that in the case of an individual_account the benefit used in determining the minimum distribution for a distribution calendar_year is the account balance as of the last valuation_date in the calendar_year immediately preceding any distribution calendar_year sec_1_408-8 of the proposed_regulations q a a-5 provides that for purposes of determining the minimum distribution required to be made from an ira in any calendar_year the account balance of the ira as of the december of the calendar_year immediately preceding the calendar_year for which distributions are being made will be substituted in sec_1_401_a_9_-1 f-1 for xxxxxxxxxxxxxxxxxxx the benefit of the employee the account balance as of the december of such calendar_year is the value of the ira upon close of business on such december however for purposes of determining the minimum distribution for the second distribution calendar_year for an individual the account balance as of december of such calendar_year must be reduced by any distribution as described in sec_1_401_a_9_-1 f-5 c made to satisfy the minimum distribution_requirements for the individual's first distribution calendar_year after such date because decedent's life expectancy was being recalculated upon his death in accordance with q a e-8 a of sec_1_401_a_9_-1 of the proposed_regulations his life expectancy was reduced to zero as of the end the calendar_year following the calendar_year of his death although his benefit was paid in the form of a single life expectancy upon his death his life expectancy was not the last applicable life expectancy because he timely designated his beneficiary by his required_beginning_date in accordance with q a d-3 a of the proposed_regulations therefore pursuant to q a e-8 b of sec_1_401_a_9_-1 of the proposed_regulations for purposes of determining the minimum distribution in the calendar_year after the death of decedent the applicable life expectancy is the life expectancy of the designated_beneficiary as determined under that section decedent died on therefore the calendar_year after the death of decedent namely the calendar_year ending date is the date by which distributions must begin to be made from ira z to the beneficiaries thereof using the life expectancy of his designated beneficiaries because decedent named trust m as his beneficiary of ira z and because trust m is a_trust that meets the requirements of q a d-5a b of the proposed_regulations the distributions from ira z made to trust m will be treated as having been paid to the beneficiaries of trust m and as stated above with respect to trust m's interest in ira z and the beneficiaries of trust m will be treated as having been designated as beneficiaries of ira z for purposes of determining the distribution period under sec_401 of the code since more than one individual was designated as a beneficiary with respect to ira z pursuant to sec_1_401_a_9_-1 of the proposed_regulations q a e-5 a the beneficiary who is the oldest and who has the shortest life expectancy will be the designated_beneficiary for purposes of determining the distribution period under ira z taxpayer a had the shortest life expectancy of the three designated beneficiaries on decedent's required_beginning_date therefore taxpayer a is the designated_beneficiary whose life expectancy will be used when determining the minimum distribution period under ira z for the calendar_year commencing after the year of decedent's death and for all subsequent years thereafter xxxxxxxxxxxxxxxxxxx thus with respect to your third ruling_request we conclude that for purposes of satisfying the minimum_required_distribution rules of sec_401 of the code made applicable to iras pursuant to sec_408 distributions from ira z to taxpayer's a b and c who shall be treated as having been designated beneficiaries of ira z may be distributed based on the life expectancy of taxpayer a the oldest beneficiary these rulings are based upon the assumption that ira z otherwise meets the requirements of sec_408 of the code this ruling is directed only to the taxpayer who requested it sec_6110 of the code provides that it may not be used or cited by others as precedent in accordance with a power_of_attorney on file in this office a copy of this ruling is being sent to your authorized representative if additional information is needed please contact xxxxxxxxxxxxxx t ep ra t2 at xxxxxxxxxxxxxxxxx sincerely yours joyce e floyd manager employee_plans technical group tax_exempt_and_government_entities_division enclosures deleted copy of letter_ruling notice of intention to disclose


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 tege eb qp4 plr-t-102506-15 date date attn employer a company h hospital r hospital s plan p state s this is in response to your request dated date and followed by correspondence dated date submitted by your authorized representative in which you requested a ruling that employees of company h a single member llc that is treated as a disregarded_entity under sec_7701 of the internal_revenue_code code will be treated as employees of employer a a sec_501 nonprofit organization which is the sole member of company h and thus eligible to participate in plan p a sec_403 plan maintained by employer a the following facts and representations have been submitted under penalties of sec_501 nonprofit corporation exempt from taxation under sec_501 employer a is a multi-facility health system providing medical services to the general_public a sec_501 nonprofit corporation exempt from taxation under sec_501 employer a is also the sole member of hospital s a sec_501 nonprofit corporation exempt from taxation under sec_501 sole member of hospital r a dear perjury in support of the ruling requested employer a was the employer a is plr-t-102506-15 employer a maintains plan p a defined_contribution_plan intended to comply with the requirements of sec_403 plan p covers employees of employer a hospital r hospital s and other affiliated entities described under sec_501 that are eligible to participate in plan p effective date employer a merged hospital r into hospital s with hospital s being the surviving legal entity employer a will convert the surviving entity c corporation hospital s into company h a nonprofit single member limited_liability_company under the laws of state s but not under sec_501 whose sole member will be employer a you represent that company h is intended to be a disregarded_entity for federal tax purposes pursuant to the default classification rules under sec_301_7701-3 of the procedure and administrations regulations p a regulations and will not file form_8832 entity classification election to change its classification for tax purposes company h will not file separate tax returns or a form_1023 application_for recognition of exemption under sec_501 of the internal_revenue_code based on the foregoing facts and representations you have requested a ruling that the employees of company h formerly employees of hospital r and hospital s will be treated as employees of employer a and will be eligible to continue to participate in plan p sec_403 provides in relevant part that if an annuity_contract is purchased sec_501 which is exempt from tax for an employee by an employer described in under sec_501 then contributions by such employer to the contract are excluded from the employee’s gross_income if specific conditions are met sec_1_403_b_-3 of the income_tax regulations the regulations provides that amounts contributed by an eligible_employer for the purchase of an annuity_contract for an employee are excluded from the employee’s gross_income if certain conditions are met sec_1_403_b_-2 of the regulations defines an eligible_employer as sec_501 organization with respect to any employee of the sec_501 including a organization sec_1_403_b_-2 further provides that eligible_employer under paragraph b i a subsidiary or other affiliate of an eligible_employer is not an this section if the subsidiary or other affiliate is not an entity described in paragraph b i of this section of plr-t-102506-15 sec_403 plans sec_1_403_b_-5 of the regulations provides a universal availability requirement for under the universal availability requirement all employees of an eligible_employer must be permitted to make elective_deferrals if any employee of the eligible_employer is permitted to make elective_deferrals to the sec_403 plan sec_1_403_b_-5 provides that a plan will not fail to satisfy the universal availability requirement merely because it excludes employees who i are eligible to make elective_deferrals under another sec_403 plan a sec_457 eligible governmental_plan or a sec_401 plan of the employer ii are non-resident aliens iii are students performing services described under sec_3121 or iv normally work fewer than hours per week sec_301_7701-1 of the p a regulations states that the classification of various organizations for federal tax purposes is determined under the code and does not depend on whether the organization is recognized as an entity under local law sec_301_7701-2 of the p a regulations provides that for purposes of such section and sec_301_7701-3 a business_entity with only one owner is either classified as a corporation or is disregarded if the entity is disregarded its activities are treated in the same manner as a sole_proprietorship branch or division of the owner sec_301_7701-3 of the p a regulations provides that a business_entity that is not classified as a corporation under sec_301_7701-2 or an eligible_entity can elect its classification for federal tax purposes as provided in such section sec_301_7701-3 further provides that an eligible_entity with a single owner can elect to be classified for federal tax purpose as an association and thus a corporation under sec_301_7701-2 or to be disregarded as an entity separate from its owner sec_301_7701-3 of the p a regulations provides that except as sec_301_7701-3 unless the entity elects otherwise a domestic eligible provided in entity is disregarded as an entity separate from its owner if it has a single owner sec_301_7701-3 i of the p a regulations provides in part that an eligible_entity may elect to be classified other than as provided under sec_301_7701-3 or to change its classification by filing form_8832 entity classification election with the service sec_301_7701-2 of the p a regulations provides exceptions to the disregarded_entity rules for certain specific purposes generally including employment_taxes and certain excise_taxes no exception is provided for sec_403 in this case you have represented that company h will be a single-member limited_liability_company and that company h will not be classified as a corporation as file an election defined in sec_301_7701-2 of the p a regulations nor will company h plr-t-102506-15 under sec_301_7701-3 to be classified as a corporation using form_8832 as a limited_liability_company with a single member which has not elected a different classification company h as a disregarded_entity under the p a regulations company h will be treated as a branch or division of employer a is treated as a disregarded entity’ under sec_301_7701-3 we therefore conclude that for purposes of sec_403 the employees of company h will be treated as employed by a branch or division of employer a an organization exempt from tax under sec_501 because the employees of company h will be treated as employed by a branch or division of employer a the inclusion of such employees in plan p is permitted under sec_403 moreover employees of company h will be subject_to the universal availability be considered employees of requirement of employer a applies universal employees of company h must be permitted to make elective_deferrals under plan p if employees of employer a are permitted to make elective_deferrals under plan p sec_1_403_b_-5 because they will to accordingly availability exception unless an this ruling letter expresses no opinion on whether plan p complies with the requirements of sec_403 this ruling letter expresses no opinion on whether employer a’s treatment of while this office has not verified any of the material except as expressly provided herein no opinion is expressed or implied the ruling contained in this letter is based upon information and representations concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter additionally no opinion is expressed as to the tax treatment of the transaction described herein under the provisions of any other section of the code the p a regulations or the regulations which may be applicable thereto company h as a disregarded_entity adversely affects or will adversely affect the sec_501 status of employer a this ruling is based on the assumption that the sec_501 status of employer a is not and will not be adversely affected submitted by the taxpayer and accompanied by a penalties of perjury statement executed by an appropriate party submitted in support of the request for rulings it is subject_to verification on examination this ruling is directed only to the taxpayer requesting it sec_6110 provides that it may not be used or cited as precedent plr-t-102506-15 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 jason e levine senior tax law specialist qualified_plans branch tax exempt and government entities


internal_revenue_service department of the treasury number release date index number washington dc person to contact telephone number refer reply to cc corp b05-plr-140761-02 date date legend distributing controlled business a state x shareholder a shareholder b shareholder c shareholder d beneficiary date date plr-140761-02 q shares r shares s shares t shares u shares v shares w shares x shares y shares z shares dear this letter responds to a request for a private_letter_ruling dated date submitted by you on behalf of distributing with respect to the federal_income_tax consequences of a proposed transaction additional information was submitted in letters dated date and date the rulings in this letter are based on the facts and representations submitted under penalties of perjury in support of the request verification of that information may be required as part of the audit process the material information provided is summarized below distributing is an accrual basis state x corporation which operates business a and business b distributing has outstanding q shares of voting common_stock which are held by four shareholders as follows shareholders shareholder a shareholder b shareholder c shareholder d common_stock shares u shares v shares r shares s shares plr-140761-02 shareholder a and shareholder b are brothers and are the sons of beneficiary shareholder c is a revocable grantor_trust set up by beneficiary shareholder d is a_trust as to which beneficiary is the lifetime beneficiary and beneficiary’s children are the remaindermen financial information and supporting documentation has been received that indicates that each of business a and business b has had gross_receipts and operating_expenses representative of the active_conduct_of_a_trade_or_business for each of the past five years shareholder a and shareholder b are in charge of the operations of distributing shareholder a is responsible for business a and shareholder b is responsible for business b for various reasons shareholder a and shareholder b share a desire to operate business a and business b respectively apart from the influence of the other accordingly distributing formed controlled a state x corporation on date and transferred the assets associated with business b to controlled in exchange for t shares of controlled common_stock on date it is further proposed that distributing will transfer all of the outstanding controlled common_stock to shareholders b c and d solely in exchange for shares of their distributing stock on a one-for-one basis ownership of the two corporations subsequent to the transaction shall be as follows shareholders shareholder a shareholder b shareholder c shareholder d distributing shares controlled shares u shares none x shares y shares none v shares w shares z shares shareholder a will be the majority shareholder in distributing and shareholder b will be the majority shareholder in controlled it is represented that the distributing stock held in trust by shareholders c and d will be distributed to shareholder a and that the controlled stock so held will be distributed to shareholder b in due course controlled and distributing will file a consolidated_return for the period beginning on date until the date of the distribution in connection with the proposed transaction it has been represented that a controlled will owe no indebtedness to distributing after the distribution of the controlled stock plr-140761-02 b the fair_market_value of the controlled stock to be received by each shareholder of distributing who will receive controlled stock will be approximately equal to the fair_market_value of the distributing stock surrendered by that shareholder in the exchange c no part of the consideration to be distributed by distributing will be received by a shareholder as a creditor employee or in any capacity other than that of a shareholder of the corporation d the years of financial information submitted on behalf of distributing for business a and business b is representative of the corporation’s present operations and with regard to such corporation there have been no substantial operational changes since the date of the last financial statements submitted e following the transaction distributing and controlled will each continue the active_conduct of its business independently and with its separate employees f the distribution of the stock of controlled is carried out for the following corporate business purposes i to eliminate conflicts between the two shareholders who manage the separate businesses and ii to allow the separate businesses to grow and become more profitable the distribution of the stock or stock and securities of controlled is motivated in whole or in substantial part by these corporate business purposes g distributing is not an s_corporation within the meaning of sec_1361 and there is no plan or intention by distributing or controlled to make an s_corporation_election pursuant to sec_1362 h there is no plan or intention by the shareholders of distributing to sell exchange transfer by gift or otherwise dispose_of any of their stock in either distributing or controlled after the transaction except for those transfers through inheritance i there is no plan or intention by either distributing or controlled directly or through any subsidiary_corporation to purchase any of its outstanding_stock after the transaction other than through stock purchases meeting the requirements of sec_4 b of revproc_96_30 j there is no plan or intention to liquidate either distributing or controlled to merge either corporation with any other corporation or to sell or otherwise dispose_of the assets of either corporation after the transaction except in the ordinary course of business plr-140761-02 k the total adjusted bases and the fair_market_value of the assets to be transferred to controlled by distributing each equals or exceeds the sum of the liabilities assumed as determined under sec_357 by controlled plus any liabilities to which the transferred assets are subject l the liabilities assumed as determined under sec_357 in the transaction and the liabilities to which the transferred assets are subject were incurred in the ordinary course of business and are associated with the assets being transferred m no intercorporate debt will exist between distributing and controlled at the time of or subsequent to the distribution of the controlled stock n immediately before the distribution items of income gain loss deduction and credit will be taken into account as required by the applicable intercompany_transaction regulations see sec_1_1502-13 and sec_1 as in effect before the publication of t d i r b and as currently in effect sec_1_1502-13 as published by t d further distributing’s excess_loss_account with respect to the controlled stock will be included in income immediately before the distribution see sec_1_1502-19 o payments made in connection with all continuing transactions if any between distributing and controlled will be for fair_market_value based on terms and conditions arrived at by the parties bargaining at arm’s length p no two parties to the transaction are investment companies as defined in sec_368 and iv q the distribution of controlled stock is not part of a plan or series of related transactions within the meaning of sec_355 pursuant to which one or more persons will acquire directly or indirectly stock possessing percent or more of the total combined voting power of all classes of stock of either distributing or controlled entitled to vote or stock possessing percent or more of the total value of all classes of stock of either distributing or controlled based solely on the information submitted and on the representations set forth above we rule that the transfer by distributing to controlled of the assets associated with business b in exchange for all the outstanding_stock in controlled followed by the distribution of the controlled stock to shareholder b shareholder c and shareholder d in exchange for distributing stock will be a reorganization within the meaning of sec_368 of the internal_revenue_code distributing and controlled will each be a_party_to_a_reorganization within the meaning of sec_368 plr-140761-02 no gain_or_loss will be recognized by distributing on its contribution of the assets associated with business b to controlled in exchange for controlled stock sec_361 and sec_357 no gain_or_loss will be recognized by controlled on the receipt of the assets associated with business b in exchange for controlled stock sec_1032 the basis of the assets associated with business b that controlled received will be the same as the basis of those assets in the hands of distributing immediately prior to the transfer sec_362 the holding_period of the assets associated with business b that controlled received will include the respective periods during which such assets were held by distributing sec_1223 no gain_or_loss will be recognized by and no amount will be included in the income of the stockholders of distributing on the receipt of the controlled stock sec_355 the basis of the controlled stock received by shareholder b shareholder c and shareholder d will be the same as the basis of the distributing stock surrendered in exchange therefor sec_358 the holding_period of controlled stock received by a stockholder of distributing will include the holding_period of the distributing stock with respect to which it was distributed provided that such stockholder held the distributing stock as a capital_asset on the date of the distribution sec_1223 no gain_or_loss will be recognized by distributing on the distribution to its stockholders of all of its controlled stock sec_361 as provided in sec_312 of the code proper allocation of earnings_and_profits between controlled and distributing will be made under sec_1_312-10 of the income_tax regulations pursuant to sec_1245 and sec_1250 distributing will not recognize any gain and will not include any amounts in income under sec_1245 and sec_1250 on the transfer of distributing’s assets to controlled no opinion is expressed about the tax consequences of the transaction under other provisions of the code and regulations or about the tax treatment of any conditions existing at the time of or effects resulting from the transaction that are not specifically covered by the above rulings plr-140761-02 this ruling is directed only to the taxpayer s who requested 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 the taxpayer’s representative a copy of this letter must be attached to any income_tax return to which it is relevant sincerely yours debra carlisle chief branch office of associate chief_counsel corporate


internal_revenue_service number release date index number - ------------------- ------------------------------ ----------------------------- ------------------------------- - department of the treasury washington dc person to contact ---------------------- id no ------------- telephone number --------------------- refer reply to cc psi b02 - plr-130111-03 date date x country date dear ---- --------- -------------------------- ein ---------------- ---------- ----------------- this letter responds to your letter dated date and subsequent correspondence submitted on behalf of x requesting an extension under ' of the procedure and administration regulations for x to elect under sec_301_7701-3 to be treated as a partnership for federal tax purposes the information submitted states that x is an entity formed under the laws of country the members of x intended that the x elect to be treated as a partnership effective date however inadvertently form_8832 entity classification election was not filed on behalf of x sec_301_7701-3 provides guidance on the classification of a foreign eligible_entity for federal tax purposes generally a foreign eligible_entity is treated as an association_taxable_as_a_corporation if all members have limited_liability unless the foreign eligible_entity has more than one owner and makes an election to be treated as a partnership pursuant to the rules in sec_301_7701-3 sec_301_7701-3 provides that an entity classification election must be filed on form_8832 and can plr-130111-03 be effective up to days prior to the date the form is filed or up to months after the date on which the form is filed under sec_301_9100-1 the commissioner may grant a reasonable extension of time to make a regulatory election or a statutory election but no more than six months except in the case of a taxpayer who is abroad under all subtitles of the internal_revenue_code except subtitles e g h and i sec_301_9100-1 defines the term regulatory election as including an election whose due_date is prescribed by a regulation published in the federal_register or a revenue_ruling revenue_procedure notice or announcement published in the internal_revenue_bulletin sec_301_9100-1 through provide the standards the commissioner will use to determine whether to grant an extension of time to make an 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 elections that do not meet the requirements of sec_301_9100-2 requests 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 sec_301 a based solely on the information submitted we conclude that x has satisfied the requirements of and as a result x is granted an extension of time for making the election to be classified as a partnership for federal tax purposes effective date for days following the date of this letter x should make the election by filing form_8832 with the appropriate service_center a copy of this letter should be attached to the form a copy is enclosed for that purpose 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 internal_revenue_code provides that it may not be used or cited as precedent plr-130111-03 being sent to x pursuant to a power_of_attorney on file with this office a copy of this letter is sincerely heather c maloy associate chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes


tax_exempt_and_government_entities_division department of the treasury internal_revenue_service washington d c jan uniform issue list krrekkekkekekkekekaekkkehenkek kekekkekrkekkekeekkkaeekke rakkkkekewkekkknkeekkekeenhk hakkeakekkekkkeekrekkekkeek attention krekkeekeeawerkekeekekkeek legend church a rare arrkrkah aer rrr nrrere order b sh aerarerenkkraer araki state c iii iir iii iri plan xx me rarer krrerekreeaereraere dear kkkkkekkekekhekkrerekreke this is in response to a letter dated as supplemented by correspondence dated lalalaleialalaialelelelelehuleisleieislielehel and barmera risa eerie seed in which your authorized representative requested a letter_ruling on behalf of order b under sec_414 of the internal_revenue_code the code’ in support of your ruling_request you have submitted the following statements and information order b a not-for-profit corporation chartered under the laws of state c is a religious_order that is organized under is an integral part of and shares common religious bonds and convictions with church a members of order b participate in and facilitate church a religious worship practice and other functions of church a order b also is listed in the official directory of church a for the united_states the internal_revenue_service service has determined that any organization listed or appearing in the church a directory is an organization that is described in sec_501 of the code and exempt from tax under sec_501 effective date order b established plan x a defined contribution savings_plan exclusively for the benefit of common_law employees of order b hired on or after date and their beneficiaries also effective date plan x has been administered by the plan administrative committee an unincorporated organization established for the principal purpose or function of administering and maintaining plan x plan administrative committee members serve at the pleasure of the governing council of order b none of the employees of order b are engaged in providing services for a for-profit organization based on the foregoing statements and representations you request a ruling that plan x is a church_plan within the meaning of sec_414 of the code to qualify under sec_401 of the code an employees’ plan generally must among other requirements meet the minimum_participation_standards of sec_410 and the minimum vesting standards of sec_411 qualified_pension plans also must meet the minimum_funding standards of sec_412 each of these sections however contains an exception for a church_plan as defined in sec_414 unless an election has been made in accordance with sec_410 see sec_410 sec_411 and sec_412 further only the employer or administrator of a plan subject_to the employee_retirement_income_security_act_of_1974 erisa is required to file form_5500 annual return report of employee_benefit_plan church pension benefit plans and various welfare_benefit plans that are church plans are excused from the filing see announcement 1982_47_irb_53 and sec_1 of the instructions to form_5500 sec_414 of the code generally defines a church_plan as a plan established and maintained for its employees or their beneficiaries by a church or by a convention or association of churches which is exempt from taxation under sec_501 sec_414 of the code provides that a plan established and maintained for its employees or their beneficiaries by a church or by a convention or association of churches includes a plan maintained by an organization whether a civil law corporation or otherwise the principal purpose or function of which is the administration or funding of a plan or program for the provision of retirement benefits or welfare benefits or both for the employees of a church or a convention or association of churches if such organization is controlled by or associated with a church or a convention or association of churches sec_414 of the code provides that an organization whether a civil law corporation or otherwise is associated with a church_or_convention_or_association_of_churches if the organization shares common religious bonds and convictions with that church_or_convention_or_association_of_churches sec_1_414_e_-1 of the income_tax regulations the regulations provides in pertinent part that for purposes of code sec_414 the term church_plan means a plan established and at all times maintained for its employees by a church or by a convention or association of churches hereinafter included within the term church’ which is exempt from tax under sec_501 sec_1_414_e_-1 of the regulations provides in pertinent part that for purposes of sec_1_414_e_-1 the term church includes a religious_order if such order is an integral part of a church and is engaged in carrying out the functions of a church whether as a civil law corporation or otherwise listed in the official directory of church a for the united_states and is in this case order b is a religious_order that is organized under the auspices of church a order b is therefore an organization that is described in sec_501 of the code and exempt from tax under sec_501 moreover as an organization that is listed in the official directory of church a in the united_states order b shares common religious bonds and convictions with church a and is therefore associated with church a within the meaning of sec_414 of the code for purposes of the church_plan rules moreover because order b is an integral part of church a and is engaged in carrying out the functions of church a order b is considered to be a church within the meaning of sec_1_414_e_-1 of the regulations and for purposes of the church_plan rules plan x is a retirement savings_plan established effective date by order b exclusively for its common_law employees hired on or after date and their beneficiaries plan x is administered by its plan administrative committee an organization the principal purpose or function of which is the administration or funding of a plan that provides retirement benefits for order b employees and their beneficiaries the plan administrative committee members serve at the pleasure of the governing council of order b accordingly we conclude that plan x is a church_plan within the meaning of sec_414 of the code no opinion is expressed as to the tax treatment of the transaction described herein under the provisions of any other section of either the code or regulations which may be applicable thereto e this letter expresses no opinion as to whether plan x satisfies the requirements for qualification under code sec_401 the determination as to whether a plan is qualified under sec_401 is within the jurisdiction of the manager employee_plans determinations programs cincinnati ohio this ruling therefore is directed only to the taxpayer order b that requested it sec_6110 of the code provides that it may not be used or cited by others as precedent copies of this letter and related documents have been sent to your authorized representative in accordance with a power_of_attorney on file in this office any questions pertaining to the ruling please contact mr s ee identification_number of this office by phone at sarerreseaeaeeeeeeeeese of by fax pincite-9598 for further information if you have sincerely yours carlow a watbins carlton a watkins manager employee_plans technical group