department of the treasury internal_revenue_service a washington d c sin no third party contacts date aug employer_identification_number legend b x y dear applicant contact person identification_number telephone number t by- this is in response to a letter dated date from b’s authorized representative concerning whether b an organization recognized as exempt from federal_income_tax under sec_501 of the internal_revenue_code and classified as a private_foundation as described in sec_509 of the code may make three set-asides each under the suitability test of the code under sec_4942 for its taxable_year ending date the information submitted shows that b's principal activity is making grants to public_charities exclusively for charitable purposes including providing scholarships at institutions of higher learning improving health caré and meeting basic human needs b has approximately y in assets b has a long history of making multi-year grants but it has not in the past used the set-aside procedure b has determined that it is now appropriate to implement such procedures in order to clearly account for grants made in particular areas each year even though distribution of the full amounts granted may ultimately take several years with respect to each of the three areas of charitable activity for which set-asides are requested b has a strong tradition of support the set-asides will serve to expand b's grant-making programs with new projects in these areas of historical support while the amounts of the set-asides requested may appear large they are not so large in the context of b’s overall grant-making program the first set-aside is in the amount of dollar_figure x to be used to fund programs at hospitals in b’s geographic area and other research institutions for genomic and other such cutting-edge scientific and medical_research and for improved patient care b is a major funder of area hospitals having distributed more thandollar_figure medical_research is the next major area of support to that end b would like to allocate this dollar_figurex to be spent over the next three to five years to support one or more research programs and the related clinical trials and patient care should the programs prove promising b will grant additional_amounts _ x in grants for activities in this area in recent years b has determined that advanced b believes that the project is better accomplished by a set-aside as opposed to an immediate grant of dollar_figure ‘x because the institutions have not yet fully established a new collaborative model to coordinate research in this area and some of the work may have to be undertaken separately once the projects are crystallized in the near future b will spend at least the amount currently set-aside within the next three to five years the second set-aside is in the amount of dollar_figure ox for the specific purpose of promoting needs-blind admissions policies at liberal arts colleges universities and other schools in the united_states and abroad to be distributed within the next three years b contemplates direct grants to educational organizations for the purpose of making higher education accessible to all qualified students regardless of financial resources it will distribute the entire amount as soon as institutions which are possible recipients determine the assistance that would be needed to allow them to make admissions decisions without taking into account an applicant's ability to pay b claims the project is better accomplished by a set-aside because the educational institutions with which b has been working to maintain or develop needs-blind admissions policies have each been affected differently by the vagaries of financial markets of the last year b intends to implement and begin immediate payment of grants to institutions as soon as those institutions have assessed the extent to which changes in their endowments affect their abilities to establish or maintain needs-blind policies the third set-aside is in the amount of dollar_figure 1x to be expended in the next two years to significantly expand the capacity of emergency food organizations in the united_states for direct relief of poverty this project is better accomplished by a set-aside as b intends to provide its grants as soon as the prospective grantees make known whether and if so the rate at which they can absorb the amounts of the proposed grants in any event all of the amount set-aside will be distributed within the next months sec_4942 of the code imposes an excise_tax on private_foundations that fail to make certain minimum annual qualifying distributions sec_4942 of the code defines a qualifying_distribution as a any amount_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 provides that for all taxable years beginning on or after date an amount set_aside for a specific project which comes within one or more purposes described in sec_170 may be treated as a qualifying_distribution if it meets the requirements of subparagraph b of sec_4942 sec_4942 of the code provides that an amount set_aside for a specific project may be treated as a qualifying_distribution if at the time of the set-aside the foundation establishes to the satisfaction of the secretary that the amount will be paid for the specific project within five years and the project is one which can be better accomplished by such set_aside rather than by immediate payment of funds ihe suitability test sec_53_4942_a_-3 of the foundation and similar excise_taxes regulations provides that an amount set_aside for a specific project that is for one or more of the purposes described in sec_170 or b may be treated as a qualifying_distribution in the year in which set_aside but not in the year in which actually paid if the requirements of sec_4942 and this paragraph are satisfied the requirements of this paragraph b are satisfied if the private_foundation establishes to the satisfaction of the commissioner that the amount set_aside will be paid for the specific project within months after it is set_aside and i the set_aside satisfies the suitability test or ii the foundation satisfies the cash distribution test sec_53_4942_a_-3 of the regulations provides that the suitability test is satisfied if the foundation establishes that the specific project is one in which relatively long-term grants or expenditures must be made in order to assure the continuity of particular charitable projects or program-related investments the regulation cites as an example of a suitable project a plan to fund a specific research program that is of such magnitude as to require an accumulation of funds before beginning the research even though not all of the details of the program have been finalized revrul_74_450 1972_2_cb_388 involved a set-aside granted to a private_operating_foundation under the suitability test for a project involving the conversion of a portion of newly acquired land into an extension of an existing wildlife sanctuary and the remainder into a public park under a four-year construction_contract which required most of the payments during the last two years revrul_75_511 1975_2_cb_450 denied a foundation's request for approval of a set-aside for annual scholarship payments the foundation's principal activity was the making of scholarship grants the foundation selected new scholarship recipients each year the scholarships typically covered a three year period and were paid annually in the past the foundation simply paid each year's scholarship installments out of its current income instead of continuing that practice however the foundation sought approval to set_aside for each grantee an amount sufficient to cover that grantees scholarship payments for the three-year scholarship term under this proposal the foundation would then pay scholarship installments out of each grantee's set-aside account until those funds were depleted the foundation did not show that making scholarship grants in this case was an activity that could be better accomplished by a set-aside than by immediate payment of funds with respect to the three set-asides b must show that the amount set-aside accomplishes one or more purposes described in sec_170 of the code that the set-aside amount will be paid for the specific project within five years and the project is one that can be better accomplished by such set-aside rather than by immediate payment of funds the suitability test the first set-aside is in the amount of dollar_figure ‘x to be used to fund programs at area hospitals and other research institutions for cutting-edge scientific and medical_research and for improved patient care support of scientific and medical_research furthers purposes described in sec_170 of the code b will allocate dollar_figure x to be spent over the next three to five years to support one or more research programs and the related clinical trials and patient care the project is better accomplished by a set-aside because the institutions have not yet fully established a new collaborative model to coordinate research in this area and some of the work may have to be undertaken separately the second set-aside is in the amount of dollar_figure x for the specific purpose of promoting needs-blind admissions policies at liberal arts colleges universities and other schools in the united_states and abroad to be distributed within the next three years the project is within the purposes described in sec_170 of the code because it contemplates direct grants to educational organizations for the purpose of making higher education accessible to all qualified students regardless of financial resources b will distribute the entire amount as soon as institutions which are possible recipients determine the assistance that would be needed to allow them to make admissions decisions without taking into account an applicant's ability to pay the project is better accomplished by a set-aside than immediate grants totaling dollar_figure x because the educational institutions with which b has been working to maintain or develop a needs-blind admissions policies have each been affected differently by the vagaries of financial markets of the last year b intends to implement and begin immediate payment of grants to institutions as soon as those institutions have assessed the extent to which changes in their endowments affect their abilities to establish or maintain needs-blind policies the third set-aside is in the amount of dollar_figure x to be expended in the next two years to significantly expanding the capacity of emergency food organizations in the united_states for direct relief of poverty as contemplated under sec_170 of the code this project is better accomplished by a set-aside as b intends to provide these grants as soon as the prospective grantees make known whether and if so the rate at which they can absorb the amounts of the proposed grants in any event all of the amount set-aside will be distributed within the next months satisfying the requirements of sec_4942 of the code accordingly the three set-asides by b accomplish one or more purposes described in section c b of the code the set-aside amounts will be paid for the specific projects within five years and the projects are ones that can be better accomplished by such set-asides rather than by immediate payment of funds based on the facts and circumstances as stated above we rule that b’s three set-asides of funds will satisfy the suitability test of sec_4942 of the code and therefore will constitute a qualifying_distribution for b’s fiscal_year ending date we direct your attention to section a -3 b of the regulations entitled evidence of set- aside this section provides that a set-aside approved by the internal_revenue_service shall be evidenced by the entry of a dollar amount on the books_and_records of a private_foundation as a pledge or obligation to be paid at a future date or dates except as specifically ruled upon above no opinion is expressed concerning the federal_income_tax consequences of the transaction described above under any other provision of the internal_revenue_code because this ruling could help resolve future questions about your federal_income_tax status you should keep it in your permanent records this ruling is directed only to the organization that requested it sec_6110 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 gerald v sack manager exempt_organizations technical group


department of the treasury internal_revenue_service washington d c sep dollar_figure tax_exempt_and_government_entities_division uniform issue list set er rat xxxxxxxxkxkx xxxxxxxxxxxx legend taxpayer account a financial_institution b physician c physician d financial_institution e financial_institution f account g amount dear xx xxxxxxx this is in response to a letter dated date as modified and supplemented by additional correspondence dated date date and date from your authorized representative in which you requested a waiver of the 60-day rollover requirement contained in sec_408 of the intemal revenue code the code taxpayer asserts that the failure to accomplish the rollover within the 60-day period described by sec_408 of the code was due to his mental and physical conditions which affected his memory and impaired his ability to manage his financial affairs the following facts and representations have been submitted under penalty of perjury in support of the ruling requested taxpayer was age at the time of the distribution of amount from account a an individual_retirement_arrangement ira established and maintained at financial_institution b taxpayer suffers from numerous health issues has been in declining health for several years and is under the care of physician c taxpayer’s neurologist and physician d medical documentation and statements from physicians c and d submitted with taxpayer's request indicate the severity of his medical problems and the extent of his treatment for these conditions taxpayer moved the funds in account a to a taxable savings at in june of account at financial_institution e and then october big_number financial_institution f in order to receive a higher rate of return taxpayer did not remember that the funds were from an ira when he reinvested them first in a savings account and then in a regular cd account account g he did not become aware of this until he was contacted by his accountant who was reviewing taxpayer's forms and asked him why he had closed account a the funds continue to remain in account g and have not been used by the taxpayer to account g based on the above facts and representations taxpayer requests a ruling that the internal_revenue_service service waive the 60-day rollover requirement contained in sec_408 of the code with respect to the distribution from account a sec_408 of the code provides that except as otherwise provided in sec_408 any amount_paid or distributed out of an ira shall be included in gross_income by the payee or distributee as the case may be in the manner provided under sec_72 of the code sec_408 of the code defines and provides the rules applicable to ira_rollovers sec_408 of the code provides that sec_408 of the code does not apply to any amount_paid or distributed out of an ira to the individual for whose benefit the ira is maintained if i the entire amount received including money and any other_property is paid into an ira for the benefit of such individual not later than the day after the day on which the individual receives the payment or distribution or ii the entire amount received including money and any other_property is paid into an eligible_retirement_plan other than an ira for the benefit of such individual not later than the day after the date on which the payment or distribution is received except that the maximum amount which may be paid into such plan may not exceed the portion of the amount received which is includible in gross_income determined without regard to sec_408 sec_408 of the code provides that sec_408 does not apply to any amount described in sec_408 3a i received by an individual from an ira if at any time during the 1-year period ending on the day of such receipt such individual received any other amount described in sec_408 i from an ira which was not includible in gross_income because of the application of sec_408 sec_408 of the code provides a similar 60-day rollover period for partial rollovers sec_408 e of the code provides that the rollover provisions of sec_408 do not apply to any amount required to be distributed under sec_408 sec_408 of the code provides that the secretary may waive the day requirement under sec_408 and sec_408 of the code where the failure to waive such requirement would be against equity or good conscience including casualty disaster or other events beyond the reasonable control of the individual subject_to such requirement only distributions that occurred after date are eligible for the waiver under sec_408 i of the code revproc_2003_16 2003_4_irb_359 date provides that in determining whether to grant a waiver of the 60-day rollover requirement pursuant to sec_408 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 sec_401 of the code provides the rules for required minimum distributions from a qualified_plan sec_401 provides in pertinent part that a_trust shall not constitute a qualified_trust unless the plan provides that the entire_interest of each employee will be distributed or commence to be distributed to such employee not later than the required_beginning_date sec_401 defines the term required_beginning_date as april of the calendar_year following the later of the calendar_year in which the employee attains age or the calendar_year in which the employee retires the information presented and documentation submitted by taxpayer's physicians and by his authorized representative are consistent with taxpayer's assertion that his failure to accomplish a timely rollover was due to medical conditions which impaired his ability to manage his financial affairs therefore pursuant to sec_408 of the code the service hereby waives the 60-day rollover requirement with respect to the distribution from account a taxpayer is granted a period of days from the issuance of this ruling letter to contribute amount into a rollover ira provided all other requirements of sec_408 of the code except the 60-day requirement are met with respect to such contribution amount will be considered a rollover_contribution within the meaning of sec_408 of the code this ruling does not authorize the rollover of amounts that are required to be distributed by code sec_401 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 letter has been sent to your authorized representative in accordance with a power_of_attorney on file in this office 20uu948u64 if you wish to inquire about this ruling please contact xxxxxxxxxxxxx government i d number xx-xxxxx by phone at xxx xxx-xxxx or by fax at xxx xxx-xxxx please address all correspondence to se t ep ra t1 sincerely callen a watkins carlton a watkins manager employee_plans technical group enclosures deleted copy of ruling letter notice of intention to disclose copy of cover letter to authorized representative cc xxkxxkxkkkxkxkkkk xxxkxkkkxxkxkk xkxkkxkkkkkk


department of the treasury i n t e r n al r e v e n u e s e r v i c e w as h i n g t o n d c date cc dom it a wta-n-100542-00 offic e of c h ief c o u n sel number release date uilc memorandum for harry martin fed-state coordinator north-south carolina district from lewis j fernandez deputy assistant chief_counsel income_tax accounting subject north carolina flood relief - income replacement this technical assistance is in response to your request for assistance dated date regarding the tax treatment of state payments made to individuals and businesses of north carolina who suffered losses due to the flood damage caused by hurricane floyd technical assistance does not relate to a specific case and is not binding on examination or appeals this document is not to be cited as precedent issue are the following flood relief payments gross_income to the recipient upon which information reporting is required under sec_6041 of the internal_revenue_code payments to farmers for crop yield losses payments to farmer owned cooperatives for commodity quality losses supplemental payments to growers’ associations for uncollected assessments and payments to fishermen for harvest losses conclusion the following flood relief payments are gross_income to the recipient upon which information reporting is required under sec_6041 payments to farmers for crop yield losses payments to farmer owned cooperatives for commodity quality losses supplemental payments to growers’ associations for uncollected assessments and payments to fishermen for harvest losses facts the general assembly of north carolina declared hurricane floyd the worst natural disaster in the state’s history in the latter part of hurricane floyd caused wta-n-100542-00 extensive and prolonged flooding that devastated the civil social economic and environmental well-being of eastern north carolina the entire economic base of eastern north carolina was undermined making it extremely difficult for individuals to earn income to support themselves and their families in response to the widespread damage caused by hurricane floyd governor jim hunt jr of north carolina proposed a state emergency package that consisted of numerous relief programs to assist individuals and small businesses in recovering from the disaster the hurricane floyd recovery act of appropriating funds for a package of relief programs was enacted on date the following disaster assistance programs are addressed in this technical assistance the numbers appeared in the margin of materials in your request for assistance crop disaster assistance this grant program provides payments of up to percent of the yield losses suffered by farmers from the damage caused by hurricane floyd these payments are in addition to the crop-loss disaster assistance provided by the federal government commodity quality losses and association assessment losses this grant program provides supplemental payments to farmer-owned cooperatives for quality losses associated with flood-damaged commodities these cooperatives purchased commodities that have been found to be deficient in quality due to damage associated with the flooding the payments under this program will indemnify the cooperatives for losses caused by quality deficiencies additionally this program provides supplemental payments to growers’ associations for uncollected assessments many of these associations operate on an assessment per harvested acre basis to fund promotion and marketing of individual north carolina commodities because the floods prevented the harvest of these critical products the associations are unable to provide the necessary marketing assistance to maintain demand commercial fishing disaster assistance this fishing loss disaster assistance program provides north carolina fishermen with grants and loans to compensate them for loss of income due to harvest losses caused by the flooding the north carolina division of marine fisheries will verify losses based on historical fishing activity the hurricane floyd recovery act of n c sess laws extra session sec_4 requires that state agencies distributing the funds inform recipients by written_statement of the federal and state_income_tax consequences of the wta-n-100542-00 disbursements in response to this requirement the north carolina department of revenue has requested your assistance in determining the federal_income_tax treatment of the disbursements law and analysis sec_61 provides generally that gross_income means all income from whatever source derived sec_1_61-1 of the income_tax regulations provides that gross_income includes income realized in any form in 348_us_426 1955_1_cb_207 the united_states supreme court held that the concept of gross_income encompassed accessions to wealth clearly realized over which taxpayers have complete dominion the crop disaster assistance program commodity quality loss and association assessment loss programs and the commercial fishing disaster assistance program provide grants for crop yield losses fish harvest losses commodity quality losses and assessment association losses these grants would clearly be income subject_to federal tax had they been profits generated in the normal course of business thus the payments made under these supplemental grant programs to reimburse taxpayers for their lost profits constitute gross_income to the recipients within the meaning of sec_61 unless the payment is a loan rather than a grant sec_6041 provides that all persons engaged in a trade_or_business and making payment in the course of such trade_or_business to another person of rent salaries wages premiums annuities compensations remunerations emoluments or other fixed or determinable gains profits and income of dollar_figure or more in any taxable_year shall render a true and accurate return to the secretary_of_the_treasury under such regulations and in such form and manner and to such extent as may be prescribed setting forth the amount of such gains profits and income and the name and address of the recipient of such payment under sec_1_6041-1 federal and state governments are considered persons engaged in a trade_or_business for purposes of sec_6041 additionally under sec_1_6041-3 payments to a corporation are generally exempt from the information reporting requirements the grant programs described in this assistance provide for payments that are fixed or determinable gains profits or income to the recipients thus information reporting is required under sec_6041 unless the payments are made to incorporated entities accordingly we suggest that you advise the state of north carolina that subject_to the exceptions information reporting is required on grants to farmers for crop yield losses on grants to farmer owned cooperatives for commodity losses on grants to growers’ associations for assessment losses and on grants to commercial fishermen for harvest losses further we suggest that you advise the state of north carolina to describe the wta-n-100542-00 tax consequences of these grants to the recipients in language similar to the following the internal_revenue_service has advised us that you must include in income any crop insurance proceeds you receive as the result of crop damage you generally include them in the year you receive them treat as crop insurance proceeds the crop disaster payments or other_payments you receive from the state or federal government as the result of destruction or damage to crops or the inability to plant crops or lost fishing income because of drought flood or any other natural disaster unless the payment is a loan rather than a grant information may also be found in irs publication farmer’s tax guide taxpayers uncertain whether these principles or interpretations of tax law should apply to their situations should consider seeking a private_letter_ruling or if appropriate technical_advice procedures for issuing letter rulings and technical_advice are in revproc_2000_1 2000_1_irb_4 and revproc_2000_2 2000_1_irb_73 respectively if you have further questions about this memorandum please call george baker at


department of the treasury employer_identification_number contact person - id number contact telephone number uil internal_revenue_service p o box cincinnati oh release number release date date date legend _ b foundation c llc d project e religion f country g university h dollar amount j dollar amount m dollar amount n dollar amount p dollar amount dear you asked for advance approval of your educational grant procedures under internal_revenue_code sec_4945 this approval is required because you are a private_foundation that is exempt from federal_income_tax our determination we approved your procedures for awarding educational grants based on the information you submitted and assuming you will conduct your program as proposed we determined that your procedures for awarding educational grants meet the requirements of code sec_4945 as a result expenditures you make under these procedures will not be taxable description of your request b a foundation and the sole member of c operates an educational grant program called d the purpose of d is to expose participants to leadership and career opportunities nurture those skills and encourage participants to consider a career as a professional in the e community while b will primarily fund d b may request that other donors enter into their original grant agreement with the recipient in providing additional funding you plan on operating in connection with b to become an additional donor party to the grant agreement in doing so you will provide grants to the original recipient and funds would be administered and monitored under the procedures established by b described below you initially plan to invite anywhere from to college students who have demonstrated an affinity towards playing a leadership role in the e community and anticipate will seriously consider a career as a e communal professional to apply for d the first_phase of the program will involve recruitment during summer some distance learning during the fall semester of the first academic year and a scholarship and other funding for participants to spend the spring semester at a university in f currently anticipated to be g in addition to being a matriculated student program participants will participate in a number of additional educational activities which you expect to provide exclusively during the spring semester in f which may include weekly educational seminars which will expose participants to e educational content leadership skills role models and career guidance educational tours single and multiple day tours of f consistent with the educational theme of the program opportunities to intern at educational institutions not-for-profit_organizations or other social service agencies in f planning sessions for the camp and campus projects the duration of the first_phase of your program will last for approximately two years thereafter you will commit to funding new participants and the participant number will be determined after an assessment regarding the success of the program’s first year and available_resources it is anticipated that you will recruit a new cohort each year to participate in phase of the program in connection with the spring semester in f you will award each participant a stipend to fully subsidize the cost of the tuition to attend their university on a financial needs basis you may also make scholarship funding available at the conclusion of phase i you will invite a number of participants who you believe are likely to pursue careers as e communal professionals either as a rabbi educator social worker or not- for-profit manager to apply for a fellowship to graduate school you anticipate awarding a certain number of fellowships to deserving applicants to attend graduate school phase i will last for the duration of the graduate program in which participants are matriculated students you anticipate focusing your recruiting efforts on the senior staff at certain summer camps that have substantial e educational programming and inviting such individuals to identify potential college age staff members who would be appropriate candidates to apply to your program your staff will then send promotional materials and an application to such senior camp staff and once potential applicants are identified you will send such materials directly to such college students program staff will also visit certain summer camps that have substantial e educational programming to recruit potential program participants and will market the program directly to college age staff at such camps letter catalog number 58222y in the event that your selection process does not yield enough candidates to meet the participant numbers you may broaden your process and recruit college students directly from nominations recommendations and referrals from other sources either by seeking individuals who have a track record of service within the e community or by virtue of the fact that such individuals are already scheduled to spend the spring semester abroad at an university in f you will provide such individuals with recruitment materials and an application that needs to be completed individuals will then interview with your staff while the participants are in f for the spring semester they will receive guidance on the development of an educational project that they will be responsible for implementing during the following summer and on their college campus during the following academic year you will underwrite the cost and will provide a mentor providing guidance on the development of this project you will also underwrite a budget expected on average to equal approximately j dollars to support implementation costs such amount will be dependent upon a budget the participant will submit for approval upon successful implementation during the summer you will pay a m dollars honorarium to the participant during the second year participants in good standing would be invited to an in person multi- day educational conference in the united_states you will underwrite all travel lodging and food expenses to enable participants to attend the conference program participants are also expected to implement an educational program on their college campus or in the local community during the second year of your program in connection with such project you will underwrite the cost of and provide a mentor to provide guidance on the development of this project expected on average to equal approximately h dollars to support implementation costs such amount will be dependent upon a budget that the participant would submit for your approval upon successful completion of this project during the second year of the program you will pay aj dollars honorarium to the participant selection for participation in phase will be based in connection with the following parameters _ the level of engagement in e life of the applicant the level of the interest in pursuing a career as a e communal professional aptitudes of the applicant in a career as a communal e professional academic achievements strength of the letter of reference for such applicant interview and interpersonal skills as determined by your staff to obtain a fellowship during phase ii of d the participant must demonstrate to your staff superior leadership abilities a passion to serve and work in a professional capacity in a not-for-profit organization that serves the e community and superb academic capabilities demonstrated in their coursework at their f university and at their domestic college fellowship recipients are eligible for up to three years of support or the duration of the academic program if it is longer than three years fellowship recipients must be accepted into a graduate program and remain in good standing at the academic institution where they are studying in order to continue to receive your financial support letter catalog number 58222y phase il participants will also participate in certain distance learning and may be asked to mentor future phase participants phase ii participants may also be invited to an educational conference held in the united_states selection for participation in phase ii will be based on the level of promise and aptitudes that the phase participants have demonstrated towards fulfilling the program objective - pursuing a successful career as a communal professional either as a rabbi cantor educator social worker or administrator for a not-for-profit organization only individuals who were participants in phase will be considered for phase ii staff will consider the criteria referenced above including the ability and capacity of the participant to plan and implement a quality program of e content in either a camp or campus setting the n dollars tuition subsidy that each participant will receive is intended to match the tuition cost at their university in f for the spring semester additionally on a needs basis participants are eligible to apply for additional scholarship support if they can demonstrate to you that their families would be unable to afford the costs of attending your program in f the amount of such scholarship would directly relate to the anticipated actual costs of attending spring semester and the demonstrated financial needs of the participant additionally while in f during the spring semester you will pay for the costs of the educational programming and touring that is made available exclusively to program participants you will award certain participants with a fellowship up to p dollars annually for up to three years to enable fellows to attend graduate school to study to become a rabbi cantor educator social worker or not-for-profit manager such fellowship awards may cover the costs of tuition housing and living_expenses and will be subject_to your discretion you anticipate staffing an advisory committee to inform shape and advise the development and implementation of the program you will identify knowledgeable educators with expertise and experience in the subject matter that will be the focus of your program your committee may also be tapped to identify alternative locations programs from which you will recruit prospective participants committee members may also have input on the recruitment process and selection criteria your selection committee will be comprised of your staff and an outside expert consultant knowledgeable in program implementation engaged by you to support the development and implementation of your program selection committee members will be individuals with knowledge and expertise in operating educational programs for college students and may or may not comprise members of the advisory committee your selection committee will also be responsible for identifying any relationships between potential applicants and disqualified persons ensuring that individuals with any such relationship s are not invited to participate in your program during phase i officers or other c representatives will regularly communicate with participants in the program to receive feedback on how the grant monies are being spent this will include reports on all aspects of the educational programming in the united letter catalog number 58222y states and f as well as the implementation of the two related projects in connection with phase ii of the project your staff will monitor and remain in regular communication with fellowship recipients and will monitor how grant monies are being spent in connection with phase il of d c in its sole discretion may take any and all such reasonable and appropriate steps including possible legal action to compel compliance of use of funds for their intended purpose including requiring the return of all or any portion of funds remitted and the withholding of funds not previously remitted in connection with d potential participants who are related to whether by blood or through marriage or have any direct or indirect affiliation with d staff or any of your or c’s directors officers or employees will be ineligible to participate no director officer_or_employee of you or c or any other person who is involved in the process of selecting applicants will be in a position to derive a private benefit directly or indirectly if certain participants are selected over others you will pre-screen any and all non-u s applicants using the treasury department’s specially designated nationals and blocked persons list sdn the fbi's most wanted terrorists list the state department's terrorist exclusion list the u s bureau of industry and security's denied persons list unverified list and entity list and similar lists maintained by the united nations basis for our determination the law imposes certain excise_taxes on the taxable_expenditures of private_foundations code sec_4945 a taxable_expenditure is any amount a private_foundation pays as a grant to an individual for travel study or other similar purposes however a grant that meets all of the following requirements of code sec_4945 is not a taxable_expenditure e e e the foundation awards the grant on an objective and nondiscriminatory basis the irs approves in advance the procedure for awarding the grant the grant is - - - a scholarship or fellowship subject_to sec_117 and is to be used for study at an educational_organization described in sec_170 or aprize or award subject_to the provisions of sec_74 if the recipient of the prize or award is selected from the general_public or to achieve a specific objective produce a report or similar product or improve or enhance a literary artistic musical scientific teaching or other similar skill or talent of the recipient to receive approval of its educational grant procedures sec_53_4945-4 requires that a private_foundation show e e the grant procedure includes an objective and nondiscriminatory selection process the grant procedure results in the recipients performing the activities the grants were intended to finance letter catalog number 58222y e the foundation plans to obtain reports to determine whether the recipients have performed the activities that the grants were intended to finance other conditions that apply to this determination this determination covers only the grant program described above this approval will apply to succeeding grant programs only if their standards and procedures don't differ significantly from those described in your original request this determination applies only to you it may not be cited as precedent you cannot rely on the conclusions in this letter if the facts you provided have changed substantially you must report any significant changes in your program to the cincinnati office of exempt_organizations at internal_revenue_service exempt_organizations determinations p o box cincinnati oh you cannot make grants to your creators officers directors trustees foundation managers or members of selection committees or their relatives all funds distributed to individuals must be made on a charitable basis and must further the purposes of your organization you cannot award grants for a purpose that is inconsistent with code sec_170 b you should keep adequate_records and case histories so that you can substantiate your grant distributions with the irs if necessary we've sent a copy of this letter to your representative as indicated in your power_of_attorney please keep a copy of this letter in your records if you have any questions please contact the person listed at the top of this letter enclosures notice redacted letter sincerely director exempt_organizations letter catalog number 58222y


department of the treasury internal_revenue_service washington d c contact person identification_number telepnone number t tax_exempt_and_government_entities_division date jtboe 2s employer_identification_number legend dear sir or madam this is in response to your letter dated date in which you requested certain rulings with respect to a proposed transfer of all of the assets of c to b b is exempt under sec_501 of the internal_revenue_code and is classified as private_foundation under sec_509 c is exempt under sec_501 of the internat revenue code and is classified as a private_operating_foundation under sec_4942 the board_of directors for b and c intend to approve a plan of merger under which c would merge with b under the plan b would be the surviving entity the directors have concluded that the proposed merger would eliminate the overlap in objective and operational structures between b and c and believe that their consolidation into a single entity will streamline the conduct of their common charitable objectives on the effective date of merger all of the assets and liabilities of c would become and be deemed to be a part of the assets and liabilities of b c as a consequence of the merger would cease to exist as a legal entity as of the effective time of the merger b and c are effectively controlled by the same board_of directors c has never notified the service in the past that it intends to terminate its private_foundation_status nor has c ever received notification that its status as a private_foundation has been terminated furthermore c 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 sec_501 of the code provides for the exemption from federal_income_tax of organizations organized and operated exclusively for charitable purposes no part of the net_earnings of which inures to the benefit of any private_shareholder_or_individual sec_507 of the code and the regulations to sec_507 sets forth rules applicable to terminating foundations the internal_revenue_service in revrul_2002_28 2002_20_irb_941 copy attached has issued guidance on the filing obligations and tax issues that arise when a private_foundation transfers all of its assets to one or more other private_foundations under sec_507 of the code the rev_rul presents three situations in which a private_foundation transfers all of its assets to one or more other effectively controlled private_foundations in situation one the foundation under a plan of dissolution distributes all of its remaining assets in equal shares to three other private_foundations in situation two the trustees of a private_foundation trust create a not-for-profit corporation to carry on the trust’s charitable activities which the trustees have determined can be more effectively accomplished by operating in corporate form all of the trust’s assets and liabilities are transferred to the not-for-profit corporation in situation three two private_foundations transfer all of their assets and liabilities to a newly formed private_foundation revrul_2002_28 provides that a private_foundation that transfers all of its assets to one or more private_foundations in a transfer described in sec_507 is not required to notify the manager exempt_organizations determinations tax exempt government entities that it plans to terminate its private_foundation_status under sec_507 the ruling further states that if the private_foundation does not provide notice that it plans terminate then it is not subject_to the termination_tax under sec_507 if the private_foundation provides notice of termination then it is subject_to the tax however if the private_foundation has no assets on the day it provides notice the sec_507 tax will be zero the rev_rul gives detailed information as to the applicability of the excise_taxes imposed by sections of the code the ruling further provides that a private_foundation that has disposed of all its assets and terminates its private_foundation_status must file a form pf for the tax_year of the disposition and must comply with any expenditure_responsibility reporting obligations on the return a-private foundation that has disposed of all its assets and does not terminate its private_foundation_status must file a form_990-pf for the tax_year of the disposition and must comply with any expenditure_responsibility reporting obligations on the return but does not need to file returns in the following tax years if it has no assets and does not engage in any activities activities in later years it must resume filing form_990-pf for those years if the private_foundation receives additional assets or resumes our evaluation of the facts and circumstances in your ruling_request indicates that the transfer of c’s assets to b would be similar to the facts and circumstances described in situation three of the rev_rul under the facts described the foundations would not be subject_to tax under sec_507 and sections of the code accordingly based on the information furnished and the code and regulations as interpreted in revrul_2002_28 we rule as follows the merger of c with and into b qualifies as a transfer under sec_507 and as such a will not result in a termination of c's private_foundation_status under sec_507 b will not cause the imposition of the termination_tax described in sec_507 c will not cause b to be treated as a newly created organization and d will not constitute a willful and flagrant act or failure to act giving rise to liability for tax under chapter the merger and the resulting transfer of all of c’s assets to b and the assumption by b of all of the liabilities of c will not adversely affect the sec_501 c tax exempt status of either b or c from and after the effective date of the merger b will continue to exist as an organization which is exempt from taxation under sec_501 b and c are effectively controlled within the meaning of sec_1_482-1a of the income_tax regulations directly or indirectly by the same persons therefore pursuant to sec_1_507-3of the regulations for purposes of the excise_taxes imposed under chapter and sec_507 through of the code b will be treated as if it is c upon the transfer of assets by c to b pursuant to the merger b will possess the attributes and characteristics of c specified in sec_1_507-3 of the regulations a b will succeed to the entire aggregate tax_benefit of c under sec_507 b substantial contributors to c under sec_507 will be treated as substantial contributors to b and c b will be responsible for any liabilities of c under chapter to the extent that c does not satisfy such liabilities the transfer of assets by c to b pursuant to the merger will not give rise to gross_investment_income or capital_gain_net_income within the meaning of sec_4940 because the transfer will not constitute a sale_or_other_disposition of property or other realizable event’ within the meaning of sec_4940 because b will be treated as if it is c under sec_1_507-3 for purposes of sec_4940 any investment_income of c for the taxable_year of the transfer will be includible in the computation of the net_investment_income of b for the taxable_year of the transfer the transfer of assets by c to b pursuant to the merger will not constitute self-dealing under sec_4941 because for purposes of sec_4941 the term disqualified_person does not include an organization described in sec_501 other than an organization described in sec_509 consequently such transfer will not subject b or c to tax under sec_4941 because b will be treated as if it were c under sec_1_507-3 of the regulations for purposes of sec_4942 c will not be required to meet the qualifying_distribution requirements of sec_4942 for the taxable_year of the transfer provided that b's distributable_amount for the year of the transfer if any is increased by c’s distributable_amount for the year of transfer further c’s qualifying distributions made during the taxable_year of the transfer and the excess qualifying_distribution carryover of c under sec_4942 if any will be carried over to b and may be used by b to meet its distribution_requirements under sec_4942 the transfer of assets by c to b pursuant to the merger will not result in the application of sec_4943 with regard to excess_business_holdings because none of the assets transferred will place b in the position of having excess_business_holdings the transfer of assets by c to b pursuant to the merger will not constitute a jeopardizing investment within the meaning of sec_4944 the transfer of assets by c to b pursuant to the merger will not constitute a taxable_expenditure within the meaning of sec_4945 and c will not be required to exercise expenditure_responsibility with respect to the assets transferred to b to c in the merger will be required to exercise expenditure_responsibility with respect to any expenditure_responsibility grants of c c by the internal_revenue_service prior to the effective date of the merger respecting grant-making procedures under sec_4945 the legal accounting and other expenses_incurred by b and c in connection with this ruling_request and effectuating the proposed transfer will be considered qualifying distributions under sec_4942 and will not constitute taxable_expenditures pursuant to sec_4945 b will be entitled to rely on the approvals given b as the successor b will be entitled to the benefit of the savings provisions and provisional rules applicable to c with respect to the assets transferred in the merger as set forth in sec_1 a of the regulations we are informing the your organization’s permanent records te_ge office of this action please keep a copy of this ruling in 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 eet lt v fecoes gerald v sack manager exempt_organizations technical group


number release date id office uilc cca_2009020516464319 ----------- from ---------------------- sent thursday february pm to ------------------------- cc subject your question the service may not refund_or_credit an overpayment after the refund statute expiration date rsed thus in your case the funds can't be refunded or credited because it is beyond the rsed transferring the funds to excess collections is appropriate if you have any questions please contact me


department of the treasury int ernal revenue service washington d c date o f f i c e o f c h i e f c o u n s e l number release date cc pa apjp bo3 tl-n-7312-00 uilc internal_revenue_service national_office field_service_advice memorandum for associate area_counsel area lm fsh har from subject assistant chief_counsel administrative provisions and judicial practice cc pa apjp agreement to extend statute_of_limitations for assessment with regard to consistency adjustment under tefra provisions this field_service_advice responds to your undated memorandum field_service_advice is not binding on examination or appeals and is not a final case determination this document is not to be used or cited as precedent disclosure statement field_service_advice is chief_counsel_advice and is open to public inspection pursuant to the provisions of sec_6110 the provisions of sec_6110 require the service to remove taxpayer identifying information and provide the taxpayer with notice of intention to disclose before it is made available for public inspection sec_6110 and i sec_6110 also authorizes the service to delete information from field_service_advice that is protected from disclosure under u s c sec_552 b and c before the document is provided to the taxpayer with notice of intention to disclose only the national_office function issuing the field_service_advice is authorized to make such deletions and to make the redacted document available for public inspection accordingly the examination appeals or counsel recipient of this document may not provide a copy of this unredacted document to the taxpayer or their representative the recipient of this document may share this unredacted document only with those persons whose official tax_administration duties with respect to the case and the issues discussed in the document require inspection or disclosure of the field_service_advice issue whether an agreement between the i r s and the taxpayer to extend the period of time for assessment of any_tax includes the extension of time to assess a computational adjustment under sec_6222 in the absence of additional language related to the adjustment conclusion an assessable computational adjustment or true-up under sec_6222 is attributable to a partnership_item thus additional language with regard to computational adjustments of partnership should be added to the extension agreement to preclude any argument that the extension does not extend the limitations_period for making true-ups facts it is not unusual for corporate taxpayers to hold partnership interests in one or more partnerships for various reasons the schedule k-1s partner’s share of income credits deductions etc are not available to the taxpayer partners when they file the required corporate_income_tax returns form_1120 therefore when filing the forms these taxpayer partners frequently report their allocable share of partnership income and losses based on estimates of what the taxpayer partner believes will be reflected on the schedule k-1s issued by the partnerships frequently these taxpayer partners do not file a form_8082 notice of inconsistent treatment notifying the i r s that the treatment of certain partnership items on the forms are inconsistent with the treatment of those items on the partnership returns more often than not the taxpayer partners bring the inconsistencies to the examiners’ attention during the examination the inconsistencies generally favor the taxpayer partners or the government in varying amounts and most often result in relatively minimal net adjustments labeled true-ups by i r s examiners to the extent the taxpayer partner’s estimates differ from the amounts reported on the partnership return form_1065 the i r s examiners make the computational adjustment or true-up to the form_1120 to account for the inconsistent treatment the general practice of the i r s examiner has been to include the true-up in the revenue agent’s report rar and on form_5701 notice of proposed_adjustment for coordinated exam program then to assess the computational adjustment as part of any deficiency when the examination is completed rather than assessing the true-up immediately as allowed by sec_6222 law and analysis sec_6222 provides in relevant part that a partner shall on the partner’s return treat a partnership_item in a manner which is consistent with the treatment of the partnership_item on the partnership return under sec_6222 if a partnership_item is treated inconsistently on the partner’s return the i r s may assess any resulting deficiency without regard to the restriction on an assessment attributable to a partnership_item under sec_6225 a computational adjustment is a change in the tax_liability of a partner to properly reflect the treatment of a partnership_item sec_6231 thus a true-up under sec_6222 is a type of computational adjustment section a generally provides that deficiency procedures under sec_6211 shall not apply to computational adjustments because the provisions of sec_6225 and sec_6211 do not apply a true-up may be immediately assessed by the i r s statute_of_limitations under tefra tax equity and fiscal responsibility act partnership provisions a minimum period for assessment applies with regard to the assessment of partnership items affected items and converted items the applicable statute_of_limitations provision depends upon the nature of the item to be assessed section a provides in relevant part that the period for assessing any income_tax with respect to any person which is attributable to any partnership_item or affected_item for a partnership taxable_year shall not expire before three years from the later of the due_date of the partnership return or the date the partnership return is filed in contrast the general statute_of_limitations for assessment under sec_6501 expires three years after the return is filed like sec_6501 section allows for extension of the limitations_period by agreement section b sec_6231 in relevant part defines a partnership_item as any item required to be taken into account for the partnership’s taxable_year to the extent such item is more appropriately determined at the partnership level than at the partner level sec_6231 in relevant part defines a computational adjustment as the change in the tax_liability of a partner which properly reflects the treatment under tefra of a partnership_item thus a computational adjustment or true-up is the computation of a tax_liability attributable to a partnership_item this point is further illustrated by sec_6222 which provides in relevant part that the restriction on assessment during a partnership proceeding does not apply to any part of a deficiency attributable to any computational adjustment required to make the treatment of the items by the partner consistent with the treatment of the items on the partnership return finally section c a i allows the partner to challenge a true-up which erroneously computes any adjustment necessary to make the partnership items on the partner’s return consistent with the treatment of the partnership items on the partnership return sec_6222 and c a i like sec_6231 make the partnership return the source of the true-up tax thus the true-up is attributable to partnership items for the reasons stated a true-up is attributable to a partnership_item therefore the assessment_period for partnership items under section applies to true-ups please call if you have any further questions curtis g wilson assistant chief_counsel administrative provisions and judicial practice by william a heard attorney reviewer cc pa apjp bo3


internal_revenue_service national_office technical_advice_memorandum release number release date date date uil e o exams programs and review internal_revenue_service commerce street mc dal dallas tx taxpayer's name taxpayer's address taxpayer's identification_number years involved date of conference legend q r s t u u1 u2 u3 u4 v w a b c d description of the parties a is a trustee of q a private_foundation a is also a descendant of a substantial e f g date date city issue whether the loans to r from v a disqualified_person to q represent indirect self-dealing facts contributor and is therefore a disqualified_person to q under both sec_4946 of the code as foundation_manager and sec_4946 for a familial relationship total number of directors treating any fraction thereof as an additional director the class b common_stock has the right to elect the remaining directors a owns big_number shares of class a common_stock and big_number shares of class b common_stock of v a thus owns a controlling_interest in v due to a’s ownership of more than of the total combined voting power v is a disqualified_person to q under sec_4946 of the code ownership of the remaining issued and outstanding shares of class a common_stock is widely held ownership of the remaining issued and outstanding shares of class b stock is held by u the collective name for the following trusts u1 u2 u3 and u4 each of these trusts is for the benefit of one of a’s children which consists of equal shares for b c d and e the four trusts are governed by a single trust_indenture and various amendments executed by a in a private_letter_ruling the four trusts were held to be disqualified persons to q approximately c is the president and chief operating officer d and e are on the board_of directors in addition a receives in excess of dollar_figure--------------a year in salary and benefits from v and c receives in excess of dollar_figure----------- by s a split-interest trust as defined by sec_4947 of the code with primarily charitable beneficial_ownership the ownership was unchanged as of date when a private_letter_ruling was requested as to whether r represented an excess business holding the service ruled that q eventually had to reduce its holdings in r below v is a publicly traded company the class a common_stock of v elects one-third of the r was originally a family-owned entity as of date it was owned by q and a has held positions as chairman of the board director and ceo of v since t total s q ____ ____ owner of shares owned percentage t is a tax-exempt_organization as described in sec_501 and is classified as as of ownership of r has been as follows other than a private_foundation under sec_509 t receives a substantial amount of its funding from v t‘s amended articles of incorporation provides for a three-member board_of directors currently composed of a as lifetime director and b and d as the other two directors q s and t each year for several years for the sole purpose of authorizing him to vote their r shares on their behalf at the annual shareholders meeting in and a also serves on the board_of r and was its chairman in and in a f his spouse and b his son represented of the six-member board_of directors all three are disqualified persons to v in addition g the son of f was on the board_of directors in two additional directors were added d a and f's daughter and e a's son both d and e are disqualified persons to v since five of the eight members of the board_of directors of r were disqualified persons to q loan transactions during r had three outstanding loans with v the balance_sheet of r shows dollar_figure----- -----------------and dollar_figure----------------of long term debt owed in and respectively this debt is comprised entirely of loans from v and w another related corporation loans from both v and w are similar with slight variations in their terms all loans contain some variation of the following according to the minutes of r a received the proxies in a fiduciary capacity from each of late payment penalty in the event r fails to make payments when due acceleration clause if r is deemed in default ability of maker to increase interest to maximum rate allowed by law in event of default prohibition against prepayment until after the 5th year or 7th if a year note prepayment penalty of of outstanding principal during first year prepayment allowed with penalty decreased each additional year sec_53_4941_d_-1 of the foundation and similar excise_taxes regulations sec_4941 of the internal_revenue_code provides a tax on each act of self- sec_4941 of the code defines self dealing as any direct or indirect b lending each loan was a mortgage loan issued to r and secured_by real_property interest rates varied between and law dealing between a disqualified_person and a private_foundation of money or other extension of credit between a private_foundation and a disqualified_person provides that an organization is controlled by a private_foundation if the foundation or one or more of its foundation managers acting only in such capacity may only by aggregating their votes or positions of authority require the organization to engage in a transaction which if engaged in with the private_foundation would constitute self-dealing similarly an organization is controlled by a private_foundation in the case of such a transaction between the organization and a disqualified_person if such disqualified_person together with one or more persons who are disqualified persons by reason of such a person's relationship within the meaning of sec_4946 c through g to such disqualified_person may only by aggregating their votes or positions of authority with that of the foundation require the organization to engage in such a transaction the controlled organization need not be a private_foundation for example it may be any type of exempt or nonexempt organization including a school hospital operating_foundation or social_welfare_organization an organization will be considered to be controlled by a private_foundation or by a private_foundation and disqualified persons referred to in the second sentence of this subparagraph if such persons are able in fact to control the organization even if their aggregate voting power is less than percent of the total voting power of the organization's governing body or if one or more of such persons has the right to exercise veto power over the actions of such organization relevant to any potential acts of self- dealing controlling_interest of the voting_stock of corporation x and as a result of such interest elects a majority of the board_of directors of x two of the foundation managers a and b who are also directors of corporation x form corporation y for the purpose of building and managing a country club a and b receive a total of percent of y's stock making y a disqualified_person with respect to p under sec_4946 in order to finance the construction and operation of the country club y requested and received a loan in the amount of dollar_figure million from x the making of the loan by x to y shall constitute an indirect act of self-dealing between p and y in sec_53_4941_d_-1 example of the regulations private_foundation p owns percent of the voting_stock of corporation w a a substantial_contributor with respect to p owns percent of the voting_stock of corporation w b a's son own sec_15 percent of the voting_stock of corporation w the terms of the voting_stock are such that p a and b could vote their stock in a block to elect a majority of the board_of directors of w w is treated as controlled by p within the meaning of subparagraph of this paragraph for purposes of this example a and b also own percent of the stock of corporation y making y a disqualified_person with respect to p under in sec_53_4941_d_-1 example of the regulations private_foundation p owns the moody v commissioner tcmemo_1995_195 involved a similar issue where the court in sec_53_4941_d_-1 example of the regulations a a disqualified_person with sec_4946 w makes a loan to y of dollar_figure million the making of this loan by w to y shall constitute an indirect act of self-dealing between p and y respect to private_foundation p enters into a contract with corporation m which is also a disqualified_person with respect to p p owns percent of m's stock and controls m within the meaning of subparagraph of this paragraph m is in the retail department store business purchases by a of goods sold by m in the normal and customary course of business at retail or higher prices are not indirect acts of self-dealing so long as the total of the amounts involved in all of such purchases by a in any one year does not exceed dollar_figure revrul_76_158 held that a private_foundation that owned of the voting_stock of a corporation and whose foundation_manager personally owned the remaining percent but did not hold a position of authority in the corporation by virtue of being foundation_manager did not control the corporation for purposes of sec_4941 of the code the private_foundation did not have the right to exercise veto power over the actions of the corporation and had no authority over the corporation's actions other than that represented by it sec_35 stock ownership did not find indirect self-dealing shearn moody jr a trustee of the moody foundation and a director of gal-tex incurred a large bill at a hotel owned by gal-tex which at the time was owned by the foundation and the libbie shearn moody trust mr moody billed the foundation for the expenses the foundation refused to pay as mr moody failed to substantiate a business_purpose for the expenses mr moody filed for bankruptcy and the hotel sought to collect in the bankruptcy proceedings unsuccessfully the court agreed with the premise that a disqualified_person can engage in indirect self-dealing with private_foundation assets by engaging in transactions with an organization controlled by the private_foundation but held that the foundation did not control gal-tex under the circumstances applying sec_53_4941_d_-1 of the regulations the court reasoned that the foundation or its foundation managers acting in such capacity did not control gal-tex reasoning that ownership is ordinarily not enough to constitute control that mr moody together with others who are disqualified persons by virtue of their relationship to mr moody there were none could not require gal-tex to engage in self- dealing only by aggregating their influence with that of the foundation that mr moody lacked actual control or a veto power over the activities of gal-tex and that to the contrary gal-tex exercised considerable independence from both mr moody and the foundation in seeking payment from them the court also reasoned that failure of an organization to come within the control tests of the regulations may not be determinative there may exist other ways to engage in self-dealing through organizations that are related to the private_foundation though the facts did not support indirect self-dealing in this instance the court went on to find indirect self-dealing in other transactions involving foundation grants to charities that used some of the funds for the personal benefit of mr moody eg paying his bankruptcy lawyers for research projects rationale under the facts presented we conclude that the loans to r from v a disqualified_person to q do not constitute acts of indirect self-dealing under sec_4941 of the code under the second sentence of sec_53_4941_d_-1 the disqualified_person sec_53_4941_d_-1 of the regulations provides several tests for determining sec_4941 of the code generally prohibits lending of money between a private_foundation and a disqualified_person it prohibits indirect as well as direct lending one form of indirect self-dealing is between a disqualified_person and an organization controlled by the private_foundation transactions between a disqualified_person and an organization not controlled by the private_foundation are not indirect acts of self-dealing in most cases however the code and regulations do not systematically define all manner of indirect self-dealing instead the facts and circumstances must be considered in each case whether an organization is controlled by a private_foundation for purposes of indirect acts of self- dealing in the first second and fourth sentences considering the first sentence of sec_53_4941_d_-1 q owns less than a minority interest of r and as such is unable to force r to enter into any lease arrangement also the facts provided do not indicate that any of q’s foundation managers in their capacity as foundation managers had such control thus q did not control r under this test engaging in the purported act of indirect self-dealing is v the facts do not indicate that there are any persons who are disqualified persons by reason of an ownership relationship to v s controls r without the assistance of q thus q did not control r under this test in fact even if less than voting power or relevant veto power the first contemplates a situation where there is no majority owner but a plurality owner exercising control see example which does not appear to be the case here moreover there are no facts indicating that q exercises actual control_over r the fourth sentence also indicates that a relevant veto power may be regarded as control viewed in light of revrul_76_158 q did not control r through veto power person and an organization controlled by q we find that the loans did not otherwise constitute indirect self-dealing on the facts presented conclusion constitute acts of indirect self-dealing under sec_4941 of the code the fourth sentence of sec_53_4941_d_-1 references two types of control control based on the foregoing we find that the loan transactions were not between a disqualified based on the foregoing facts the loans to r from v a disqualified_person to q do not a copy of this memorandum is to be given to v sec_6110 of the internal_revenue_code provides that it may not be used or cited as precedent -end-


internal_revenue_service department of the treasury index number u i l no washington dc number release date legend person to contact telephone number refer reply to cc dom p si plr-105567-99 date date company state shareholders a dear this letter responds to a letter dated date requesting a ruling on behalf of company under sec_1362 of the internal_revenue_code the information submitted discloses that company was incorporated on a in state company has four shareholders shareholders it is represented that company has intended to be an s_corporation since its incorporation believing itself to be an s_corporation company has operated accordingly since a after the end of its taxable_year beginning on a however company discovered that its s election had not been timely filed plr-105567-99 company requests a ruling that its sec_1362 election will be treated as timely made for its taxable_year that begins on a sec_1362 provides that a small_business_corporation may elect to be an s_corporation sec_1362 explains when an s election will be effective generally 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 is made sec_1362 provides that if an s election is made after the first two and one half months of a corporation's taxable_year then that corporation will not be treated as an s_corporation until the taxable_year following the year in which the s election is made sec_1362 provides that if no sec_1362 election is made for any taxable_year and the secretary determines that there was reasonable_cause for the failure to timely make such election then the secretary may treat such an election as timely made for such taxable_year and sec_1362 shall not apply applying the relevant law to the facts submitted and representations made we rule that company's sec_1362 election will be treated as timely made for its taxable_year that begins on a however this ruling is contingent on company filing form_2553 election by a small_business_corporation with an effective date of a with the appropriate service_center within days from the date of this ruling a copy of this letter should be attached to the form_2553 except as specifically set forth above we express no opinion concerning the federal tax consequences of the foregoing facts specifically we express no opinion on whether company otherwise qualifies as an s_corporation plr-105567-99 this ruling is directed only to the taxpayer who requested it sec_6110 provides that it may not be used or cited as precedent sincerely yours william p o’shea chief branch office of the assistant chief_counsel passthroughs and special industries enclosure copy for sec_6110 purposes


internal_revenue_service department of the treasury index numbers 1015-dollar_figure 2601-dollar_figure washington dc number release date person to contact telephone number refer reply to cc dom p si 4-plr-103983-00 date date re legend a b child a child b child c child c1 child c2 child c3 trust d trust d-c2 trust d-c3 trust d-c1 c2 trust d-c1 c3 dear this is in response to your letter dated date and prior correspondence submitted on behalf of the trustees and trust beneficiaries requesting income_tax and generation-skipping_transfer_tax rulings concerning the merger of identical trusts a and b both deceased had three children child a child b and child c in child b created and funded an irrevocable_trust trust d for the lifetime benefit of child c’s children child c1 child c2 and child c3 under the terms of trust d three identical trusts were created trust d-c1 for child c1 trust d-c2 for child c2 and trust d-c3 for child c3 upon the death of either child c1 c2 or c3 the trust for the deceased child is to be divided into separate trusts for the child’s issue per stirpes or if none the trust shall be held for the benefit of the survivors of child c1 c2 or c3 plr-103983-00 child c1 died in and was not survived by issue according to the terms of trust d-c1 the trust was divided into two trusts trust d-c1 c2 to be held under terms identical to trust d-c2 for the benefit of child c2 and trust d-c1 c3 to be held under terms identical to trust d-c3 for the benefit of child c3 since the death of c1 the provisions governing trust d-c1 c3 have been identical to the provisions governing trust d-c3 including present and future beneficiaries distribution standards trustee provisions trustee powers and termination provisions the trustees propose to merge trust d-c1 c3 into trust d-c3 the trustees intend to petition the appropriate state court to determine that each trust proposed to be merged is identical and ii order the consolidation of the trusts upon receipt of a favorable private_letter_ruling it is represented that there have been no additions to the subject trusts constructive or otherwise after date the following rulings have been requested the trusts were irrevocable on date and are not subject_to the generation-skipping_transfer_tax by reason of b a of the tax_reform_act_of_1986 the merger will not constitute an addition to the surviving trust nor cause a change in the substance of the surviving trust that will cause the surviving trust to lose its exempt status under sec_26_2601-1 of the generation-skipping_transfer_tax regulations the merger does not constitute a gift by the trust beneficiaries for purposes of sec_2511 of the internal_revenue_code neither the merger nor the distribution of assets to the surviving trust will result in recognition of gain_or_loss to any trust or the beneficiary of any trust assets of the merged trusts will have the same basis and holding periods under sec_1015 and sec_1223 in the surviving trust afer the merger as they did prior to the merger ruling requests sec_2501 imposes a gift_tax on the transfer of property by gift sec_2511 provides that the gift_tax shall apply whether the transfer is in trust or otherwise whether the gift is direct or indirect and whether the property is real or personal tangible or intangible sec_2601 imposes a tax on every generation-skipping_transfer plr-103983-00 section b a of the act and sec_26_2601-1 provide that the generation-skipping_transfer_tax shall not apply to any generation-skipping_transfer under a_trust that was irrevocable on date but only to the extent that such transfer is not made out of corpus added to the trust after date or out of income attributable to corpus so added sec_26_2601-1 provides that if an addition is made after date to an irrevocable_trust that is otherwise exempted from the application of chapter by b a of the act a pro_rata portion of subsequent distributions from and terminations of interests in property held in the trust is subject_to the provisions of chapter in general any modification of an irrevocable_trust that results in a change in the quality value or timing of any interest in the trust will cause the trust to lose exempt status in the present situation after the merger there will be no change in the dispositive provisions with respect to the property previously held in each particular trust the trustees will hold the same property after the merger and the interests of all beneficiaries will be unchanged the surviving trust will terminate at the same time as provided with respect to each separate trust prior to the merger thus the proposed merger of the trusts as described will not effect the quality value or timing of any beneficial_interest under the original trusts accordingly we conclude that based on the representations made all the trusts were irrevocable on date and are not subject_to the generation-skipping_transfer_tax by reason of b a of the act further we conclude that the mergers as described will not constitute an addition to any surviving trust and will not otherwise cause any surviving trust to lose exempt status under sec_26_2601-1 lastly we conclude that the mergers do not constitute gifts by the trust beneficiaries for purposes of sec_2511 ruling_request sec_4 and sec_1001 provides that the gain from the sale_or_other_disposition of property shall be the excess of the amount_realized therefrom over the adjusted_basis provided in sec_1011 for determining gain and the loss shall be the excess of the adjusted_basis over the amount_realized sec_1001 provides that except as otherwise provided in subtitle a the entire amount of gain_or_loss determined under sec_1001 on the sale_or_exchange of property shall be recognized sec_1_1001-1 of the income_tax regulations provides that generally the gain_or_loss realized from a conversion of property into cash or from an exchange of property for other_property differing materially either in_kind or extent is treated as income or as loss sustained plr-103983-00 an exchange of property results in the realization of gain_or_loss under sec_1001 if the properties exchanged are materially different 499_us_554 there is a material difference when the exchanged properties embody legal entitlements different in_kind or extent or if they confer different rights and powers cottage savings u s pincite in this case the merger of trust d-c1 c3 into trust d-c3 surviving trust will not constitute a sale_or_other_disposition for purposes of sec_1001 the interests of the beneficiaries before and after the mergers remain the same because each trust has the same beneficiaries and identical terms the exchanged properties are not materially different because they do not embody legal entitlements that are different in_kind or confer different rights and powers we conclude that neither the merger nor the distribution of assets to the surviving trust will result in recognition of gain_or_loss to any trust or the beneficiary of any trust sec_1015 provides that if property is acquired after date by a transfer in trust other than by a transfer in trust by gift bequest or devise the basis is the same as it would be in the hands of the grantor increased in the amount of gain or decreased in the amount of loss recognized to the grantor on the transfer under the law applicable to the year in which the transfer is made sec_1_1015-2 provides that in the case of property acquired after date by transfer in trust other than by transfer in trust by gift bequest or devise the basis_of_property so acquired is the same as it would be in the hands of the grantor increased in the amount of gain or decreased in the amount of loss recognized to the grantor on the transfer under the law applicable to the year in which the transfer was made if the taxpayer acquired the property by transfer in trust this basis applies whether the property be in the hands of the trustee or the beneficiary and whether acquired prior to termination of the trust and distribution of the property or thereafter sec_1223 of the code provides that in determining the period for which the taxpayer has held property however acquired there shall be included in the period for which the property was held by any other person if under chapter such property has for the purpose of determining gain_or_loss from a sale_or_exchange the same basis in whole or in part in the taxpayer’s hands as it would have in the hands of such other person we conclude that the basis of the assets in the surviving trust will be same as the basis of those assets in the original trusts before the merger accordingly we conclude that the assets in the surviving trust after the proposed merger in this case will have the same holding periods as they had prior to the merger plr-103983-00 except as we have ruled under the cited provisions of the code we express no opinion about the tax consequences of the proposed transaction under those provisions or under any other provisions of the code the rulings contained in this letter are based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in support of the request for rulings it is subject_to verification on examination this ruling is directed only to the taxpayers requesting it sec_6110 of the code provides that it may not be used or cited as precedent sincerely yours assistant chief_counsel passthroughs and special industries by robert honigman acting assistant to the branch chief enclosure copy for purposes


internal_revenue_service department of the treasury number release date index number washington dc person to contact telephone number refer reply to cc psi -- plr-114799-03 date date legend taxpayer site state state law dear this letter responds to a letter dated date submitted on behalf of taxpayer requesting a private_letter_ruling regarding sec_45 of the internal_revenue_code taxpayer represents the following facts taxpayer was formed to develop own and operate a wind_energy conversion facility on leased land at site the land is owned by an unrelated party taxpayer will generate electricity from wind and sell the electricity to unrelated parties in the wholesale power market state law provides a refundable state_income_tax credit the amount of the state_income_tax credit is based upon among other things the amount of real_property_taxes and the increase in employment the amount of the state_income_tax credit is not based upon the capital cost of construction or acquisition of project taxpayer is not obligated to reinvest any proceeds attributable to the state_income_tax credit in the plr-114799-03 wind_energy conversion facility at site or any other project for producing electricity from renewable resources state has determined that taxpayer is the owner of real_property and that the real_property_taxes paid_by taxpayer are eligible to be included in the calculation of the state_income_tax credit provided by state law each windmill wind turbine will be assessed only after it is placed in operation the windmills wind turbines will be assessed separately from the land sec_45 provides a federal_income_tax credit for electricity produced from certain renewable resources including wind and sold to an unrelated_person sec_45 provides that the amount of the credit determined under sec_45 with respect to any project for any taxable_year determined after the application of sec_45 and shall be reduced by the amount that is the product of the amount so determined for the year and a fraction a the numerator of which is the sum for the taxable_year and all prior taxable years of i grants provided by the united_states a state or a political_subdivision of a state for use in connection with the project ii proceeds of an issue of state_or_local_government obligations used to provide financing for the project the interest on which is exempt from tax under sec_103 iii the aggregate amount of subsidized_energy_financing provided directly or indirectly under a federal state or local program provided in connection with the project and iv the amount of any other credit allowable with respect to any property that is part of the project and plr-114799-03 b the denominator of which is the aggregate amount of additions to the capital_account for the project for the taxable_year and all prior taxable years the amounts under the preceding sentence for any taxable_year shall be determined as of the close of the taxable_year sec_29 provides a similar reduction in the credit allowed by sec_29 relating to the production and sale of fuel from a nonconventional source regarding the reduction provided by sec_29 the conference_report h_r conf_rep no 96th cong 2d sess 1980_3_cb_245 states the following to the extent that the sec_29 credit is available for the production and sale of any of the eligible sources it is reduced in proportion to federal state and local grants subsidized energy loans and tax-exempt_financing provided in connection with the construction or acquisition of the facility or its equipment see also revrul_85_77 1985_1_cb_15 the state_income_tax credit provided by state law is based upon among other things the amount of real_property_taxes and the increase in employment it is not provided in connection with the capital cost of construction or acquisition of project accordingly based solely on the representations and the relevant law set forth above we conclude that the amount of any credit under sec_45 will not be reduced under sec_45 because of the state_income_tax credit provided by state law no opinion is expressed or implied regarding the application of any other provisions of the code or income_tax regulations specifically we express no opinion on whether any other requirement of sec_45 is met including the placed_in_service requirement of sec_45 according to the power_of_attorney on file with the ruling_request a copy of this letter is being sent to taxpayer plr-114799-03 this ruling is directed only to the taxpayer requesting it sec_6110 provides that it may not be used or cited as precedent sincerely yours susan j reaman branch chief branch office of the associate chief_counsel passthroughs and special industries enclosures copy of letter copy for sec_6110 purposes cc