department of the treasury internal_revenue_service tege eo examinations mail stop dal commerce st dallas texas pak exempt and overnment entities division release number release date legend org organization name - ee addee sec_2 address _ date date oa taxpayer_identification_number person to contact employee identification_number employee telephone number org address last date to file a petition in tax_court april 20xx certified mail - return receipt dear this is a final adverse determination regarding your exempt status under sec_501 of the internal_revenue_code the code our favorable determination_letter to you dated july 20xx is hereby revoked and you are no longer exempt under sec_501 of the code effective january 20xx the revocation of your exempt status was made for the following reason s organizations described in sec_501 and exempt under sec_501 must be both organized and operated exclusively for exempt purposes you have failed to produce documents to establish that you are operated exclusively for exempt purposes and that no part of your net_earnings inures to the benefit of private shareholders or individuals you failed to respond to repeated reasonable requests to allow the internal_revenue_service to examine your records regarding your receipts expenditures or activities as required by sec_6001 sec_6033 and revrul_59_95 1959_1_cb_627 your organization has been inactive for several prior years and there have been no operations or financial activities conducted or planned as such you fail to meet the operational requirements for continued exemption under sec_501 contributions to your organization are no longer deductible under sec_170 after january 20xx you are required to file income_tax returns on form_1120 these returns should be filed with the appropriate service_center for the tax_year ending december 20xx and for all tax years thereafter in accordance with the instructions of the return processing of income_tax returns and assessments of any taxes due will not be delayed should a petition for declaratory_judgment be filed under sec_7428 of the internal_revenue_code if you decide to contest this determination under the declaratory_judgment provisions of sec_7428 of the code a petition to the united_states tax_court the united_states claims_court or the district_court of the united_states for the district of columbia must be filed before the ' day after the date this determination was mailed to you please contact the clerk of the appropriate court for rules regarding filing petitions for declaratory judgments by referring to the enclosed publication you may write to the united_states tax_court at the following address you also have the right to contact the office_of_the_taxpayer_advocate taxpayer_advocate assistance is not a substitute for established irs procedures such as the formal appeals process the taxpayer_advocate cannot reverse a legally correct_tax determination or extend the time fixed by law that you have to file a petition in a united_states court the taxpayer_advocate can however see that a tax matter that may not have been resolved through normal channels gets prompt and proper handling you may call toll-free and ask for taxpayer_advocate assistance if you prefer you may contact your local taxpayer_advocate at see the enclosed notice taxpayer_advocate_service - your voice at the irs for taxpayer_advocate telephone numbers and addresses you should contact your state officials if you have any questions about how this final_determination may affect your state responsibilities and requirements if you have any questions please contact the person whose name and telephone number are shown in the heading of this letter sincerely nanette m downing acting director eo examinations enclosures publication publication government entities division org address department of the treasury internal_revenue_service mail stop po box ogden ut date of this notice contact person id number contact telephone numbers toll free long distance fax employer_identification_number tax period s form s certified mail - return receipt requested dear we have enclosed a copy of our report of examination explaining why we believe revocation of your exempt status under sec_501 of the internal_revenue_code irc is necessary if you accept our findings take no further action we will issue a final revocation letter lf you do not agree with our proposed revocation you must submit to us a written request for appeals_office consideration within days from the date of this letter to protest our decision your protest should include a statement of the facts the applicable law and arguments in support of your position an appeals officer will review your case the appeals_office is independent of the director eo examinations the appeals_office resolves most disputes informally and promptly the enclosed publication the examination process and publication exempt_organizations appeal procedures for unagreed issues explain how to appeal an internal_revenue_service irs decision publication also includes information on your rights as a taxpayer and the irs collection process you may also request that we refer this matter for technical_advice as explained in if we issue a determination_letter to you based on technical_advice no publication further administrative appeal is available to you within the irs regarding the issue that was the subject of the technical_advice letter catalog number 34809zf if we do not hear from you within days from the date of this letter we will process your case based on the recommendations shown in the report of examination if you do not protest this proposed determination within days from the date of this letter the irs will consider it to be a failure to exhaust your available administrative remedies sec_7428 of the irc provides in part a declaratory_judgment or decree under this section shall not be issued in any proceeding unless the tax_court the claims_court or the district_court of the united_states for the district of columbia determines that the organization involved has exhausted its administrative remedies within the internal_revenue_service we will then issue a final revocation letter we will also notify the appropriate state officials of the revocation in accordance with sec_6104 of the irc you have the right to contact the office_of_the_taxpayer_advocate taxpayer_advocate assistance is not a substitute for established irs procedures such as the formal appeals process the taxpayer_advocate cannot reverse a legally correct_tax determination or extend the time fixed by law that you have to file a petition in a united_states court the taxpayer_advocate can however see that a tax matter that may not have been resolved through normal channels gets prompt and proper handling you may call toll free and ask for taxpayer_advocate assistance if you prefer you may contact your local taxpayer_advocate at if you have any questions please call the contact person at the telephone number shown in the heading of this letter the most convenient time to call if we need to contact you if you write please provide a telephone number and telephone number hours sincerely soda lougt - sunita lough director eo examinations enclosures publication publication _ form 886a report of examination letter catalog number 34809zf form 886-a rev date schedule number or exhibit explanations of items name of taxpayer org tax identification_number year period ended december 20xx legend org organization name directors issue xxx date state state dir-1l dir-2 whether org qualifies for exemption under sec_501 of the internal_revenue_code facts org has never filed form_990 since receiving their exempt status in july of 20xx according to the organizations website it was established for the purpose of providing a safe stable and loving community for the unsettled children dependent on the state of state the mission will be accomplished by meeting their physical emotional and spiritual needs in a comfortable atmosphere their intent is to transform the lives of the children and their families by equipping them with the skills a knowledge they need to succeed and function as a family the ultimate goal of org is to reunite these enriched children with their parents in dependable environment the state department of state division of corporations records indicate the organizations status as inactive with the officers being dir-1 and dir-2 exhibit a provides a list of the internal_revenue_service correspondence or phone contact to xempt organization eo or power_of_attorney poa requesting that exempt_organization tile the form_990 for the tax period ending december 20xx summary of exhibit a contact type correspondence sent phone contact date sent or called certified mail y n receipt signed date or phone response eo advised returns would be filed letter letter address city state address city state xx xx n n phone xx address city state letter letter no answer the phone just rang no voice mail y on -22-xx signed by dir-2 also had another address of not delivered address city state xx address city state address city state o1-14- xx letter not j y y y form 886-a rev department of the treasury - internal_revenue_service page -1- form 886-a rev schedule number or exhibit date explanations of items name of taxpayer org december 20xx tax identification_number year period ended letter address city state delivered y dated 02-21-xx y xx xx y dated 04-15-xx signed by dir-2 eoca letter for draft address city state xx y y dated 04-10-xx signed by dir-2 address city state y xx eoca letter for dratt org has failed to respond to the internal_revenue_service correspondence or file the forms for the tax period ending december 20xx law c dollar_figure c organized and operates exclusively for religious charitable scientific testing for public safety literary or educational_purposes and to foster national and amatuer sports competition dollar_figurereg c -1 a in order to be exempt under sec_501 the organization must be both organized and operated exclusively for one or more of the purposes specified in the section religious charitable scientific testing for public safety literary or educational sec_6001 provides that every person liable for any_tax imposed by the irc or for the collection thereof shall keep adequate_records as the secretary_of_the_treasury or_his_delegate may from time to time prescribe sec_1_6001-1 in conjunction with sec_1_6001-1 provides that every organization exempt from tax under sec_501 and subject_to the tax imposed by sec_511 on its unrelated_business_income must keep such permanent books or accounts or records including inventories as are sufficient to establish the amount of gross_income deduction credits or other matters required to be shown by such person in any return of such tax such organization shall also keep such books_and_records as are required to substantiate the information required by sec_6033 sec_1_6001-1 states that the books_or_records required by this section shall be kept at all times available for inspection by authorized internal revenue officers or employees and shall be retained as long as the contents thereof may be material in the administration of any internal revenue law sec_6033 provides except as provided in sec_6033 every organization exempt from tax under sec_501 shall file an annual return stating specifically the items of gross form 886-acrev department of the treasury - internal_revenue_service page -2- form rev titiairy poo name of taxpayer org schedule number or exhibit explanations of items tax identification_number year period ended december 20xx income receipts and disbursements and such other information for the purposes of carrying out the internal revenue laws as the secretary may by forms or regulations prescribe and keep such records render under oath such statements make such other returns and comply with such rules and regulations as the secretary may from time to time prescribe sec_1_6033-1 provides that every organization which has established its right to exemption from tax whether or not it is required to file an annual return of information shall submit such additional information as may be required by the district_director for the purpose of enabling him to inquire further into its exempt status and to administer the provisions of subchapter_f sec_501 and the following chapter of the code and sec_6033 revrul_59_95 1959_1_cb_627 concerns an exempt_organization that was requested to produce a financial statement and statement of its operations for a certain year however its records were so incomplete that the organization was unable to furnish such statements the service held that the failure or inability to file the required information_return or otherwise to comply with the provisions of sec_6033 and the regulations which implement it may result in the termination of the exempt status of an organization previously held exempt on the grounds that the organization has not established that it is observing the conditions required for the continuation of exempt status government’s position n accordance with the above cited provisions of the code and regulations under sec_6001 and sec_6033 organizations recognized as exempt from federal_income_tax must meet certain reporting requirements these requirements relate to the filing of a complete and accurate annual information and other required federal tax forms and the retention of records sufficient to determine whether such entity is operated for the purposes for which it was yranted tax-exempt status and to determine its liability for any unrelated_business_income_tax several attempts have been made to contact the organization in order to advise them of their delinquency in filing federal tax forms since the organization has not met the requirements to file federal returns they are not following the requirements for exempt status and fail to continues to qualify for tax exempt status organization’s position several attempts to contact the organizations have been made by either letters or phone calls the correspondence was mailed certified the certified receipts were signed by the dir-2 and dir-2 indicating they did receive the letters according to the state of state they are officers of the organization the signed certified receipt indicating they did receive the letters but they have not responded form 886-a rev department of the treasury - internal_revenue_service page -3- schedule number or exhibit tax identification_number year period ended explanations of items form 886-a rev date name of taxpayer org december 20xx due to the lack of response the organization’s position is unknown conclusion it is the irs's position that the organization failed to meet the reporting requirements under sec_6001 and sec_6033 to be recognized as exempt from federal_income_tax under sec_501 furthermore the organization has failed to establish that it continues to qualify for tax exempt status accordingly the organization's exempt status is revoked effective january 20xx form s u s_corporation income_tax return should be filed for the tax periods ending on or after december 20xx form 886-a rev department of the treasury - internal_revenue_service page -4-


internal_revenue_service p o box cincinnati oh number release date date date legend x dollar amount y dollar amount dear department of the treasury employer_identification_number contact person -id number contact telephone number uil you asked for advance approval of your scholarship grant procedures under sec_4945 this approval is required because you are a private_foundation that is exempt from federal_income_tax you requested approval of your scholarship program to fund the education of certain qualifying students our determination we approved your procedures for awarding scholarships based on the information you submitted and assuming you will conduct your program as proposed we determined that your procedures for awarding scholarships meet the requirements of code sec_4945 as a result expenditures you make under these procedures won't be taxable also awards made under these procedures are scholarship or fellowship grants and are not taxable to the recipients if they use them for qualified_tuition_and_related_expenses subject_to the limitations provide in code sec_117 description of your request among your exempt purposes is the awarding of scholarship grants for college education to individuals you wish to provide this educational opportunity to individuals for whom a college degree might be otherwise unattainable scholarships will be awarded for study at accredited colleges junior colleges universities other qualified educational institutions or trade schools and will generally be in the form of gifts as opposed to loans it is anticipated that the scholarships may range letter catalog number 58263t from dollar_figurex to dollar_figurey per student annually depending on the demonstrated need you will publicize the availability of your scholarships through local newspapers magazines and the internet recipients of scholarships will be selected from qualified applicants on an objective and non-discriminatory basis without regard to race color sex age religion or ethnic or national origin to be a qualified applicant for a scholarship under these procedures a student must meet the following standards a be a graduate or about to graduate from high school or its equivalent or be a student at an accredited college junior college university or other educational_institution as defined in paragraph c below or an individual pursuing aged in preparation for college b submit a confidential scholarship application c be enrolled or about to enroll in an educational_institution as defined in sec_170 b a ii which normally maintains a regular faculty and curriculum and normally has a regular organized body of students in attendance at the place where its educational activities are carried on this will include a college university trade_or_business school and a graduate post-graduate or professional school d meet one or more of the following criteria sufficient academic ability demonstrated by prior academic performance or performance on tests designed to measure aptitude to enable him or her to complete courses of study necessary to graduate from the educational_institution selected by him or her and which will admit him or her as a student character and motivation to obtain an education that he or she may be expected to work hard and seriously to continue and complete his or her education or need for financial assistance to enable him or her to complete his or her course of studies and can demonstrate such fact by information submitted with the application determinations of financial need will be based upon all pertinent factors with respect to the student's ability to complete his or her higher education or ged without assistance determinations with respect to academic ability and character will be based upon such facts which are deemed pertinent by the board_of directors and may include transcripts of any applicant and recommendations of an applicant's high school or college adviser grantees are to be selected on an objective and nondiscriminatory basis generally all potential grantees shall be individuals who satisfy the criteria for the award of the grants however you reserve the right to impose additional minor reasonable restrictions and or requirements upon the selection of grantees and or the administration of the grant any substantial or material changes will be made only with prior irs approval a selection committee appointed by your board_of directors will select the grantees each committee member is obligated to disclose any personal knowledge of and letter catalog number 58263t relationship with any potential grantee under consideration and to refrain from participation in the award process in a circumstance where he or she would derive directly or indirectly a private benefit if any potential grantee or grantees are selected over others no scholarship may be awarded to any member of your board_of directors or selection committee officers creators members of the families of the foregoing individuals or any other disqualified_person as defined in sec_4946 with respect to you or for a purpose that is inconsistent with the purposes described in sec_170 potential applicants should submit a scholarship application form this form should reflect the specific criteria or information you need as well as the factors listed above as the criteria to be considered in selecting grantees the scholarship grant will be paid_by you at the discretion of your board_of directors directly to the educational_institution for the scholarship recipient's use each educational_institution must agree in writing to use the grant funds to defray the scholarship recipient's expenses or to pay the funds or a portion thereof to the recipient only if the recipient is enrolled at such educational_institution and his or her standing at such educational_institution is consistent with the purposes and conditions of the grant you will receive a progress report of each student grantee at least once each year this report must include a summary of the use of the funds awarded the grantee's courses taken if any and grades received if any in each academic period this report must be verified by the educational_institution a final report is also required a condition of each scholarship grant is that the scholarship grant will be used only for qualified_tuition_and_related_expenses within the meaning of the sec_117 including room and board while enrolled as a full time student accordingly the scholarship grant can only be used for tuition and fees required for the enrollment or attendance of the student at a qualifying institution fees books supplies and equipment required for courses of instruction at such educational_institution and room and board an additional condition is that no part of the scholarship grant can be used as payment for teaching research or other services by the scholarship recipient required as a condition for receiving the scholarship where the reports submitted or other information including the failure to submit reports indicate that all or any part of a scholarship grant is not being used to further the purposes of such grant you are under a duty to investigate while conducting your investigation you will withhold further payments to the extent possible until any delinquent reports required under the foregoing provisions of these procedures have been submitted letter catalog number 58263t if you learn that all or any part of a grant is not being used to further the purposes of the grant you will take all reasonable and appropriate steps to recover the grant funds and or ensure restoration of the diverted funds to the purposes of the grant if such a diversion occurs and the grantee has not previously diverted grant funds to any use that does not further the purposes of the grant you will withhold any further payments to the grantee until it has received acceptable assurances that future diversions will not occur and will require the grantee to take extraordinary precautions to prevent future diversions from occurring where a grantee has previously received funds from you and you determine that any part of a grant has again been used for improper purposes you will take all reasonable and appropriate steps to recover the grant funds and or ensure the restoration of the diverted funds to the purposes of the grant in such case you will withhold further payments until the diverted funds are in fact recovered or restored you have received assurances that future diversions will not occur and you require the grantee to take extraordinary precautions to prevent future diversions from occurring the phrase all reasonable and appropriate steps as used above includes legal action where appropriate but need not include legal action if such action would in all probability not result in the satisfaction of execution on a judgment you shall retain complete records in connection with all grants awarded these records shall include all information obtained by you to evaluate the qualifications of potential grantees the identification of grantees including any relationship of any grantee to you or to your directors or officers the purpose and amount of each grant the terms of payment of each grant and any additional information you secured as part of the grant administration process 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 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 the provisions of code sec_117 the grant is to be used for study at an educational_organization described in code sec_170 a ii letter catalog number 58263t other conditions that apply to this determination this determination only covers 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 a precedent you cannot rely on the conclusions in this letter if the facts you provided have changed substantially you must report any significant changes to your program to the cincinnati office of exempt_organizations at internal_revenue_service exempt_organizations determinations p o box cincinnati oh you cannot award 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 further the purposes of your organization you cannot award grants for a purpose that is inconsistent with code sec_170 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 questions please contact the person listed at the top of this letter sincerely director exempt_organizations letter catalog number 58263t


internal_revenue_service number release date index number ------------------- ---------------------- ---------------------------------------- ----------------------------------------------- in re department of the treasury washington dc third party communication none date of communication not applicable_person to contact --------------------- id no ------------- telephone number -------------------- refer reply to cc intl b01 plr-148068-06 date date -------------------- ------------------------------------------------- ----------------------------------- legend taxpayer fund trust lp lp corp corp corp country a country a act country a entities ------------------------------- stock exchange jurisdiction jurisdiction business ----------------------- ssn ----------------- -------------------------------------- ------------------------------ -------------------------------- ----------------------------------------------- --------------------------------------------------- ------------------------------------------------------- ------------------------------------ --------------- --------------------------------------- --------------------------------- ------------------------------------------ --------------------------------------------- ------------------------------------------------------------------------------------------ -------------------------------------- -------------------------------------------- ------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------- ------------------------------------------------------------------------- --------------- -------------------------- ----------------------- -------------------------- trust document treaty units amount date date date plr-148068-06 dear ------------- this is in response to a letter dated date requesting rulings concerning sec_1 of the internal_revenue_code 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 facts taxpayer is a resident_alien for u s federal_income_tax purposes who holds units of the fund the fund’s units are traded in country a on the stock exchange each unit represents an equal undivided beneficial_interest in the fund and any distributions from the fund each unit is transferable and entitles the holder to an equal participation in distributions of the fund rights of redemption and one vote at all meetings of unit holders the fund is an unincorporated open-ended limited purpose_trust established under the laws of jurisdiction the fund was created for investment purposes taxpayer represents that the fund qualifies as a mutual_fund trust for purposes of the country a act in order for the fund to maintain its status as a mutual_fund trust under the country a act the fund must not be established or maintained primarily for the benefit of nonresidents of country a thus the trust document provides that nonresidents of country a can never be the beneficial owners of more than of the units taxpayer represents that the fund is treated as a resident of country a for country a tax purposes and that the fund is subject_to country a tax on its worldwide income including net realized taxable capital_gains less a deduction for the amounts paid or payable in the year to the unit holders the fund has trustees who supervise the activities and manage the investments and affairs of the fund the trustees have full absolute and exclusive power over fund assets and the affairs of the fund the unit holders have limited_liability in connection with operation of the fund the fund owns of the interests in trust established under the laws of jurisdiction trust owns units in lp a limited_partnership existing under the laws of jurisdiction lp owns units in lp a limited_partnership existing under the laws of jurisdiction lp2 owns all of the shares of corp a country a corporation which holds all of the shares of each of corp and corp both country a corporations as of date trust also held accounts_receivable of approximately amount together lp1 and lp2 carry plr-148068-06 on the business corp and corp provide insurance coverage to business customers the fund’s directly and indirectly held assets are all located outside the united_states the business is carried on only in country a_trust document provides that the fund is restricted to acquiring investing in transferring disposing of and otherwise dealing with securities of trust and other corporations partnerships trusts or other persons engaged directly or indirectly in and assets used in connection with the business as well as activities ancillary or incidental thereto and such other investments as the trust may determine in addition the fund may acquire invest in transfer dispose_of and otherwise deal with securities of trust lp1 lp2 corp corp corp or any of their respective subsidiaries also the fund can issue units and other_securities of the fund including convertible securities and warrants to obtain funds to conduct the activities of the fund including raising funds for acquisitions and development the fund can issue debt securities and must satisfy the liabilities obligations or debts of the fund the fund can dispose_of all or any part of the assets of the fund taxpayer represents that the fund is not a passive_foreign_investment_company as defined in sec_1297 on date the fund filed a form_8832 entity classification election indicating that it was a foreign eligible_entity electing to be classified as an association_taxable_as_a_corporation for u s income_tax purposes the election was effective as of date rulings requested is the fund is a foreign_corporation for purposes of sec_1 is the fund a qualified_foreign_corporation for purposes of sec_1 ruling under sec_1 certain dividends_paid by a qualified_foreign_corporation to u s individuals are qualified_dividend_income taxed at the capital_gains rates see sec_1 and b i subject_to certain exceptions the term qualified_foreign_corporation includes any foreign_corporation that is eligible for benefits of a comprehensive_income_tax_treaty with the united_states which the secretary determines is satisfactory for purposes of this paragraph and which includes an exchange of information program see sec_1 plr-148068-06 sec_7701 provides that the term corporation includes associations joint-stock companies and insurance_companies sec_301_7701-1 provides that the internal_revenue_code prescribes the classification of various organizations for federal_income_tax purposes sec_301_7701-1 states that a joint_venture or other contractual arrangement may create a separate_entity for federal_income_tax purposes if the participants carry on a trade business financial operation or venture and divide the profits therefrom sec_301_7701-4 provides that in general the term trust refers to an arrangement created either by will or by an inter_vivos declaration whereby trustees take title to property for the purpose of protecting or conserving it for the beneficiaries under the ordinary rules applied in chancery or probate courts usually the beneficiaries of such a_trust do no more than accept the benefits thereof and are not the voluntary planners or creators of the trust arrangement however the beneficiaries of such a_trust may be the persons who create it and it will be recognized as a_trust under the code if it was created for the purpose of protecting or conserving the trust property for beneficiaries who stand in the same relation to the trust as they would if the trust had been created by others for them generally speaking an arrangement will be treated as a_trust under the code if it can be shown that the purpose of the arrangement is to vest in trustees responsibility for the protection and conservation of property for beneficiaries who cannot share in the discharge of this responsibility and therefore are not associates in a joint enterprise for the conduct of business for profit sec_301_7701-4 provides that there are other arrangements which are known as trusts because the legal_title to property is conveyed to trustees for the benefit of beneficiaries but which are not classified as trusts for purposes of the internal_revenue_code because they are not simply arrangements to protect or conserve the property for the beneficiaries these trusts which are often known as business or commercial trusts generally are created by the beneficiaries simply as a device to carry on a profit-making business which normally would have been carried on through business organizations that are classified as corporations or partnerships under the code however the fact the corpus of the trust is not supplied by the beneficiaries is not sufficient reason in itself for classifying the arrangement as an ordinary_trust rather than as an association or partnership the fact that any organization is technically cast in the trust form by conveying title to property to trustees for the benefit of persons designated as beneficiaries will not change the real character of the organization if the organization is more properly classified as a business_entity under sec_301_7701-2 sec_301_7701-4 provides that an investment_trust will not be classified as a_trust if there is a power under the trust agreement to vary the investment of the plr-148068-06 certificate holders an investment_trust with a single class of ownership interests representing undivided beneficial interests in the assets of the trust will be classified as a_trust if there is no power under the trust agreement to vary the investment of the certificate holders an investment_trust with multiple classes of ownership interests ordinarily will be classified as a business_entity under sec_301_7701-2 however an investment_trust with multiple classes of ownership interests in which there is no power under the trust agreement to vary the investment of the certificate holders will be classified as a_trust if the trust is formed to facilitate direct investment in the assets of the trust and the existence of multiple classes of ownership interests is incidental to that purpose in 122_f2d_545 2nd cir cert_denied 314_us_701 the court stated that a power to vary the investment of the certificate holders exists if there is managerial power under the trust instrument that enables a_trust to take advantage of market variations to improve the investment of the investors the court further held that a power to acquire new bonds upon the admission of new investors where existing investors would acquire a pro_rata interest in the new bonds was a power to vary the investment of the existing investors because the power allowed the trustee to take advantage of market variations in a manner that could improve the investment of the original investors revrul_78_149 1978_1_cb_448 concludes that a right to replace bonds called by the issuer prior to maturity with other similar bonds is a power to vary in revrul_75_192 1975_1_cb_384 a trustee received principal and interest payments on a pool of mortgages during the period between quarterly distribution dates the trustee invested cash on hand in short-term obligations of or guaranteed by the united_states or any agency_or_instrumentality thereof and in certificates of deposit of any bank or trust company having a minimum stated surplus and capital the trustee was permitted to invest only in obligations maturing prior to the next distribution date and was required to hold the obligations until maturity the trustee had no authority under the trust agreement to purchase new securities or mortgages or to make any other new investments in that case the revenue_ruling concluded that there was no power to vary in revrul_86_92 1986_2_cb_214 a_trust held tax-exempt_bonds and contracts to purchase tax-exempt_bonds the contracts provided that the bonds must be transferred to the trust within days of the trust’s creation if a bond was not transferred for reasons beyond the control of the trustee or the trust’s sponsor the sponsor had days within which to transfer different bonds of substantially the same character and quality the revenue_ruling concluded that neither the trustee nor the sponsor had a power to take advantage of market variations to improve the investment of certificate holders and that the powers are incidental to the organization of the trust plr-148068-06 in revrul_90_63 1990_2_cb_270 the trustee of an investment_trust had a power to consent to changes in the credit support of debt obligations held by the trust the power was exercisable only to the extent the trustee reasonably believed the change was advisable to maintain the value of trust property by preserving the credit rating of the obligations the revenue_ruling concluded that although it was possible for the change in credit support to result in an increase in the value of the trust property the increase would be incidental to maintaining the value of the trust property thus the trustee’s limited power under the circumstances did not constitute a power to vary revrul_75_192 1975_1_cb_384 concluded that temporary investments will not constitute a power to vary if the purpose is to prevent funds from being non-productive and not to take advantage of market fluctuations sec_301_7701-2 provides that for federal_income_tax purposes the term corporation includes an association as determined under sec_301_7701-3 see also g_c_m sec_301_7701-2 provides that for purposes of that section and sec_301_7701-3 a business_entity is any entity recognized for federal tax purposes including an entity with a single owner that may be disregarded as an entity separate from its owner under sec_301_7701-3 that is not properly classified as a_trust under sec_301_7701-4 or otherwise subject_to special treatment under the code a business_entity with two or more members is classified for federal tax purposes as either a corporation or a partnership a business_entity with only one owner is classified as a corporation or is disregarded if the entity is disregarded its activities are treated in the same manner as a sole_proprietorship branch or division of the owner sec_301_7701-3 provides that a business_entity that is not classified as a corporation under sec_301_7701-2 or an eligible_entity can elect its classification for federal_income_tax purposes as provided in that section an eligible_entity with at least two members can elect to be classified as either an association or a partnership sec_301_7701-5 provides that a business_entity including an entity that is disregarded as separate from its owner is foreign if it is not domestic a business_entity is domestic if it is created or organized as any type of entity including but not limited to a corporation unincorporated association general_partnership limited_partnership and limited_liability corporation in the united_states or under the law of the united_states or of any state in this case the fund carries on a business for profit through its investments and the unit holders divide the profits therefrom the property of the fund and the affairs of the fund are conducted and transacted in the name of the fund in addition the unit plr-148068-06 holders are not subject_to any liability in connection with the fund therefore the fund is an entity separate from its owners for federal tax purposes under sec_301_7701-1 the fund is not a_trust under sec_301_7701-4 because it is not simply an arrangement to protect or conserve property for the beneficiaries the fund is a device to carry on a profit-making business in addition the trust document gives the fund’s trustees broad power to acquire invest in transfer dispose_of and otherwise deal with the securities of trust and other corporations partnerships trusts or other persons engaged directly or indirectly in and assets used in connection with the business as well as activities ancillary or incidental thereto and such other investments as the fund’s trustees may determine the power accorded under trust document is the managerial power to vary the investments of the fund to take advantage of market variations to improve the investment of the unit holders the fund has the power to vary its investments and should not be classified as an investment_trust under the entity classification regulations therefore because the fund is not properly classified as a_trust under sec_301_7701-4 and is not otherwise subject_to special treatment under the code the fund is a business_entity for purposes of sec_301 and because the fund is a business_entity that is not classified as a corporation under sec_301_7701-2 or it is an eligible_entity as an eligible_entity the fund can elect its classification for federal tax purposes under sec_301_7701-3 because the fund was not created or organized as any type of entity in or under the law of the united_states or any state it is treated as a foreign_business_entity under sec_301_7701-5 on date the fund filed a form_8832 entity classification election indicating that is was a foreign eligible_entity electing to be classified as an association_taxable_as_a_corporation for u s income_tax purposes the election was intended to be effective as of date accordingly based solely on the information submitted and the representations made we conclude that the fund can elect its classification for federal_income_tax purposes under sec_301_7701-3 and because it properly filed the appropriate form to elect to be treated as a foreign_corporation for federal_income_tax purposes as of date the fund will be treated as a foreign_corporation for purposes of sec_1 as of such date ruling sec_1 provides in relevant part c qualified foreign_corporations plr-148068-06 i in general except as otherwise provided in this paragraph the term qualified_foreign_corporation means any foreign_corporation if- ii such corporation is eligible for benefits of a comprehensive_income_tax_treaty with the united_states which the secretary determines is satisfactory for purposes of this paragraph and which includes an exchange of information program notice_2006_101 2006_47_irb_930 provides that the u s income_tax treaty with country a meets the requirements of sec_1 notice_2006_101 also provides that a foreign_corporation is eligible for benefits of a u s income_tax treaty listed in such notice if the foreign_corporation is a resident within the meaning of such term under the relevant treaty and it satisfies any other requirements of that treaty including the requirements under any applicable limitation_on_benefits provision article ------ residence of the treaty defines the term resident of a contracting state for purposes of the application of the treaty by the united_states article ---------- limitation_on_benefits of the treaty limits the benefits under the treaty to residents of country a that are qualifying persons taxpayer represents that the fund is not a pfic as defined in sec_1297 of the code we concluded above that to determine whether the fund will be treated as a corporation for purposes of sec_1 we look to whether the fund is properly treated as a corporation for u s tax purposes rather than for foreign tax purposes this conclusion is not determinative however of whether the fund is eligible for comprehensive benefits under the treaty whether the fund is a qualified_foreign_corporation within the meaning of sec_1 depends on whether the fund is a resident of country a within the meaning of article ------ residence of the treaty and a qualifying person within the meaning of article ---------- limitation_on_benefits of the treaty the residence and limitation_on_benefits articles of the treaty are applied to the fund a country a entity without regard to the fund’s entity classification for u s tax purposes accordingly based solely on the information submitted and the representations made the fund may be treated as a qualified_foreign_corporation for purposes of sec_1 provided that for the relevant period it is a resident of country a within the meaning of article ------ and it is a qualifying person within the meaning of article ---------- of the treaty except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter in particular no opinion is expressed as to whether the fund is a resident of plr-148068-06 country a for purposes of the treaty or as to whether the fund satisfies the requirements of the limitation_on_benefits article of the treaty no opinion is expressed about the tax treatment of the fund under other provisions of the code and regulations or about the tax treatment of any conditions existing at the time of or effects resulting from any dividend distribution that are not specifically covered by the above rulings this ruling is directed only to the taxpayer requesting it sec_6110 of the code provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to the taxpayer a copy of this letter must be attached to any income_tax return to which it is relevant alternatively taxpayers filing their returns electronically may satisfy this requirement by attaching a statement to their return that provides the date and control number of the letter_ruling sincerely edward r barret assistant to the branch chief branch office of associate chief_counsel international cc


department of the treasury internal_revenue_service washington d c date number info release date cc tege eoeg et1 - genin-135111-03 uilc memorandum for director internal_revenue_service center cincinnati oh attn technical unit from subject office of division counsel associate chief_counsel tax exempt and government entities cc tege eoeg et1 - genin-135111-03 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 became 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 became 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 ------------------------------------ ---------------- ---------------- telephone number -------------------- refer reply to cc psi b01 plr-130294-15 date date legend x --------------------------------- ------------------------------------------------------------- state date date -------------------- ------------------ ---------------------- dear ---------------- this responds to a letter dated date and subsequent correspondence submitted on behalf of x requesting relief under sec_1362 of the internal_revenue_code according to the information submitted x was incorporated on date under the laws of state x intended to be treated as an s_corporation for federal tax purposes effective date but the proper election was not timely filed facts sec_1362 provides that a small_business_corporation may elect to be an s law and analysis corporation sec_1362 provides the rule on when an s election will be effective sec_1362 provides that if an s election is made within the first two and one-half months plr-130294-15 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 if the 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 no election is made pursuant to sec_1362 or if made the election is made after the date prescribed for making such an election and the secretary determines there was reasonable_cause for the failure to timely make the election then the secretary may treat such election as timely made for such taxable_year and effective as of the first day of that year x did not file a timely election to be treated as an s_corporation under sec_1362 effective date x has however established reasonable_cause for not making a timely election and is entitled to relief under sec_1362 based solely on the facts submitted and representations made and provided that x otherwise qualifies as a subchapter_s_corporation we conclude that x will be recognized as an s_corporation effective date conclusion this ruling is contingent upon x within days from the date of this letter submitting a properly completed form_2553 election by a small_business_corporation a copy of this letter should be attached to form_2553 x must also file any necessary original or amended returns consistent with the relief granted within days of the date of this letter except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter specifically no opinion is expressed or implied concerning whether x otherwise qualifies as an s_corporation for federal tax purposes this ruling is directed only to the taxpayer requesting it sec_6110 provides that it may not be used or cited as precedent in accordance with the power of plr-130294-15 attorney on file with this office a copy of this letter is being sent to the taxpayer's authorized representative sincerely laura c fields laura c fields senior technician reviewer branch office of the chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes cc


internal_revenue_service number release date index number -------------------------------- --------------------------- ---------------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ----------------------- id no ------------- telephone number --------------------- refer reply to cc psi b1 plr-152806-08 date date legend taxpayers -------------------------------------------------------------- ----------------------------------------------------- -------------------------------------------------------------- --------------------- year ------- dear -------------- this responds to a letter dated date submitted by your authorized representative on your behalf requesting a ruling that you be granted an extension of time under sec_301_9100-3 of the procedure and administration regulations to file an election under sec_469 of the internal_revenue_code and sec_1_469-9 of the income_tax regulations to treat all interests in rental real_estate as a single rental real_estate activity facts according to the information submitted taxpayers are married individuals who filed their tax returns jointly taxpayers represent that in year they were in a real_property business as defined by sec_469 and were qualified under sec_469 to make an election to treat all interests in rental real_estate as a single rental real_estate activity however taxpayers filed their joint_return for year without the statement required under sec_1_469-9 plr-152806-08 law and analysis under sec_469 the term passive_activity generally includes any rental_activity sec_469 provides a limited exception to this rule for taxpayers in a real_property business specifically sec_469 indicates that if a taxpayer meets the requirements of sec_469 the taxpayer's rental real_estate activity will no longer be presumptively passive by its terms the exception under sec_469 is to be applied as if each interest of the taxpayer in rental real_estate were a separate activity however a taxpayer may elect to treat all interests in rental real_estate as a single activity sec_1_469-9 provides that a qualifying taxpayer makes the election to treat all interests in rental real_estate as a single rental real_estate activity by filing a statement with the taxpayer's original income_tax return for the taxable_year sec_1_469-9 describes the information that must be contained in the statement under sec_301_9100-1 the commissioner may grant a reasonable extension of time to make a regulatory election or a statutory election but no more than six months except in the case of a taxpayer who is abroad under all subtitles of the code except subtitles e g h and i sec_301_9100-1 defines the term regulatory election as including an election whose deadline is prescribed by a regulation published in the internal_revenue_bulletin sec_301_9100-1 through provide the standards that the commissioner will use to determine whether to grant an extension of time to make an election sec_301_9100-2 provides automatic extensions of time for making certain elections sec_301_9100-3 provides extensions of time for making elections that do not meet the requirements of sec_301_9100-2 sec_301_9100-3 provides that requests for relief under sec_301_9100-3 will be granted when the taxpayer provides evidence to establish that the taxpayer acted reasonably and in good_faith and the grant of relief will not prejudice the interests of the government sec_301_9100-3 provides that subject_to paragraphs b i through iii of sec_301_9100-3 when a taxpayer reasonably relied on a qualified_tax professional including a tax professional employed by the taxpayer and the tax professional failed to make or advise the taxpayer to make the election the taxpayer will be deemed to have acted reasonably and in good_faith plr-152806-08 conclusion based solely on the facts submitted and the representations made we conclude that the requirements of sec_301_9100-3 have been satisfied as a result taxpayers are granted an extension of time of sixty days from the date of this letter but in no event later than the authorized period for filing an amended_return for year to make an election under sec_469 to treat all their interests in rental real_estate as a single rental real_estate activity effective year the election must be in the form of the statement required by sec_1_469-9 and attached to an amended_return for year a copy of this letter should be attached to the election except as specifically provided herein no opinion is expressed or implied concerning the federal tax consequences of the facts described above under any other provision of the code specifically no opinion is expressed concerning whether taxpayers satisfy the requirements under sec_469 or whether taxpayers materially participate in any activity this ruling is directed only to the taxpayer requesting it sec_6110 provides that it may not be used or cited as precedent pursuant to the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative enclosures copy of this letter copy for sec_6110 purposes sincerely curt g wilson curt g wilson associate chief_counsel passthroughs and special industries