internal_revenue_service number release date cc dom fs it a tl-n-8552-98 uilc date internal_revenue_service national_office field_service_advice memorandum for district_counsel manhattan cc ner man attn drita tonuzi from heather maloy associate chief_counsel cc it a subject audit protection under revproc_92_20 this field_service_advice responds to your memorandum dated date field_service_advice is not binding on examination or appeals and is not a final case determination this document is not to be 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 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 legend a year year year year year issue whether a is entitled to audit protection under rev_proc 1992_1_cb_685 where a change in method_of_accounting was made under sec_475 conclusion a is not entitled to audit protection facts during the years in issue through a was a dealer in interest rate swaps a device used to protect customers against adverse_interest rate changes a traded interest rate swaps that called for substantial nonperiodic payments at the end of the contract these payments are referred to as backloaded payments the backloaded payments compensated for the off-market interest rates that were used to calculate periodic_payments which were lower than they would have been if market rates were used a was an accrual basis taxpayer with a taxable_year ending on december of each year a reported its backloaded payments when received the service proposed adjustments for years amortizing the backloaded payments ratably over the life of the swap beginning with taxable_year a changed its method_of_accounting for swaps to the mark to market method pursuant to sec_475 revenue reconciliation act of which requires securities dealers to mark to market certain securities including swaps after date the law provided that in the case of any taxpayer required to change its method_of_accounting for any taxable_year such change shall be treated as initiated by the taxpayer and shall be treated as made with the consent of the secretary under the mark to market method_of_accounting dealers are required to recognize gains and losses as if their securities were sold at fair_market_value on the last business_day of the taxable_year a seeks audit protection under section dollar_figure of revproc_92_20 1992_1_cb_685 for backloaded swap payments for tax years prior to the enactment of sec_475 if a were granted audit protection it would be entitled to a full concession by the commissioner of the adjustments set forth above for the years in issue as a protective measure a attached a form_3115 to its federal_income_tax return for year the year that it changed to the mark to market method under sec_475 the examining agent argues that a is not entitled to audit protection for backloaded payments for the years in issue under revproc_92_20 because the revenue_procedure does not apply to an accounting_method changed under sec_475 alternatively the agent argues that audit relief is not available under the revenue_procedure because the audit of backloaded swap payments began prior to the enactment of sec_475 and a’s change_of accounting under that provision the service’s position is that the backloaded payments issue was raised prior to date the date that sec_475 was enacted in a letter dated date a set forth its argument that it is entitled to audit protection under revproc_92_20 a argues that the revenue reconciliation act of designated the mark to market change as an accounting_method change initiated by the taxpayer and made with the consent of the service section dollar_figure of revproc_92_20 provides that a taxpayer which changes its accounting_method with the consent of the service is protected from an examining agent changing the same method_of_accounting for a prior year in this case the agents are proposing to change a’s method_of_accounting pertaining to swaps for years pre- years even though a with the deemed consent of the service changed its method in year in summary sec_475 was enacted on date and requires securities dealers to mark to market certain securities for taxable years ending on or after date a is a securities_dealer that began marking to market its swaps beginning with year prior to year and during the years in issue a included income from swaps when the payments were received in the case of backloaded payments a’s accounting_method provided a deferral of income until the end of the swap contract after audit however the service determined that a should have amortized the swap payments ratably over the life of the swap contracts for years a now seeks audit protection under the provisions of revproc_92_20 law sec_475 enacted on date requires securities dealers to mark to market certain securities for taxable years ending on or after date under this method_of_accounting dealers must recognize gains and losses each year as if their securities were sold at fair_market_value on the last business_day of such taxable_year for any taxpayer required to change its method_of_accounting due to sec_475 such change shall be treated as initiated by the taxpayer treated as made with the consent of the secretary and the net amount of the adjustment required to be taken into account by the taxpayer under sec_481 shall be taken into account ratably over the taxable_year period beginning with the first taxable_year ending on or after date thus the change_of_accounting_method was automatic under sec_475 revproc_92_20 1992_1_cb_685 provides the general procedures under sec_1_446-1 for obtaining the consent of the commissioner to change a method_of_accounting a gradation of incentives including prior year audit protection is available to encourage prompt voluntary compliance if the taxpayer files a form_3115 within designated time frames and complies with all other requirements in the revenue_procedure analysis we agree with your view that the audit protection provisions of revproc_92_20 do not apply in this case because the sec_475 accounting_method change was mandated by statute in contrast the revenue_procedure was enacted to encourage prompt compliance with proper tax_accounting principles and uses a gradation of incentives to encourage prompt voluntary compliance under this approach a taxpayer generally receives better terms and conditions for any change in accounting_method if the taxpayer files its request to change methods before it is contacted for examination by the service audit protection as described in section applies when taxpayer has filed a timely form_3115 as prescribed in the revenue_procedure and the agent is then prevented from proposing a change in the same method_of_accounting for a year prior to a year_of_change required under the revenue_procedure we concur that there is no other legal authority other than revproc_92_20 which provides taxpayers who comply with statutory changes in accounting methods with audit protection for prior years recent revenue procedures such as rev procs and provide automatic consent for accounting changes to comply with certain aspects of sec_475 and do not grant prior year audit protection revproc_92_20 is not applicable and none of the automatic accounting_method changes have extended audit protection for the treatment of the issue in prior years furthermore as you point out even if revproc_92_20 was applicable a has not complied with the terms and conditions for obtaining audit protection that is it did not file a form_3115 in any of the possible time frames as set out in the revenue_procedure case development hazards and other considerations we believe that our position in this case is fully supportable with no significant litigation hazards heather maloy by gerald m horan senior technician reviewer branch income_tax accounting division


internal_revenue_service department of the significant index no washington oc ue 9r-0o contact person telephone number tn reference ta op e epsa date jul in re this letter constitutes notice that with respect to the above-named defined benefit pension_plan we have granted a conditional waiver of the minimum_funding_standard for the plan_year ending date the conditional waiver for the plan_year ended date has been granted in accordance with sec_412 of the internal_revenue_code and sec_303 of the employee retirement income security act of the information furnished indicates that the company had net operating losses for its fiscal years ended date and the sponsor also had negative working_capital for its fiscal years ended date and also the company had insufficient cash to make the required_contribution positive net_worth measures to effect a recovery chief financial officer reducing the number of administrative positions and selling an outdated facility and moving into a more efficient facility company had a profit this constituted an improvement of nearly from the same period in as for the pension_plan as of date the value of the assets was equal to of the plan's current_liability however the company has maintained in addition the company has enacted numerous these measures include hiring a new financial improvement the for the three-month period ended date showing signs of the company’s because the financial improvement of the company is still uncertain the waiver is subject_to the following conditions the contribution required to satisfy the minimum_funding_standard taking into account this waiver for the plan years ended date and is to be timely made as defined in sec_412 of the code and the company is percent excise_tax imposed under sec_4971 of the code for the plan years ended date cimposed because of the company’s failure to pay the amounts required sider sec_412 cc of the code for a previous waiver and july to pay the if these conditions are not satisfied this waiver is retroactively null and void you agreed to these conditions ina telephone conversation with of our office on date your attention is called to sec_412 of the code which describes the consequences which would result in the event the plan is amended to increase benefits change the rate in the accrual_of_benefits or to change the rate of vesting while any portion of the waived funding de iciency remain unamortized this ruling sec_6110 of the code provides that it may not be used or cited by others as precedent is directed only to the taxpayer that requested it when filing form_5500 for the plan_year ended date the date of this letter should be entered on the schedule b actuarial information actuary for the plan director in a copy of this letter should also be sent to the enrolled key district we have sent a copy to the sincerely yours ames e holland jr chief actuarial branch


o f f i c e o f t h e c h i e f c o u n s e l department of the treasury i n t e r n a l r e v e n u e s e r v i c e w a s h i n g t o n d c date number info release date uil ------------------------------------------- ------------------------------------------- ------------------------------------------------------------------ ----------------------------------------- ----------------------------------------- dear -------------------- this letter responds to your letter dated date requesting a response to the question of whether an s_corporation that is a member of a controlled_group_of_corporations within the meaning of sec_1563 can make a sec_179 election up to the full amount specified in sec_179 the maximum election amount sec_179 provides that a taxpayer may elect to treat the cost of any sec_179 property as an expense which is not chargeable to capital_account sec_179 further provides any cost so treated shall be allowed as a deduction for the taxable_year in which the sec_179 property is placed_in_service sec_179 provides a dollar limitation on the amount of the aggregate cost which may be taken into account under sec_179 sec_179 provides that for purposes of sec_179 all component members of a controlled_group shall be treated as one taxpayer sec_179 provides that for purposes of sec_179 the term controlled_group has the meaning assigned to it by sec_1563 with certain modifications sec_1563 defines four types of controlled groups of corporations in order for a corporation to be included in one of these controlled groups under sec_1563 it must satisfy the stock ownership test for that type of group other rules in sec_1563 may also apply in order to determine whether a corporation satisfies the applicable stock ownership test -------- sec_1563 describes which corporations are component members of a sec_1563 controlled_group_of_corporations in part by excluding certain corporations excluded members under sec_1563 see sec_1563 through b e and sec_1_1563-1 notwithstanding that a corporation that is treated as an excluded_member is not a component_member it is nevertheless treated as a member of the group see sec_1_1563-1 an s_corporation is treated as an excluded_member of a controlled_group see sec_1_1563-1 as noted above pursuant to sec_1_1563-1 it is a member of a controlled_group for purposes of sec_1563 as also noted above sec_179 applies the controlled_group rules of sec_1563 by only taking into account the component members of a controlled_group since an s_corporation is not a component_member of a controlled_group sec_179 does not apply thus an s_corporation may make a sec_179 election up to the maximum election amount even if it is otherwise a member of a controlled_group_of_corporations for purposes of sec_1563 this letter describes certain general principles of federal_income_tax law it is intended for informational purposes only and does not constitute a ruling see dollar_figure of revproc_2012_1 2012_1_irb_1 date please do not hesitate to contact me if you have any further questions i can be reached at ------------------- sincerely william d alexander associate chief_counsel corporate by _________________________ grid r glyer assistant to the branch chief branch corporate


internal_revenue_service department of the treasury washington d c number release date index no telephone number legend refer reply to cc fip plr-119008-00 date date person to contact trust operating partnership subsidiary a subsidiary b subsidiary c subsidiary d date state x a dear this ruling responds to a letter dated date as well as subsequent correspondence submitted on behalf of trust requesting a ruling concerning the treatment of certain reimbursement payments under sec_856 of the internal_revenue_code facts trust a state x corporation elected to be treated as a real_estate_investment_trust reit effective for its tax_year ended date trust’s multi-family properties property interests and business_assets are owned by and its operations are conducted through operating partnership trust currently is the sole general_partner of and an owner of a partnership_interest of approximately a percent in operating partnership operating partnership owns and operates directly and through partnerships and limited_liability companies in which it owns substantially_all of the economic interests multifamily apartment communities trust through operating partnership owns interests in subsidiary a subsidiary b subsidiary c and subsidiary d the subsidiaries trust through operating partnership does not own percent or more of the voting_stock of any of the subsidiaries but owns at least percent of the nonvoting_stock of each of the subsidiaries each of the subsidiaries will join with trust to make an election under sec_856 of the code to have each of the subsidiaries be treated as a taxable_reit_subsidiary effective date plr-119008-00 the sole purpose of trust is to serve as the general_partner of and to own units of operating partnership operating partnership owns an economic_interest of percent or more in each of the subsidiaries as part of a restructuring of its employment arrangements certain executive officers of trust who have been employed by operating partnership will now be employed by trust moreover certain executive officers who have been employed by the subsidiaries will now be employed by trust trust will enter into one or more sharing agreements with operating partnership and the subsidiaries pursuant to which trust will agree to share the executives with operating partnership and the subsidiaries with respect to operating partnership trust will pay the expenses associated with the executives that are attributable to time spent by the executives working on behalf of operating partnership including salaries benefit plans and fringe_benefits in this regard trust intends to adopt a stock_option plan for these executives pursuant to operating partnership’s partnership_agreement the salaries and other costs related to the executives that are attributable to time spent by those executives in connection with the operation of operating partnership will be reimbursed by operating partnership the partnership_agreement provides that all such reimbursements are treated for federal_income_tax purposes as expenses of operating partnership incurred on its behalf and not as expenses of the general_partner moreover trust will also pay the expenses associated with the executives’ time spent working on behalf of the subsidiaries including salaries benefit plans and fringe_benefits each of the subsidiaries will agree to reimburse trust for its proportionate share of the expenses associated with the executives each of the subsidiaries will deduct as expenses its proportionate share of the expenses associated with the executives’ time spent working on behalf of the subsidiary pursuant to the reimbursement arrangements the amount of costs to be reimbursed will be determined on an arm’s length basis and will include a proportionate share of the costs reasonably related to the performance of services by the executives including a proportionate share of the executives’ salaries and benefit plans which includes the spread on any stock_options issued the proportionate share of costs will be determined on the basis of the relative amount of time such executives spend performing services for operating partnership or the respective subsidiaries as applicable trust represents that neither trust operating partnership nor the subsidiaries i is in the business of providing services of the type that will be covered by these reimbursement arrangements or ii will derive any profit from this reimbursement arrangement trust will not deduct any of the subsidiaries’ or operating partnership’s share of the reimbursed plr-119008-00 costs as expenses trust will treat the reimbursements as a repayment of a non-interest bearing advance to the extent that sec_7872 of the code applies to either the advances made by trust on behalf of operating partnership or to the advances made by trust on behalf of the subsidiaries trust will account for any amounts imputed on such advances in a manner that is consistent with the requirements of sec_7872 of the code in computing its real_estate_investment_trust_taxable_income law and analysis sec_856 of the code provides that at least percent of a reit’s gross_income must be derived from the categories of income listed in sec_856 through h sec_856 provides that at least percent of a reit’s gross_income must be derived from the categories of income listed in sec_856 through i sec_1_856-3 of the income_tax regulations provides that a reit that is a partner in a partnership will be deemed to own its proportionate share of each of the assets of the partnership and will be deemed to be entitled to the income of the partnership attributable to such share sec_1_856-2 provides that the term gross_income has the same meaning as that term has under sec_61 of the code and the regulations thereunder sec_61 of the code defines gross_income as all income from whatever source derived in revrul_84_138 1984_2_cb_123 a regulated_investment_company ric owned all of the stock of a subsidiary_corporation that was also a ric the parent and the subsidiary shared the same facilities and some of the same personnel pursuant to an agreement the parent ric paid all of the overhead expenses including personnel costs the subsidiary then would reimburse the parent for its pro_rata share of the expenses determined on an arms’ length basis neither the parent nor the subsidiary ric was in the business of providing services of the type that were reimbursed the issue considered in the revenue_ruling was whether reimbursements received by the parent were gross_income for purposes of the gross_income_test of sec_851 of the code if the reimbursements were considered gross_income to the parent the parent would not have satisfied the sec_851 gross_income_test the service held that the reimbursement payments paid_by the subsidiary to the parent represented funds advanced by the parent ric on behalf of the subsidiary accordingly the advanced funds were not includible in the parent ric’s gross_income and were therefore excluded from the application of sec_851 plr-119008-00 in a situation similar to that described in revrul_84_138 trust will incur overhead and personnel costs on behalf of operating partnership and the subsidiaries and operating partnership and the subsidiaries will reimburse trust for their pro_rata share of these expenses determined on an arm’s length basis furthermore neither trust operating partnership nor the subsidiaries is in the business of providing services of the type that will be covered by these reimbursement arrangements trust has represented that neither trust operating partnership nor the subsidiaries will profit from the reimbursement arrangement based on the holding in revrul_84_138 the reimbursement of expenses is a repayment of amounts advanced by trust and is not includible in gross_income accordingly we conclude that the proposed reimbursement payments to be made by operating partnership and the subsidiaries to trust will not constitute gross_income to trust for purposes of sec_856 of the code holding based upon the information submitted and representations made in the ruling_request we hold that amounts paid_by operating partnership and the subsidiaries to trust under the cost reimbursement arrangement described above will not constitute gross_income to trust for purposes of sec_856 except as specifically ruled upon above no opinion is expressed or implied regarding the consequences of this transaction under any other provision of the code in particular no opinion is expressed whether trust qualifies as a reit under sec_856 of the code this ruling is directed only to the taxpayer who requested it sec_6110 of the code provides that this ruling may not be used or cited as precedent in accordance with the provisions of a power_of_attorney currently on file we are sending a copy of this ruling letter to your authorized representative sincerely yours acting associate chief_counsel financial institutions and products by alice m bennett chief branch enclosures copy of this letter copy for sec_6110 purposes


internal_revenue_service index no number release date cc dom p si - plr-121916-98 date x ein a ssn date year dear this is in reply to your letter dated date submitted on behalf of x requesting a ruling under sec_1362 of the internal_revenue_code the information submitted states that x was incorporated on date a as x's president represents that it was the intent of x's shareholders as indicated by x’s corporate bylaws that x elect to be an s_corporation effective for year x's first taxable_year however a form_2553 election by a small_business_corporation was not timely filed for that year by x because of confusion among x x’s accountants and x’s attorneys as to who was responsible for preparing and filing the election x filed a form_1120s for year and x’s shareholders filed their individual returns consistent with x’s having made a timely s election for year sec_1362 of the code provides that if -- a an election under sec_1362 is made for any taxable_year after the date prescribed by sec_1362 for making such election for such taxable_year or no such election is made for any taxable_year and b the secretary determines that there was reasonable_cause for the failure to timely make such election the secretary may treat such an election as timely made for such taxable_year based solely on the facts and the representations submitted we conclude that x has established reasonable_cause for failing to make a timely election to be an s_corporation for x’s first taxable_year accordingly provided x makes an election to be an s_corporation by filing a completed form_2553 with the appropriate service_center effective for its year taxable_year within days following the date of this letter then such election will be treated as timely made for x’s year taxable_year a copy of this letter should be attached to the form_2553 except as specifically set forth above no opinion is expressed concerning the federal tax consequences of the facts described above under any other provision of the code including whether x was or is a small_business_corporation under sec_1361 of the code this ruling is directed only to the taxpayer who requested it sec_6110 of the code provides that it may not be used or cited as precedent pursuant to the power_of_attorney on file with this office a copy of this letter is being sent to x’s authorized representative sincerely yours j thomas hines senior technician reviewer branch office of the assistant chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 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 b1-plr-110176-02 date april legend t x state d1 a d2 d3 d4 this responds to the letter dated date submitted on behalf of t requesting relief under sec_1361 of the internal_revenue_code x is a corporation of the state which elected to be treated as a subchapter_s facts plr-110176-02 corporation effective d1 a created t a transferred stock to t on d2 the beneficiary of t intended to make a qualified_subchapter_s_trust qsst election effective d2 but failed to file the election timely as a result x’s s election was terminated as of d2 the beneficiary of t filed a late qsst election and the election was accepted by the irs subsequently the trustee of t made an electing_small_business_trust esbt election effective d3 the trustee of t now requests to revoke the esbt election and convert t to a qsst law and analysis sec_1361 defines an s_corporation with respect to any taxable_year as a small_business_corporation for which an s election under sec_1362 is in effect for such year sec_1361 provides that a small_business_corporation cannot have as a shareholder a person other than an estate a_trust described in sec_1361 or an organization described in sec_1361 who is not an individual sec_1361 provides that a_trust all of which is treated under subpart e of part i of subchapter_j of chapter as owned by an individual who is a citizen or resident_of_the_united_states may be a subchapter_s_corporation shareholder sec_1361 defines the term qualified_subchapter_s_trust as a_trust - a the terms of which require that i during the life of the current income_beneficiary there shall be only income_beneficiary of the trust ii any corpus distributed during the life of the current income_beneficiary may be distributed only to such beneficiary iii the income_interest of the current income_beneficiary in the trust shall terminate on the earlier of such beneficiary’s death or the termination of the trust and iv upon the termination of the trust during the life of the current beneficiary the trust shall distribute all its assets to such beneficiary and b all of the income within the meaning of sec_643 of which is distributed or required to be distributed currently to individual who is a citizen or resident_of_the_united_states plr-110176-02 sec_1361 states that a qsst whose beneficiary makes an election under sec_1361 will be treated as a_trust described in sec_1361 and the qsst’s beneficiary will be treated as the owner for purposes of sec_678 of that portion of the qsst’s s_corporation stock to which the election under sec_1362 applies under sec_1361 the beneficiary of a qsst may elect to have sec_1361 apply under sec_1361 this election will be effective up to days and two months before the date of the election sec_1362 provides that an election under sec_1362 shall be terminated whenever at any time on or after the first day of the taxable_year for which the corporation is an s_corporation the corporation ceases to be a small_business_corporation the termination is effective on and after the day of the cessation sec_1362 sec_1361 provides that an esbt may be a shareholder of an s_corporation for purposes of sec_1361 sec_1361 provides that for purposes of sec_1361 and except as provided in sec_1361 the term electing_small_business_trust means any trust if i the trust does not have as a beneficiary any person other than an individual an estate or an organization described in sec_170 or ii no interest in the trust was acquired by purchase and iii an election under sec_1361 applies to the trust sec_1361 provides that an election under sec_1361 shall be made by the trustee the election shall apply to the tax_year of the trust for which made and all subsequent tax years of the trust unless revoked with the consent of the secretary sec_3 of revproc_98_23 provides in pertinent part that a_trust that wishes to convert within months of a previous conversion must submit an application_for consent to revoke the qsst or esbt election to the service in the form of a letter_ruling request sec_1362 in relevant part provides that if an election under sec_1362 by any corporation was terminated under sec_1362 the secretary determines that the termination was inadvertent no later than a reasonable period of time after discovery of the event resulting in the termination steps were taken so that the corporation is once more a small_business_corporation and the corporation and each person who was a shareholder in the corporation at any time during the period specified pursuant to sec_1362 agrees to make any adjustments consistent with the treatment of the corporation as an s_corporation as may be required by the secretary with respect to such period then notwithstanding the terminating event the corporation shall be treated as continuing to be an s_corporation during the period specified by the secretary the committee reports accompanying the subchapter_s_revision_act_of_1982 explain sec_1362 as follows plr-110176-02 if the internal_revenue_service determines that a corporation’s subchapter_s_election is inadvertently terminated the service can waive the effect of the terminating event for any period if the corporation timely corrects the event and if the corporation and the shareholders agree to be treated as if the election had been in effect for such period the committee intends that the internal_revenue_service be reasonable in granting waivers so that corporations whose subchapter_s eligibility requirements have been inadvertently violated do not suffer the tax consequence of a termination if no tax_avoidance would result from the continued subchapter_s treatment in granting a waiver it is hoped that the taxpayers and the government will work out agreements that protect the revenues without undue_hardship to taxpayers it is expected that the waiver may be made retroactive for all years or retroactive for the period in which the corporation again became eligible for subchapter_s treatment depending on the facts s rep no 97th cong 2d sess 1982_2_cb_718 h_r rep no 97th cong 2d sess 1982_2_cb_730 conclusions based solely on the fact submitted and the representations made we conclude that x’s subchapter_s_election terminated on d2 when x’s stock was issued to t we also conclude that the termination constituted an inadvertent termination within the meaning of sec_1362 further we conclude that pursuant to sec_1362 x will be treated as continuing to be an s_corporation from d2 assuming x’s s_corporation_election is valid and not otherwise terminated under sec_1362 in addition we conclude that t’s esbt election effective d3 is revoked effective d4 t has until sixty days from the date of this letter to elect to treat t as a qsst effective d4 the election should be made with the appropriate service_center a copy of this letter should be attached to the election except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of the facts described above under any other provision of the code specifically no opinion is expressed concerning whether x is a valid s_corporation or whether t is a valid qsst or esbt this ruling is directed only to the taxpayer who requested it sec_6110 provides that it may not be used or cited as precedent plr-110176-02 in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representatives s david r haglund sincerely david r haglund senior technician reviewer branch associate chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 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-145999-02 date date legend x a state d1 dear this letter responds to a letter dated date and subsequent correspondence from your authorized representative on behalf of x requesting a ruling under sec_1362 of the internal_revenue_code facts x was incorporated under state law on d1 x's sole shareholder a decided that x would be an s_corporation a relied upon an attorney to file x's form_2553 election by a small_business_corporation with an effective date of d1 however the form_2553 was not filed timely x requests a ruling under sec_1362 that its sec_1362 election will be treated as timely made for its taxable_year that began on d1 plr-145999-02 law and analysis sec_1362 provides that a small_business_corporation may elect to be an s_corporation sec_1362 provides the rule on 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 the 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 the corporation will not be treated as an s_corporation until the taxable_year after the year in which the s election is made sec_1362 provides that if an election under sec_1362 is made for any taxable_year after the date prescribed by sec_1362 for making the election for the taxable_year or 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 the election then the secretary may treat the election as timely made for such taxable_year and sec_1362 shall not apply conclusion based on the facts submitted and representations made we conclude that x has established reasonable_cause for its failing to make a timely s election and that x is eligible for relief under sec_1362 accordingly if x makes an election to be an s_corporation by filing with the appropriate service_center a completed form_2553 containing an effective date of d1 for the election within days following the date of this letter then such election will be treated as timely made a copy of this letter should be attached to the form_2553 filed with the service_center a copy is enclosed for that purpose except as expressly provided herein we express or imply no opinion concerning the federal tax consequences of any aspect of any transaction or item discussed or referenced in this letter specifically we express or imply no opinion concerning whether x is an s_corporation for federal tax purposes pursuant to a power_of_attorney on file with this office we are sending a copy of this letter to x's authorized representative plr-145999-02 this ruling is directed only to the taxpayer who requested it sec_6110 of the code provides that it may not be used or cited as precedent sincerely s jeanne sullivan senior technician reviewer branch office of the associate chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes


internal_revenue_service number release date index number ----------------------- ------------- -------------------------------------------- ----------------------------------- -------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ----------------------------------------------------- telephone number --------------------- refer reply to cc tege eb ec plr-122815-06 date date legend corporation date x dear -------------- -------------------------------------------- ---------------------- this letter responds to your request dated date for a ruling on the federal_income_tax consequences under sec_83 of the internal_revenue_code of a cancellation of certain nonlapse restrictions the facts represented by corporation are as follows buy-sell_agreement with corporation and each other the agreement was amended effective on date x after corporation established an employee_stock_ownership_plan esop under sec_4975 and sec_401 all of corporation’s shareholders are employed by corporation and are party to a prior to the date x amendment the buy-sell_agreement prohibited the transfer of shares to anyone other than corporation without the consent of corporation’s shareholders the agreement further required corporation to purchase a shareholder’s stock at book_value and permitted corporation to pay for the stock in installments over a three year period with interest calculated at prime rate under the buy-sell_agreement as amended on date x corporation is required to purchase a shareholder’s stock at appraised value rather than book_value the amended agreement further provides that corporation is permitted to pay for the stock in installments over a year period if the shareholder becomes disabled dies or retires and over a year period if the shareholder terminates employment before age or divorces the amended agreement specifies that the interest rate on installment payments made by corporation to departing shareholders is the short-term applicable_federal_rate established from time to time pursuant to sec_1274 adjusted plr-122815-06 monthly the amended agreement further permits retiring shareholders to sell their shares to the esop other restrictions on stock transfers found in the original buy-sell_agreement remain in the amended agreement corporation represents that it has not taken and will not take any compensation deductions related to the date x amendment corporation further represents that no shareholder is required to perform additional services to receive appraised value for his or her shares under sec_83 if in_connection_with_the_performance_of_services property is transferred to any person other than the person for whom the services are performed the excess of the fair_market_value of the property determined without regard to any restriction other than a nonlapse_restriction at the first time the rights of the person having the beneficial_interest in the property are transferable or are not subject_to a substantial_risk_of_forfeiture whichever occurs earlier over the amount if any paid for the property shall be included in the gross_income of the person who performed the services in the first taxable_year in which the rights of the person having the beneficial_interest in the property are transferable or are not subject_to a substantial_risk_of_forfeiture whichever is applicable sec_83 provides that in the case of property subject_to a nonlapse_restriction which allows the transferee to sell the property only at a price determined under a formula the price so determined shall be deemed to be the fair_market_value of the property unless established to the contrary by the secretary under sec_83 if in the case of property subject_to a nonlapse_restriction the restriction is cancelled then unless the taxpayer establishes a that the cancellation was not compensatory and b that the person if any who would be allowed a deduction if the cancellation were treated as compensatory will treat the transaction as not compensatory the excess of the fair_market_value of the property computed without regard to the restriction at the time of the cancellation over the sum of c the fair_market_value of the property computed by taking the restriction into account immediately before the cancellation and d the amount if any paid for the cancellation shall be treated as compensation_for the taxable_year in which the cancellation occurs sec_1_83-5 of the income_tax regulations provides that the determination of whether there has been a noncompensatory cancellation of a nonlapse_restriction under sec_83 depends upon the particular facts and circumstances plr-122815-06 based on the facts represented by corporation we rule that i the changes to the buy-sell_agreement pursuant to the date x amendment do not represent a compensatory cancellation of a nonlapse stock restriction under code sec_83 and ii the sale by a retiring shareholder to the company or esop under the agreement as amended on date x would not be a compensatory cancellation of a nonlapse stock restriction under sec_83 except as specifically ruled on above no opinion is expressed as to the federal tax consequences of the transaction described above under any other provision of the code this ruling is directed only to the taxpayer who requested it sec_6110 of the code provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office copies of this letter are being sent to your authorized representatives sincerely william c schmidt senior counsel executive compensation branch office of the division counsel associate chief_counsel tax exempt government entities


department of the treasury internal_revenue_service washington d c date number info release date cc tege eoeg et1 - genin-149988-02 uilc memorandum for director internal_revenue_service center kansas city mo attn entity control from subject office of division counsel associate chief_counsel tax exempt and government entities cc tege eoeg et1 - genin-149988-02 railroad retirement act tax status in accordance with the coordination procedure established between the service and the railroad retirement board rrb the rrb has provided us with its opinion that the following business ceased to be an employer under the railroad retirement act and the railroad unemployment insurance act effective date we have reviewed the opinion of the rrb and based upon the information submitted to the rrb we also conclude that ceased to be an employer under the railroad_retirement_tax_act effective date please take the appropriate action regarding this business will e mcleod cc


internal_revenue_service number release date index number --------------------------------- ---------------------------------------------- ---------------------------------- ---------------------------------------------- ------------------------------------------------ department of the treasury washington dc third party communication none date of communication not applicable_person to contact -------------------- id no ------------- telephone number --------------------- refer reply to cc psi b2 plr-138430-09 date date legend x ------------------------------------------ ---------------------------------------------- country ----------- date --------------------------- dear -------------- this responds to a letter dated date and subsequent correspondence submitted on behalf of x requesting that the service grant x an extension of time under sec_301_9100-3 of the procedure and administration regulations to elect to be treated as a disregarded_entity under sec_301_7701-3 the facts submitted and representations made are summarized as follows x was formed on date under the laws of country x is a foreign_entity eligible to elect to be treated as a disregarded_entity effective date however x inadvertently failed to timely file a form_8832 entity classification election sec_301_7701-3 provides guidance on the classification of a foreign_entity for federal_income_tax purposes generally a foreign eligible_entity is treated as an association_taxable_as_a_corporation if all members have limited_liability unless the entity makes an election to be treated otherwise if the foreign eligible_entity has one owner it may elect to be treated as a disregarded_entity pursuant to the rules in sec_301_7701-3 plr-138430-09 sec_301_7701-3 provides that an entity classification election must be filed on form_8832 and can be effective up to seventy-five days prior to the date the form is filed or up to twelve months after the date on which the form is filed sec_301_9100-1 provides that the commissioner may grant a reasonable extension of time to make a regulatory election or a statutory election but no more than months except in the case of a taxpayer who is abroad under all subtitles of the internal_revenue_code except subtitles e g h and i sec_301_9100-1 defines the term regulatory election as an election whose due_date is prescribed by a regulation published in the federal_register or a revenue_ruling revenue_procedure notice or announcement published in the internal_revenue_bulletin sec_301_9100-1 through provide the standards the commissioner will use to determine whether to grant an extension of time to make the election sec_301_9100-2 provides the rules governing automatic extensions of time for making certain elections sec_301_9100-3 provides the standards the commissioner will use to determine whether to grant an extension of time for regulatory elections that do not meet the requirements of sec_301_9100-2 under sec_301_9100-3 a request for relief will be granted when the taxpayer provides evidence to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and granting relief will not prejudice the interests of the government based solely on the information submitted and the representations made we conclude that the requirements of sec_301_9100-3 have been satisfied as a result x is granted an extension of time of days from the date of this letter to file a form_8832 with the appropriate service_center to elect to be treated as a disregarded_entity for federal tax purposes effective date a copy of this letter should be attached to the form_8832 a copy is enclosed for that purpose except as specifically set forth above no opinion is expressed concerning the federal tax consequences of the facts described above under any other provision of the code this ruling is directed only to the taxpayer requesting it sec_6110 provides that it may not be used or cited as precedent plr-138430-09 pursuant to a power_of_attorney on file with this office copies of this letter are being sent to x’s authorized representative sincerely curt g wilson associate chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes