department of the treasury internal_revenue_service washington d c tax_exempt_and_government_entities_division u i l hk xxxxx attn xxxxx xxxxx legend state a fund f employer m plan x group b employees city a ordinance o dear - an - feb tt lp ral uk this is in response to a letter dated date as supplemented by correspondence dated date and date in which your authorized representative requested a private_letter_ruling on your behalf concerning the federal_income_tax treatment of certain contributions made to plan x under section_414 h of the internal_revenue_code the following facts and representations have been submitted in support of the rulings being requested fund f is a_trust created in accordance with state a statutes to combine the pension and retirement_funds of incorporated cities and towns of state a for purposes of management and investment represented by and acting through its city of xxxxx page board_of trustees fund f established plan x for the benefit of employees of municipalities which are chartered incorporated or formed under the laws of state a section of plan x provides that the provisions of the trust_indenture establishing fund f is incorporated into and made a part of plan x sec_1 of plan x provides that a municipality as described therein may adopt plan x by executing a joinder agreement which incorporates plan x by reference it is represented in your request that employer m is a political_subdivision of state a eligible to adopt plan x and meets the definition of employer as defined in sec_2_1 of plan x originally effective date plan x a defined_benefit_plan was restated effective date the joinder agreement evidencing employer m's adoption of plan x as restated was executed and signed by the mayor of city a on date further to implement the terms of plan x as restated the council of city a passed and approved ordinance o on date ordinance o which was signed by the mayor of city a acknowledges employer m's adoption of amendments to plan x as reflected in employer m's joinder agreement ordinance o also confirms the ratification and confirmation of employer m's joinder agreement employer m's executed joinder agreement was approved by fund f on date it is represented that plan x meets the qualification requirements of sec_401 of the code sec_3_3 of plan x provides in part that if the employer elects in the joinder agreement all participants shall be required as a condition_of_employment to make contributions as specified in the joinder agreement these contributions shall be picked up and assumed by the employer and paid to the fund in lieu of contributions by the participants such contributions shall be designated as employer contributions each participant's_compensation will be reduced by the amount_paid to the fund by the employer in lieu of the required contributions by the participant these contributions shall be excluded from the participant's gross_income for federal_income_tax purposes and from wages for purposes of withholding in the taxable_year in which contributed no participant shall have the option of receiving the contributed amounts directly as compensation sec_2_1 of plan x defines fund as the fund established to provide benefits under plan x when employer m executed its joinder agreement on date amending and restating plan x it elected the pick-up option as its plan design plan x as amended and restated reflecting the pick-up option is effective date sec_4 of the joinder agreement as executed by employer m provides that each group b employee shall be required to contribute to plan x the percentage of his or her compensation required to be contributed as of date the original effective date of plan x you represent that plan x requires mandatory employee contributions equal to dollar_figure percent of the group b employee's compensation sec_4 further provides that these contributions shall be picked up and assumed by employer m and paid to the fund which holds city of xxxxx page the plan x assets in lieu of contributions by the group b employees sec_4 also provides that no group b employee shall have the option of receiving the contributed amounts directly as compensation based upon the aforementioned facts you request the following rulings plan x constitutes a pick-up program by employer m which satisfies the requirements of sec_414 of the code no part of any mandatory contribution to plan x picked up by employer m on behalf of the group b employees in plan x will be considered gross_income to the group b employees until distributed or otherwise made available to such employees within the meaning of sec_402 of the code the mandatory_contributions will be treated as employer contributions for federal_income_tax purposes the mandatory_contributions picked up by employer m will not constitute wages from which federal income taxes must be withheld sec_414 of the code provides that contributions otherwise designated as employee contributions shall be treated as employer contributions if such contributions are made to a plan described in sec_401 established by a state government or a political_subdivision thereof and are picked up by the employing unit the federal_income_tax treatment to be accorded contributions which are picked up by the employer within the meaning of sec_414 of the code is specified in revrul_77_462 1977_2_cb_358 in that revenue_ruling the employer school district agreed to assume and pay the amounts employees were required by state law to contribute to a state pension_plan revrul_77_462 concluded that the school district's picked-up contributions to the plan are excluded from the employees' gross_income until such time as they are distributed to the employees the revenue_ruling held further that under the provisions of sec_3401 a a of the code the school district's contributions to the plan are excluded from wages for purposes of the collection of income_tax at source on wages therefore no withholding is required from the employees’ salaries with respect to such picked-up contributions the issue of whether contributions have been picked up by an employer within the meaning of code sec_414 is addressed in revrul_81_35 1981_1_cb_255 and revrul_81_36 1981_1_cb_255 these revenue rulings established that the following two criteria must be met the employer must specify that the contributions although designated as employee contributions are being paid_by the employer in lieu of contributions by the employee and the employee must not be given the option of choosing to receive the contributed amounts directly instead of having them paid_by the employer to the pension_plan furthermore it is immaterial for purposes of the city of xxxxx page applicability of sec_414 whether an employer picks up contributions through a reduction in salary an offset against future salary increases or a combination of both in revrul_87_10 1987_1_cb_136 the internal_revenue_service considered whether contributions designated as employee contributions to a governmental_plan are excludable from the gross_income of the employee the service concluded that to satisfy the criteria set forth in revenue rulings and with respect to particular contributions the required specification of designated employee contributions must be completed before the period to which such contributions relate in this case sec_3_3 of plan x and sec_4 of employer m's joinder agreement meet the criteria of revrul_81_35 and revrul_81_36 by providing in effect that required contributions made to plan x by the group b employees shall be picked up and assumed by employer m and paid to plan x contributions by the group b employees sec_3_3 of plan x and sec_4 of the joinder agreement further provide that no group b employee shall have the option of receiving the contributed amounts directly in lieu of with respect to rulings request sec_1 and we conclude that plan x as adopted by employer m constitutes a pick up program that satisfies the requirements of sec_414 of the code the mandatory_contributions that are picked up by employer m on behalf of group b employees who participate in plan x shall be treated as employer contributions and will not be considered gross_income to the group b employees until distributed these amounts will be includible in the gross_income of the group b employees or their beneficiaries in the taxable_year in which they are distributed to the extent that the amounts represent contributions made by employer m because we have determined that the picked-up amounts are to be treated as employer contributions they are excepted from wages as defined in sec_3401 of the code for federal_income_tax withholding purposes in addition no part of the amounts picked up by employer m will constitute wages for federal_income_tax withholding purposes in the taxable_year in which they are contributed to plan xx these rulings apply only if the effective date for the commencement of the pick-up is no earlier than the later of the date plan x was executed and adopted by employer m or the date the pick-up is put in effect this ruling is based on plan x and employer m's joinder agreement that was signed by the mayor of city a on date in accordance with revrul_87_10 this ruling does not apply to any contribution to the extent it relates to compensation earned before the later of the - effective date of plan x or the date the pick-up is put into effect city of xxxxx page no opinion is expressed as to whether the amounts in question are subject_to tax under the federal_insurance_contributions_act no opinion is expressed as to whether the amounts in question are paid pursuant to a salary reduction agreement within the meaning of sec_3121 of the code these rulings are based on the assumption that plan x will be qualified under sec_401 of the code at the time of the proposed contributions and distributions this ruling is directed only to the taxpayer who requested it sec_6110 of the code provides that it may not be used or cited by others as precedent a copy of this letter has been sent to your authorized representative in accordance with a power_of_attorney on file in this office if you have any questions please contact xxxxx badge xxxxx t ep ra t2 at xxxxx sincerely yours signed joycr b floyd joyce e floyd manager employee_plans technical group tax_exempt_and_government_entities_division enclosures deleted copy of letter_ruling form_437 cc xxxxx xxxxx xxxxx xxxxx xx xxxxxk xxxxx xxxxx xxxxx xxxxx


government entities tax exempt sivsion ano department of the treasury internal_revenue_service washington b c oc -5 uniform issue list set e_p ra‘ ts legend taxpayer a taxpayer financial_institution a financial_institution m financial_institution s date date date date date amount m amount p amount q ira x ira y ira z page account u dr dear this is in response to yaur letters dated february may july and date submitted on your behalf by your authorized representative in which you request a waivar of the 60-day rollover requirement contained in sec_408 of the intemal revenue code the code’ the following facts and representations have been submitted under penalty of perjury in support of the ruling requested taxpayers a and b are married and file joint federal_income_tax returns taxpayer a maintained individual_retirement_accounts iras ira x and ira y with financial_institution a taxpayer a age asserts that on date taxpayer a received distributions including amounts m and p from ira x and ira y respectively taxpayer a asserts that his failure to accomplish a rollover of amounts m and p within the 60-day period prescribed by sec_408 of the code was due to a mental condition which impaired his ability to make financial decisions and understand the consequences of his decisions taxpayer b maintained an ira ira z with financial_institution a taxpayer b age asserts that on date she received a distribution of amount q from ira taxpayer a asserts that her failure to accomplish a rollover of amount q within the 60-day period prescribed by sec_408 of the code was due to her husband's hospitalization and her duties as a primary caregiver taxpayer b’s husband who always made the financial decisions and handled the family finances including management of iras x y and z became concerned about the safety of their retirement accounts at financial_institution a and instructed taxpayer b to request that financial_institution a close iras x y and on date taxpayer a arranged for the closing of taxpayer a’s ira x and y and received a distribution of amounts m and p respectively which were deposited on date into a non-ira account at financial_institution m with the intent to complete a future rollover into an ira account on date taxpayer b arranged for a the closing of taxpayer b's ira z of amount q which was deposited on date into a non-ira account at financial page institution s taxpayer b believed at the time of the deposit that she was completing a rollover of amount q to an ira on date twenty eight days after the distribution of amounts m p and q ‘taxpayer a's mental condition worsened and taxpayer a was hospitalized for his condition documentation has been submitted from dr w dated date which states that taxpayer a had been hospitalized for a mental impairment during the 80-day rollover period and that taxpayer a is clinically deteriorating rapidly beginning on date and continuing throughout the remainder of the 60-day rollover period taxpayer b became the primary caregiver for her husband as the primary caregiver taxpayer b became responsible for the daily attention to her husband's care seven days per week for at least hours per day taxpayers a and b have not used amounts m p and q for any other purpose based on the facts and representations you request a ruling that the internal_revenue_service waive the 60-day rollover requirement with respect to the distribution of amounts m p and q contained in sec_408 of the code ‘the code sec_408 of the code provides that except as otherwise provided in sec_408 any amount_paid or distributed out of an ira shall be included in gross_income by the payee or distributee as the case may be in the manner provided under sec_72 of the code sec_408 of the code defines and provides the rules applicable to ira_rollovers sec_408 e of the code provides that the rollover provisions of sec_408 do not apply to any amount required to be distributed under sec_408 sec_408 d a of the code provides that sec_408 of the cade does not apply to any amount_paid or distributed out of an ira to the individual for whose benefit the ra is maintained if i the entire amount received including money and any other_property is paid into an ra for the benefit of such individual not later than the day after the day on which the individuat receives the payment or distribution or page li the entire amount received including money and any other_property is paid into an eligible_retirement_plan other than an ira for the benefit of such individua not later than the day after the date on which the payment or distribution is received except that the maximum amount which may be paid into such plan may not exceed the portion of the amount received which is includible in gross_income determined without regard to sec_408 sec_408 b of the code provides that sec_408 does not apply to any amount described in sec_408 a i received by an individual from an ira if at any time during the 1-year period ending on the day of such receipt such individual received any other amount described in sec_408 from an ira which was not includible in gross_income because of the application of sec_408 sec_408 of the code provides a similar 60-day rollover period for partial rollovers sec_408 d e of the code provides that the rollover pravisions of sec_408 do not apply to any amount required to be distributed under sec_408 sec_408 d i af the code provides that the secretary may waive the day requirement under sec_408 d a and d d of the code where the failure to waive such requirement would be against equity or good conscience including casualty disaster or other events beyond the reasonable control of the individual subject_to such requirement ‘only distributions that occurred aftar date are eligible for the waiver under sec_408 of the code revproc_2003_16 2003_4_irb_359 date provides that in determining whether to grant a waiver of the 60-day rollover requirement pursuant fo sec_408 i the service will consider all relavant facts and circumstances including errors committed by a financial_institution inability to complete a roliover due to death disability hospitalization incarceration restrictions imposed by a foreign_country or postal error the use of the amount distributed for example in the case of payment by check whether the check was cashed and the time elapsed since the distribution ‘occurred the information presented and documentation submitted by taxpayers a and b is consistent with their assertion that their failure to accomplish a rollover of page amounts m p and q within the day period prescribed by sec_408 of the code was due to a mental condition which impaired taxpayer a's ability to make financial decisions and due to taxpayer b's inability to complete a rollover because of her husband's hospitalization and her duties as a primary caregiver therefore pursuant to sec_408 3x of tha code the service hereby waives the 60-day rollover requirement with respect to the distribution to taxpayer a of amount m and p and with respect to the distribution to taxpayer b of amount q pursuant to this ruling letter taxpayers a and b are granted a period of days measured from the date of the issuance of this letter tuling to make a rollover_contribution of amounts m p and q respectively to an ira or iras described in code sec_408 provided afl other requirements of cade sec_408 d except the 60-day requirement are met with respect to such ira contribution the contribution will be considered a rolfover contribution within the meaning of code sec_408 please note that pursuant to code sec_408 dx3 e this ruling letter does not authorize the rollover of the code sec_401 ax9 minimum required distributions no opinion is expressed as to the tax treatment of the transaction described herein under the provisions of any other section of either the code or regulations which may be applicable thereto pursuant to a power_of_attorney on file with this office a copy of this letter_ruling is being sent to your authorized representative this letter is directed only to the taxpayer who requested it sec_61 kx3 of the code provides that it may not be used or cited as precedent if you have any questions please contact page sincerely yours qv rances v sloan manager employee_plans technical group enclosures deleted copy of ruling letter notice of intention to disclose


internal_revenue_service number release date index numbers ----------------------------- ------------------------------------------------------------ ---------- ------------------------ ------------------------------------------------------------ ------- --------------------------------------- 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 plr-112154-09 date date legend x --------------------------------------------------- ---------------------------------------------------------------- d1 d2 country ------------------- ------------------- ------ dear --------------- this is in response to a letter dated date submitted on behalf of x requesting an extension of time under sec_301_9100-3 of the procedure and administration regulations to file an election under sec_301_7701-3 to be treated as a disregarded_entity for federal tax purposes facts according to the information submitted x was formed on d1 under the laws of country x intended to be treated as a disregarded_entity for federal tax purposes effective d2 however x inadvertently failed to timely file form_8832 entity classification election to be treated as a disregarded_entity for federal tax purposes effective d2 plr-112154-09 law and analysis 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 tax purposes an eligible_entity with a single owner can elect to be classified as an association or to be disregarded as an entity separate from its owner sec_301_7701-3 provides guidance on the classification of a foreign eligible_entity for federal tax purposes generally a foreign eligible_entity is treated as an association if all members have limited_liability unless the entity makes an election to be treated otherwise a foreign eligible_entity with a single owner having limited_liability may elect to be treated as a disregarded_entity pursuant to the rules of sec_301_7701-3 sec_301_7701-3 and iii provides that an entity classification election must be filed on form_8832 and can be effective up to days prior to the date the form is filed or up to months after the date the form is filed sec_301_7701-3 provides that an election under sec_301_7701-3 must be signed by - a each member of the electing entity who is an owner at the time the election is filed or b any officer manager or member of the electing entity who is authorized under local law or the entity’s organizational documents to make the election and who represents to having such authorization under penalties of perjury sec_301_7701-3 provides that if a purchasing_corporation makes an election under sec_338 regarding an acquired subsidiary an election under sec_301 c i for the acquired subsidiary can be effective no earlier than the day after the acquisition_date within the meaning of sec_338 under sec_301_9100-1 the commissioner may grant a reasonable extension of time to make a regulatory election or a statutory election but no more than six months except in the case of a taxpayer who is abroad under all subtitles of the internal_revenue_code except subtitles e g h and i section b defines the term regulatory election as including an election whose due_date is prescribed by a regulation published in the federal_register 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_9100-1 sec_301_9100-2 provides automatic extensions of time for making certain elections sec_301_9100-3 provides rules for requesting extensions of time for regulatory elections that do not meet the requirements of sec_301_9100-2 plr-112154-09 requests for relief under sec_301_9100-3 will be granted when the taxpayer provides evidence to establish that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government 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 x is granted an extension of time of days from the date of this letter to file a properly executed form_8832 effective d2 with the appropriate service_center to elect to be classified as a disregarded_entity a copy of this letter should be attached to the form_8832 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 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_attorney on file with this office a copy of this letter is being sent to your authorized representative sincerely curt g wilson curt g wilson associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes


department of the treasury i n t e r n al r e v e n u e s e r v i c e w as h i n g t o n d c date offic e of c h ief c o u n sel index nos number release date cc dom it a spr-110473-99 memorandum for blake ferguson assistant district_counsel north - south carolina district from lewis j fernandez deputy assistant chief_counsel income_tax accounting subject information reporting - condemnation of real_property this responds to your assistance request of date concerning information reporting for payments made by a state’s highway department for real_property taken pursuant to the exercise of eminent_domain powers issue in a real_property condemnation when a state’s lump-sum payment to a landowner includes both the proceeds of the condemnation and an interest component what information returns must be filed conclusion under sec_6045 of the internal_revenue_code the state must report the proceeds of a non-excepted transaction on form 1099-s under sec_6041 the interest component should be reported on form 1099-misc facts you state that whenever there is a delay between the time the state takes possession of condemned real_property and the time payment is made the state pays interest to the seller in addition to the condemnation price awards of interest average about dollar_figure the state follows a procedure of issuing form 1099-s at year-end showing the lump-sum payment without breaking the payment into its component parts of condemnation proceeds and interest spr-110473-99 law and analysis condemnation proceeds sec_6045 requires the real_estate_reporting_person defined in sec_6045 to file an information_return with respect to a real_estate_transaction and to furnish the seller with a payee_statement the amount to be reported is the gross_proceeds sec_1_6045-4 of the income_tax regulations the prescribed form is form 1099-s although sec_1_6045-4 excepts certain transactions and types of property from reporting requirements a real_estate_transaction is not excepted merely because it arises from an exercise of eminent_domain powers however under sec_6045 a sale_or_exchange of a residence is excepted from reporting if certain conditions are met these conditions relate to use as a principal_residence for the requisite length of time exclusion_of_gain under sec_121 amount of selling_price written assurances etc see revproc_98_20 1998_7_irb_32 thus unless a real_estate_transaction is excepted from the reporting requirements of sec_6045 by sec_6045 or by sec_1_6045-4 the real_estate_reporting_person is required to file a form 1099-s reporting the gross_proceeds and other required information and to furnish the seller with the payee_statement interest payments the interest component of a condemnation_award is not part of the gross_proceeds of the sale of the property it is an additional payment that is necessary to give owners of condemned property the full equivalent of the value of the property at the time it was taken in 317_us_399 c b the court considered whether stated_interest paid on a condemnation_award for the period between the date title passed and the date of final payment was part of sales_price capital_gain or ordinary_income the court concluded that it was ordinary_income either interest or a payment to meet the constitutional requirement of just compensation but not part of the capital_gain from the sale see also crews v commissioner tcmemo_1964_64 under sec_61 interest is includible in gross_income sec_1_61-7 states that interest_income includes the interest portion of a condemnation_award sec_6049 requires every person who makes payments of interest of dollar_figure or more in any calendar_year to file an information_return the interest you inquire about however does not meet the definition of interest under sec_6049 see sec_6049 and sec_1_6049-5 spr-110473-99 sec_6041 provides that all persons engaged in a trade_or_business and making payment in the course of that trade_or_business to another person of rent salaries wages premiums annuities compensations remunerations emoluments or other fixed or determinable gains profits and income other than certain payments not here relevant of dollar_figure or more in any taxable_year must render a true and accurate return under regulations prescribed by the secretary setting forth the amount of those gains profits and income and the name and address of the recipient of the payment governmental agencies are subject_to the reporting requirements of sec_6041 sec_1_6041-1 and g sec_1_6041-1 states that income is fixed when it is to be paid in amounts definitely predetermined and that income is determinable whenever there is a basis of calculation by which the amount to be paid may be ascertained although interest may be paid to give the owner full value for the property taken it is not part of the sale price as discussed above however the interest payments are fixed and determinable income at the time of payment therefore the reporting requirements of sec_6041 apply to such payments of dollar_figure or more in a taxable_year the form on which the interest must be reported is form 1099-misc this memorandum is for your general information and is advisory only it is not intended to be conclusive as to the tax consequences for any specific taxpayer if we can be of further assistance please contact cc dom it a pincite-4920 1although sec_1_6041-3 provides an exemption from the reporting requirements of sec_6041 for certain state payments this exemption applies only to obligations that are issued in exercise of the state’s borrowing power u s trust co of new york v anderson 65_f2d_575 2d cir cert_denied 290_us_683