internal_revenue_service department of the treasury number release date index number 468a re revised schedule of ruling amounts washington dc person to contact telephone number refer reply to cc dom p si plr-139136-03 date date legend taxpayer parent plant location method commission a commission b commission c municipalities fund dear this letter responds to the request of taxpayer dated submitted by your authorized representative for a revised schedule of ruling amounts pursuant to sec_1_468a-3 of the income_tax regulations taxpayer was previously granted revised schedules of ruling amounts on and information was submitted pursuant to sec_1_468a-3 that portion of the revised schedule of ruling amounts dated concerning determinations by commission b and municipalities extended only through taxpayer now seeks an extension of these ruling amounts for the period taxpayer represents the facts and information relating to its request for a revised schedule of ruling amounts as follows plr-139136-03 - taxpayer is a subsidiary of parent taxpayer has a direct ownership_interest in the plant of percent as a tenant in common the plant is situated at location plant’s operating license expires in the estimated base cost for decommissioning plant is based on an independent study and the proposed method of decommissioning the plant is method taxpayer is subject_to the jurisdiction of commission a which covers percent of taxpayer’s total electric sales commission b which covers percent commission c which covers and municipalities which covers percent for a total of percent these percentages may vary slightly from year to year amounts for commission a are not specifically reviewed herein the schedule of ruling amounts approved by the service on governs the review period for the commission a ruling amounts these amounts are reproduced in the approved schedule of ruling amounts below in order to reflect the total annual ruling_amount commission b in docket no effective authorized nuclear decommissioning costs to be included in the taxpayer’s cost of service for ratemaking purposes for plant in the amount of dollar_figure and estimated an after-tax rate of return on the assets of percent commission b estimated the total cost on a system basis of decommissioning plant to be dollar_figure in dollars of which the commission b portion is dollar_figure using an inflation factor of percent the total future cost of decommissioning plant is estimated to be dollar_figure in dollars of which the commission b portion is dollar_figure the tax and investment changes made to sec_468a of the internal_revenue_code by section of the energy policy act of were not taken into consideration when estimating these costs municipalities in an agreement effective authorized nuclear decommissioning costs to be included in the taxpayer’s cost of service for ratemaking purposes for plant in the amount of dollar_figure and estimated an after-tax rate of return on assets of percent the municipalities estimated the total cost on a system basis of decommissioning plant to be dollar_figure in dollars of which the municipalities portion is dollar_figure using an inflation factor of percent the total future cost of decommissioning plant is estimated to be dollar_figure in dollars of which the municipalities portion is dollar_figure the tax and investment changes made to sec_468a of the internal_revenue_code by section of the energy policy act of were not taken into consideration when estimating these costs the taxpayer is not requesting jurisdictional amounts with respect to commission c plr-139136-03 - the funding_period for the plant extends from through and the level_funding limitation period for the plant extends from through the estimated period for which the fund will be in effect is years through the estimated_useful_life of the plant is years through thus the taxpayer has calculated its qualifying percentage to be percent there are no proceedings pending before commission a commission b or the municipalities that may result in a change to the amount of decommissioning costs for the plant to be included in the taxpayer’s cost of service for ratemaking purposes there is however a generic proceeding at commission b related to nuclear decommissioning matters to which taxpayer is a party commission b has neither established nor indicated an intent to establish a docket specifically addressing taxpayer’s cost of service sec_468a provides that a taxpayer may elect to deduct the amount of payments made to a qualified decommissioning fund however sec_468a limits the amount_paid into such fund for any taxable_year to the lesser_of the amount of nuclear decommissioning costs allocable to this fund which is included in the taxpayer's cost of service for ratemaking purposes for the tax_year or the ruling_amount applicable to this year sec_468a provides that no deduction shall be allowed for any payment to the nuclear decommissioning fund unless the taxpayer requests and receives from the secretary a schedule of ruling amounts the ruling_amount for any_tax year is defined under sec_468a as the amount which the secretary determines to be necessary to fund that portion of nuclear decommissioning costs which bears the same ratio to the total nuclear decommissioning costs with respect to the nuclear power plant as the period for which the nuclear decommissioning fund is in effect bears to the estimated_useful_life of the plant this term is further defined to include the amount necessary to prevent excessive funding of nuclear decommissioning costs or funding of these costs at a rate more rapid than level_funding taking into account such discount rates as the secretary deems appropriate sec_468a provides that a taxpayer shall be deemed to have made a payment to the nuclear decommissioning fund on the last day of a taxable_year if the payment is made on account of such taxable_year and is made within ½ months after the close of the tax_year sec_1_468a-1 provides that an eligible_taxpayer may elect to deduct nuclear decommissioning costs under sec_468a of the code an eligible_taxpayer as defined under sec_1_468a-1 of the regulations is a taxpayer that has a qualifying interest in among other things a direct ownership_interest sec_1_468a-1 provides that the term qualifying interest means a leasehold interest in any portion of a nuclear power plant if a the holder of the plr-139136-03 - leasehold interest is subject_to the jurisdiction of a public_utility commission with respect to such portion of the nuclear power plant b the holder of the leasehold interest is primarily liable under federal or state law for decommissioning such portion of the nuclear power plant and c no other person establishes a nuclear decommissioning fund with respect to such portion of the nuclear power plant sec_1_468a-2 provides that the maximum amount of cash payments made or deemed made to a nuclear decommissioning fund during any_tax year shall not exceed the lesser_of the cost of service amount applicable to the nuclear decommissioning fund for such tax_year or the ruling_amount applicable to the nuclear decommissioning fund for such tax_year sec_1_468a-3 provides that in general a schedule of ruling amounts for a nuclear decommissioning fund is a ruling specifying annual payments that over the tax years remaining in the funding_period as of the date the schedule first applies will result in a projected balance of the nuclear decommissioning fund as of the last day of the funding_period equal to and in no event more than the amount of decommissioning costs allocable to the fund sec_1_468a-3 provides that to the extent consistent with the principles and provisions of this section each schedule of ruling amounts shall be based on the reasonable assumptions and determinations used by the applicable public_utility commission in establishing or approving the amount of decommissioning costs to be included in the cost of service for ratemaking purposes under sec_1_468a-3 the internal_revenue_service shall provide a schedule of ruling amounts identical to the schedule proposed by the taxpayer but no such schedule shall be provided by the service unless the taxpayer's proposed schedule is consistent with the principles and provisions of that section sec_1_468a-3 provides that in general the amount for any_tax year in the level_funding limitation period shall not be less than the ruling_amount for any earlier tax_year under sec_1_468a-3 the level_funding limitation period begins on the first day of the first tax_year for which a deductible payment is made to the nuclear decommissioning fund and ends on the last day on which the nuclear power plant will no longer be included in the taxpayer's rate base for ratemaking purposes sec_1_468a-3 provides that the amount of decommissioning costs allocable to a nuclear decommissioning fund is the taxpayer's share of the total estimated cost of decommissioning the nuclear power plant multiplied by the qualifying percentage sec_1_468a-3 provides that in general the total estimated cost of decommissioning a nuclear power plant is the reasonably estimated cost of decommissioning used by the applicable public_utility commission in establishing or approving the amount of these costs to be included in cost of service for ratemaking plr-139136-03 purposes - sec_1_468a-3 provides that a taxpayer's share of the total estimated cost of decommissioning a nuclear power plant equals the total estimated cost of decommissioning such plant multiplied by the taxpayer's qualifying interest in the plant under sec_1_468a-3 the qualifying percentage for any nuclear decommissioning fund is equal to a fraction the numerator of which is the number of tax years in the estimated period for which the nuclear decommissioning fund is to be in effect and the denominator of which is the number of tax years in the estimated_useful_life of the applicable plant sec_1_468a-3 provides that the estimated period for which a nuclear decommissioning fund is to be in effect begins on the later of the first day of the first taxable_year for which a deductible payment is made to the nuclear decommissioning fund or deemed made or the first day of the taxable_year that includes the date that the nuclear power plant begins commercial operations as determined by the applicable public_utility commission at the time the plant was first included in the taxpayer's rate base and ends on the last day of the taxable_year that includes the estimated date on which the nuclear power plant will no longer be included in the taxpayer's rate base for ratemaking purposes according to sec_1_468a-3 the estimated date on which the nuclear power plant will no longer be included in the taxpayer's rate base for ratemaking purposes is determined under the ratemaking assumptions used by the applicable public_utility commission in establishing or approving rates during the first ratemaking proceeding in which the nuclear power plant was included in the taxpayer's rate base sec_1_468a-3 provides that the estimated_useful_life of a nuclear power plant begins on the first day of the taxable_year that includes the date that the plant begins commercial operations as determined by the applicable public_utility commission at the time the plant was first included in the taxpayer's rate base and ends on the last day of the taxable_year that includes the estimated date on which the nuclear power plant will no longer be included in the taxpayer's rate base for ratemaking purposes according to sec_1_468a-3 the estimated date on which the nuclear power plant will no longer be included in the taxpayer's rate base for ratemaking purposes is determined under the ratemaking assumptions used by the applicable public_utility commission in establishing or approving rates during the first ratemaking proceeding in which the nuclear power plant was included in the taxpayer's rate base sec_1_468a-3 provides that the internal_revenue_service shall not provide a taxpayer with a schedule of ruling amounts for any nuclear decommissioning fund unless the public_utility commission that establishes or approves the rates for electric energy generated by the plant has determined the amount of decommissioning costs to be included in the taxpayer's cost of service for ratemaking purposes and has disclosed the after-tax rate of return and any other assumptions and determinations used in establishing or approving the amount plr-139136-03 - sec_1_468a-3 enumerates the information required to be contained in a request for a schedule of ruling amounts filed by a taxpayer in order to receive a ruling_amount for any taxable_year sec_1_468a-3 provides that any taxpayer that has previously obtained a schedule of ruling amounts can request a revised schedule of ruling amounts such a request must be made in accordance with the rules of sec_1_468a-3 the internal_revenue_service shall not provide a revised schedule of ruling amounts applicable to a taxable_year in response to a request for a schedule of ruling amounts that is filed after the deemed payment deadline date for such taxable_year sections a and c of the energy act of eliminated for taxable years after date the investment restrictions contained in sec_468a sections b and c of the energy act of revised sec_468a by lowering the tax_rate applicable to a nuclear decommissioning fund for taxable years beginning after date we have examined the representations and information submitted by the taxpayer in relation to the requirements set forth in sec_468a and the regulations thereunder based solely upon these representations of the facts we reach the following conclusions taxpayer has a qualifying interest in the plant and is therefore an eligible_taxpayer under sec_1_468a-1 of the regulations commission a commission b and municipalities have determined the amount of decommissioning costs to be included in the taxpayer's cost of service for ratemaking purposes as required by sec_1_468a-3 of the regulations taxpayer as owner of the plant has calculated its share of the total decommissioning costs under sec_1_468a-3 of the regulations taxpayer has determined that pursuant to sec_1_468a-3 of the regulations the qualifying percentage is percent taxpayer has proposed a schedule of ruling amounts which meets the requirements of sec_1_468a-3 and of the regulations the annual payments specified in the proposed schedule of ruling amounts are based on the reasonable assumptions and determinations used by commission a commission b and municipalities and will result in a projected fund balance at the end of the funding_period equal to or less than the amount of decommissioning costs allocable to the fund plr-139136-03 - the maximum amount of cash payments made or deemed made to the fund during any_tax year is restricted to the lesser amount of the decommissioning costs applicable to the fund or the ruling applicable to the fund as set forth under sec_1 468a- b of the regulations taxpayer has calculated its share of the total decommissioning costs allocable to commission a commission b and municipalities as required by sec_1 468a- f of the regulations based solely on the determinations above we conclude that the taxpayer's proposed schedule of ruling amounts satisfies the requirements of sec_468a of the code approved schedule of ruling amounts for taxable years through - commission a commission b and municipalities year comm a2 comm b municipalities total amounts for commission a are not specifically reviewed herein and are merely reprinted to arrive at the amount for the total ruling_amount for purposes of the review and revision under sec_1_468a-3 the date of the schedule of ruling amounts approved by the service on governs the review period for the commission a ruling amounts - plr-139136-03 with agreement of the taxpayer this revised schedule of ruling amounts is limited to a 5-year period for the portion of the schedule of ruling amounts for commission b and municipalities because those entities have not taken into account the statutory changes made to sec_468a of the code by the energy act the elimination of the investment restrictions and the reduction of the tax_rate applicable to income earned by the fund may result in a greater after-tax of return than was estimated prior to the enactment of the energy act by these entities this increased after-tax rate of return could over the life of the fund result in a balance in the fund on the last day of the funding_period that could exceed the amount of decommissioning costs allocable to the fund thus in order to prevent the excess accumulation in the fund this schedule of ruling amounts is being limited to a 5-year period except the amounts for commission a which took into account the amendments made by the energy act to sec_468a of the code approval of a revised schedule of ruling amounts may be granted after a determination by either commission b or municipalities of an after-tax rate of return that accounts for the reduced_tax_rate and unrestricted investments approval of the schedule of ruling amounts is contingent on there being no change in the facts and circumstances known or assumed at the time the current ruling is issued if any of the events described in sec_1_468a-3 occur in future years the taxpayer must request a review and revision of the schedule of ruling amounts generally the taxpayer is required to file such a request on or before the deemed payment deadline date for the first taxable_year in which the rates reflecting such action became effective when no such event occurs the taxpayer must file a request for a revised schedule of ruling amounts on or before the deemed payment deadline of the tenth taxable_year following the close of the tax_year in which the most recent schedule of ruling amounts was received except as specifically determined above no opinion is expressed or implied concerning the federal_income_tax consequences of the transaction described above the approved schedule of ruling amounts is relevant only to those payments made to the fund payments allocable to any funds other than the fund cannot qualify for purposes of the deduction under the provisions of sec_468a of the code payments made to such fund can qualify only to the extent that they do not exceed the lesser_of the decommissioning costs applicable to such fund or the ruling amounts applicable to this fund in the tax_year this ruling is directed only to the taxpayer who requested it sec_6110 of the code provides it may not be used or cited as precedent in accordance with the plr-139136-03 - power_of_attorney on file with this office copies of this letter are being sent to your authorized representative we are also sending a copy of this letter_ruling to the industry director natural_resources and construction lm nrc pursuant to sec_1_468a-7 a copy of this letter must be attached with the required election statement to the taxpayer's federal_income_tax return for each tax_year in which the taxpayer claims a deduction for payments made to the fund sincerely yours peter c friedman senior technician reviewer branch office of the associate chief_counsel passthroughs and special industries plr-139136-03 - cc


internal_revenue_service department of the treasury washington dc person to contact i sec_5 telephone number refer reply to cc ebeo plr date dec dec index no church national conference regional conference state conference governing document board i o o m i t u q w e w this is in response to your date request for a private_letter_ruling submitted on behalf of x additional information was submitted on date date and date a conference was held on date facts the church is a well established worldwide christian denomination that is organized pursuant to the tenets social principles constitutional provisions and legislative enactments contained in its governing document the governing document is the fundamental book outlining the law doctrine administration and organization work and procedures of the church the church operates via a connectional structure maintained through a chain of conferences the highest level of authority is the national conference which meets quadrennially to discuss issues of concern to the church the national conference is comprised of one-half lay persons and one-half members of the clergy generally each national conference amends the governing document and those amendments are reflected in the quadrennial revision of the governing document although subject_to certain restrictions the national conference has the full authority among other things to define and fix the powers and duties of the members of the ordained clergy of the church and the governing document includes the rules applicable to ordained members of the clergy the basic organizational bodies of the church are the regional conferences each regional conference within the united_states includes the local churches of the church within specific geographic boundaries the membership in each regional conference includes clergy lay persons and diaconal ministers clergy members in the regional conferences include ordained deacons and ordained elders only clergy members in full connection are allowed to vote on matters relating to the ordination character and conference relations of the members of the clergy at its date g gathering the national conference voted to establish the order of ordained deacons and the governing document was amended accordingly proposals to establish an order of ordained deacons had been made to the national conference at the three preceding quadrennial gatherings thus the decision to establish an order of deacons was made after the church spent more than twenty years studying its ministry hence after date g an individual may be ordained as either a deacon or an elder as permitted by the governing document both elders and deacons are ordained as clergy members in full connection prior to establishment of the order of ordained deacon elders were the only ordained members of the clergy the church defines ordination as the act of conferring ministerial orders in accordance with church traditions an ordained minister is a baptized person who is called by god authorized by the church and ordained by a bishop to a lifetime ministry to qualify for ordination as either a deacon or an elder an individual must meet the requirements set by the church that are specified in the governing document in addition to be ordained the individual must be recommended by the regional conference and receive the affirmative vote of the ministerial members of the regional conference through ordination the ordained individual is given the approval of the denomination to serve as an ordained minister and the authority to carry out those acts reserved to members of the clergy thus following ordination the ordained elder or deacon has the authority to exercise the responsibilities and duties of an ordained minister according to the governing document an ordained deacon is permitted to give leadership in teaching and proclaiming the gospel forming and nurturing disciples performing marriages and funerals and assisting the elder in administering the sacraments an ordained deacon has full right of voice and vote in the regional conference where membership is held may serve or hold office as a member of the clergy on the boards commissions or committees of the regional conference may be elected as a clergy delegate to the national conference must attend all sessions of the regional conference and with the elder is responsible for all matters of ordination character and conference relations with members of the clergy an ordained deacon is accountable to his or her regional conference and the bishop for the fulfillment of his or her call an ordained elder is appointed to a position by a bishop however unlike an elder an ordained deacon does not intinerate nor does the church guarantee an ordained deacon a position salary or place of employment ordained deacons are permitted to participate in the church retirement_plan for members of the clergy when it established the order of ordained deacons the national conference amended the governing document to include transitional rules that would allow certain diaconal ministers to become ordained deacons a diaconal minister is a lay person who was consecrated by a bishop but who the church does not treat or consider as a member of the clergy the church expects that some but not all of its diaconal minsters will become ordained deacons the transitional rules are available for a limited period and provide that a diaconal minister in good standing with his or her regional conference who has completed a minimum of three years in an approved service appointment may be ordained as a deacon provided he or she meets the following requirements a apply in writing to the regional conference for transfer of credentials to ordained deacon in full connection b complete the formation and education program sponsored by the board c demonstrate an understanding of the call to the order of deacon and a ministry that fulfills and exemplifies the definition and description of deacon found in the governing document d satisfy specific educational requirements and e receive a two-thirds positive vote of the clergy session of the regional conference x a local church founded in is located in city and is in the state conference x has more than big_number members and employs more than fifty c d and e were ordained employees including three ordained deacons c d and e pursuant to the transitional rules x requested rulings that c d and e are ministers of the gospel and that the duties they perform are ordinarily the duties of a minister_of_the_gospel under sec_107 of the internal_revenue_code the code x also requested rulings that c d and e are ministers performing services in the exercise of their ministry for purposes of sec_1402 and sec_3121 x has represented the following facts concerning c d and e and the duties they perform for x as ordained deacons c d and e are expected to comply with the applicable provisions of the governing document c is the minister of education d of music and e is the minister of stewardship team c d and e meet with the elder to plan the worship services assist with the sacraments and officiate at weddings and funerals each is required to preach at sunday worship service as integral members of x’s pastoral is the minister c's primary duties relate to the christian education program c plans and supervises youth adult and family activities including sunday education classes bible study and various educational programs sponsored by x schedules activities and when needed coordinates lay volunteers c also assists the x school to develop appropriate educational opportunities d the minister of music coordinates all choir and music activities functions his primary function is to encourage members of the congregation to give their time talent and money to x and the community when not leading worship services c d and e participate with the pastor in the weekly worship service they e performs financial and managerial c selects the curriculum in its initial submission x requested that the ruling apply to any ordained deacon it employed we advised x that we would not issue a ruling that its ordained deacons were ministers without examining the facts relating to each individual minister also perform various other duties at x including confirmation preparation and membership reception x's date submission specifies how each met the transitional requirements needed to be ordained as a deacon each timely applied to the state conference board to transfer his or her credentials to ordained deacon each was in good standing as a diaconal minister and had completed at least three years ina service appointment approved by the bishop since consecration as a diaconal minister each completed the continuing formation and education program sponsored by the board and satisfied the applicable educational requirements c and d have bachelors degrees and have completed graduate theological courses as required by the state conference e has a masters degree in theology studies each demonstrated an understanding of the call to the order of deacon and received the full support of the state conference board_of ordained clergy and was passed on to the state conference for a final vote of confirmation each received the required two-thirds or greater positive vote of the clergy session of state conference c d and e and were ordained as deacons on date h applicable law sec_61 of the code provides that except as otherwise provided gross_income means all income from whatever source derived including compensation_for services including fees commissions fringe_benefits and similar items sec_107 of the code provides that in the case of a minister_of_the_gospel gross_income does not include the rental value of a home furnished to the minister as a part of the minister's compensation or the rental allowance paid to the minister as part of the minister's compensation to the extent used by the minister to rent or provide a home sec_1402 and sec_3121 of the code which provide definitions for purposes of the self-employment contributions act taxes and the federal_insurance_contributions_act fica tax respectively refer to services performed by a duly ordained commissioned or licensed minister of a church in the exercise of his ministry sec_1_107-1 of the income_tax regulations provides that in order to qualify for the exclusion provided by sec_107 the home or rental allowance must be provided as remuneration for services which are ordinarily the duties of a minister_of_the_gospel in general the rules provided in regulation sec_1_1402_c_-5 apply to that determination regulation sec_1_107-1 also provides that the performance of sacerdotal functions the conduct of religious worship the administration and maintenance of religious organizations and their integral agencies and the performance of teaching and administrative functions at theological seminaries will be considered the duties of a minister for purposes of sec_107 sec_1_1402_c_-5 of the regulations provides that a duly ordained commissioned or licensed minister’ of a church is engaged in carrying_on_a_trade_or_business with respect to service performed by him in the exercise of his ministry or in the exercise of duties required by a religious_order unless an exemption under sec_1402 of the code is effective sec_1_1402_c_-5 provides that service performed by a minister in the exercise of his ministry includes the ministration of sacerdotal functions and the conduct of religious worship and the control conduct and maintenance of religious organizations including the religious boards societies and other integral agencies of such organizations under the authority of a religious body constituting a church or church denomination sec_1_1402_c_-5 provides that whether service performed by a minister constitutes the conduct of religious worship or the ministration of sacerdotal functions depends on the tenets and practices of the particular religious body constituting the minster's church or church denomination sec_31_3121_b_8_-1 has a similar provision if a church or church denomination ordains some ministers of the gospel and licenses or commissions others the licensed or commissioned minister must perform substantially_all the religious functions within the scope of the tenets and practices of his religious denomination to be treated as a minister_of_the_gospel under sec_107 of the code revrul_78_301 1978_2_cb_103 the service ruled in revrul_59_270 1959_2_cb_44 that neither a minister of music nor a minister of education was entitled to an exclusion under sec_107 when neither one was an ordained minister_of_the_gospel although both were performing services relating to the office and functions of a minister_of_the_gospel the facts of the ruling specify that neither minster was licensed ordained or commissioned in 89_tc_922 the tax_court considered whether the taxpayer a probationary member of the north arkansas annual conference of the united methodist church the conference who was both an ordained deacon and a licensed local pastor was performing services as a duly ordained commissioned or licensed minister for purposes of the self-employment_tax exemption available under sec_1402 of the code taxpayer administered the sacraments conducted worship and performed services in the control conduct and maintenance of his local church and conference the court held that the taxpayer was a duly ordained commissioned or licensed minister within the meaning of sec_1402 when he assumed the duties and functions of a minister in in analyzing whether the taxpayer was a duly ordained commissioned or licensed minister the court examined whether taxpayer performed the duties and functions of a minister within the three types of ministerial services specified in sec_1_1402_c_-5 of the regulations whether the taxpayer was ordained commissioned or licensed and whether his church considered him to be a religious leader the court held that the taxpayer was a minister because he satisfied all the elements of sec_1_1402_c_-5 of the regulations as a local pastor and an ordained deacon he administered the sacraments and conducted religious worship the court also found that he satisfied the third prong control conduct and maintenance of the church or religious organizations within the church because he was in charge of all the organizational concerns of his own congregation including administering the provisions of the church discipline supervising the working program of the local church maintaining church_records and meeting local financial obligations the court noted that a church's designation of an individual as a minister standing alone is insufficient to determine whether the individual is a minister for self- employment_tax purposes however it is an additional factor to consider the court concluded that when a person performs all the three types of services set forth in the regulations and is recognized as a minister or religious leader by his denomination that person is a minister for purposes of sec_1402 of the code thus taxpayer's status as a probationary member of the conference did not prevent him from being a minister for purposes of sec_1402 in haimowitz v commissioner tcmemo_1997_40 the tax_court concluded that the taxpayer a synagogue administrator was not a minister_of_the_gospel for purposes of sec_107 of the code he had been employed by a temple for years and was recognized as a fellow in synagogue administration he performed various services for the temple including assisting students with bar and bat mitzvah preparation serving as marriage ceremony director and conducting services for mourners on his income_tax return he specified that he was a religious functionary and asserted that as a religious functionary he was a minister_of_the_gospel within the meaning of sec_107 here the tax_court concluded that taxpayer did not meet the requirements of regulation sec_1_1402_c_-5 specifically the court found that the duties he performed although related to the jewish religion were organizational in nature and did not require performance from one with ministerial credentials the court then noted the religious rites and ceremonies he did not perform he never fulfilled the role of rabbi or cantor and the services he did perform were secular in nature for example he never officiated at a wedding or a funeral and he merely assisted the rabbi at religious services thus the court concluded he did not perform regularly those duties that the ministers of the jewish faith customarily perform in addition the court found taxpayer's recognition as a fellow in synagogue administration was irrelevant as that designation is not a recognized religious official of the jewish religion the court also noted that taxpayer did not present any evidence that the temple considered him to be a religious leader accordingly the court concluded that taxpayer failed to demonstrate that he was a minister_of_the_gospel discussion applying the test established in wingo we conclude that c d and e are ministers of the gospel performing services in the exercise of their ministries within the meaning of sec_1_1402_c_-5 of the regulations as ordained members of the clergy in the church c d and e conduct worship and assist with the sacraments in addition as ordained members of the clergy in full connection they perform services in the control conduct and maintenance of the church further x and the church consider c d and e to be religious leaders who can perform substantially_all of the religious functions within the scope of the church's tenets and practices we find that is distinguishable from the synagogue administrator in haimowitz as e is an ordained member of the clergy in full connection e officiates at weddings and funerals and will regularly perform the duties that members of the clergy of the church customarily perform accordingly c d and e are performing services as ministers of the gospel within the meaning of sec_107 of the code thus c d and e are eligible to have a portion of their salary designated as a parsonage_allowance any parsonage_allowance will be excluded from gross_income provided the allowance is designated and paid in accordance with sec_107 we further conclude that the services c d and e perform are in the exercise of their ministry within the meaning of sec_3121 of the code this ruling is not intended to imply or suggest that the mere designation of an individual as a minister is sufficient to conclude that the individual is a minister_of_the_gospel for purposes of sec_107 sec_1402 sec_3121 or sec_3401 of the code nor does this ruling suggest that the service has departed from its position in revrul_59_270 this no ruling applies only to c d and e with respect to the services they perform for x 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 sincerely lowrg erry e bbw e holmes chief branch office of the associate chief_counsel employee_benefits and exempt_organizations enclosure copy for purposes


tcmemo_2003_196 united_states tax_court virgil and joyce brashear petitioners v commissioner of internal revenue respondent docket no 12147-02l filed date virgil and joyce brashear pro sese alan j tomsic for respondent memorandum opinion chiechi judge this case is before the court on respon- dent’s motion for summary_judgment and to impose a penalty under section respondent’s motion we shall grant respon- dent’s motion background the record establishes and or the parties do not dispute the following petitioners resided in henderson nevada at the time they filed the petition in this case on date petitioners filed jointly a federal_income_tax tax_return for their taxable_year joint_return in their joint_return petitioners reported total income of dollar_figure and total_tax of dollar_figure and claimed a refund of dollar_figure of tax withheld petitioners attached to their joint_return form_w-2 wage and tax statement reporting wages tips and other compensation of dollar_figure petitioners also attached a document to their joint_return petitioners’ attachment to their joint_return that contained statements contentions and arguments that the court finds to be frivolous and or ground- less 1all section references are to the internal_revenue_code in effect at all relevant times all rule references are to the tax_court rules_of_practice and procedure 2although the court ordered petitioners to file a response to respondent’s motion petitioners failed to do so 3petitioners’ attachment to their joint_return is very similar to the documents that certain other taxpayers with cases in the court attached to their tax returns see eg copeland continued on date respondent issued to petitioners a notice_of_deficiency notice with respect to their taxable_year which they received in that notice respondent determined a deficiency in and an accuracy-related_penalty under sec_6662 on petitioners’ tax for their taxable_year in the respective amounts of dollar_figure and dollar_figure petitioners did not file a petition in the court with respect to the notice relating to their taxable_year on date respondent assessed petitioners’ tax as well as a penalty and interest as provided by law for their taxable_year we shall refer to any such unpaid assessed amounts as well as interest as provided by law accrued after date as petitioners’ unpaid liability for on date respondent issued to petitioners a notice of balance due with respect to petitioners’ unpaid liability for on date respondent issued a second notice of balance due with respect to that unpaid liability on date respondent issued to petitioners a notice_of_federal_tax_lien filing and your right to a hearing notice of tax_lien with respect to their taxable_year on or about date in response to inter alia the notice of tax_lien petitioners filed form request for a collection due continued v commissioner tcmemo_2003_46 smith v commissioner tcmemo_2003_45 process hearing form and requested a hearing with respondent’s appeals_office appeals_office in that form petitioners stated that they intended to make an audio recording of their appeals_office hearing petitioners attached a document to their form petitioners’ attachment to form that contained statements contentions arguments and requests that the court finds to be frivolous and or groundless on date date and date respectively respondent applied payments of dollar_figure dollar_figure and dollar_figure to petitioners’ account with respect to their taxable_year on date respondent’s appeals officer appeals officer held an appeals_office hearing with petitioners with respect to the notice of tax_lien at the appeals_office hear- ing the appeals officer gave petitioners form_4340 certificate of assessments payments and other specified matters form with respect to their taxable_year on date the appeals_office issued to petitioners a notice_of_determination concerning collection action s under sec_6320 and or notice_of_determination an attach- 4petitioners’ attachment to form contained statements contentions arguments and requests that are very similar to the statements contentions arguments and requests contained in the attachments to forms filed with the internal_revenue_service by certain other taxpayers with cases in the court see eg flathers v commissioner tcmemo_2003_60 ment to the notice_of_determination stated in pertinent part what is the issue you requested a hearing under the provisions of sec_6320 to prevent the appropriate collection action the only issue raised by you was to dispute the authority under which the service has assessed tax and is at- tempting to collect the tax you raised no non-frivo- lous issues at the hearings held verification of legal and procedural requirements notice_and_demand was issued by regular mail for the above year to your last_known_address as required under sec_6303 the notice_of_federal_tax_lien letter was sent to you by certified mail dated date you responded timely with a request for a col- lection due process hearing so you are entitled to judicial review a certified transcript was requested reviewed and a copy was provided to you at the hearing held appeals officer tony aguiar has had no other involvement with this case in respect to this liability issues raised by the taxpayer you claim you did not receive a statutory notice_and_demand or valid notice_of_deficiency for the sic although you had income you filed form_1040 for showing zero income you attached two pages to the tax_return disputing the authority of the service to assess and collect income_tax you were sent a statutory_notice_of_deficiency on date which gave you the opportunity to petition the united_states tax_court and raise issue with the amount owed you chose not to petition the tax_court the statutory_notice_of_deficiency defaulted and the amount per the notice was assessed the assessment is valid at the hearing you stated you did not believe there was any authority for the service to assess and collect income taxes you believe voluntary means giving you a choice of whether or not to pay income_tax you did not raise any collection alternatives balancing efficient collection the requirements for all applicable laws and adminis- trative procedures have been met the courts have addressed the arguments presented you received all required notices you were given the opportunity at the hearing to arrange for payment of the liability but neglected to do so you have neglected or refused to pay the government should be allowed to proceed with its proposed enforcement action the lien lacking your cooperation the proposed collection action bal- ances the need for efficient collection with your concern that any collection action be no more intrusive than necessary on date petitioners filed a petition with the court for review of respondent’s notice_of_determination with respect to petitioners’ unpaid liability for except for an argument under sec_7521 the petition contains state- ments contentions arguments and requests that the court finds to be frivolous and or groundless with respect to sec_7521 petitioners allege in the petition that the appeals_office refused to allow them to make an audio recording of the appeals_office hearing held on date and that that refusal was improper under that section discussion the court may grant summary_judgment where there is no genuine issue of material fact and a decision may be rendered a sec_5the frivolous and or groundless statements contentions arguments and requests in petitioners’ petition are very similar to the frivolous and or groundless statements contentions arguments and requests in petitions filed by certain other taxpayers with cases in the court see eg copeland v commissioner tcmemo_2003_46 smith v commissioner tcmemo_2003_45 a matter of law rule b 98_tc_518 affd 17_f3d_965 7th cir we conclude that there are no genuine issues of material fact regarding the questions raised in respondent’s motion where as is the case here the validity of the underlying tax_liability is not properly placed at issue the court will review the determination of the commissioner of internal revenue for abuse_of_discretion 114_tc_604 114_tc_176 as was true of petitioners’ attachment to their return and petitioners’ attachment to form petitioners’ petition except for an argument under sec_7521 contains state- ments contentions arguments and requests that the court finds to be frivolous and or groundless we turn to petitioners’ argument under sec_7521 that the refusal by the appeals_office to permit petitioners to make an audio recording of the appeals_office hearing held on date was improper throughout the period commencing with petitioners’ filing their joint_return with respondent and ending with their filing the petition with the court petitioners have made statements and requests and advanced contentions and arguments that the court has found to be frivolous and or ground- less consequently even though we recently held in keene v commissioner t c __ that sec_7521 re- quires the appeals_office to allow a taxpayer to make an audio recording of an appeals_office hearing held pursuant to sec_6330 we conclude that it is not necessary and will not be productive to remand this case to the appeals_office for another hearing under sec_6320 in order to allow petitioners to make such an audio recording see 117_tc_183 and it is not necessary or appropriate to reject respondent’s determination to proceed with the collec- tion action as determined in the notice_of_determination with respect to petitioners’ unpaid liability for see id based upon our examination of the entire record before us we find that respondent did not abuse respondent’s discretion in determining to proceed with the collection action as determined in the notice_of_determination with respect to petitioners’ taxable_year in respondent’s motion respondent requests that the court require petitioners to pay a penalty to the united_states pursu- ant to sec_6673 sec_6673 authorizes the court to require a taxpayer to pay to the united_states a penalty in an amount not to exceed dollar_figure whenever it appears to the court inter alia that a proceeding before it was instituted or maintained primarily for delay sec_6673 or that the taxpayer’s position in such a proceeding is frivolous or ground- 6see kemper v commissioner tcmemo_2003_195 less sec_6673 in 115_tc_576 we issued an unequivocal warning to taxpayers concerning the imposi- tion of a penalty under sec_6673 on those taxpayers who abuse the protections afforded by sec_6320 and sec_6330 by instituting or maintaining actions under those sections primarily for delay or by taking frivolous or groundless positions in such actions in the instant case petitioners advance we believe primar- ily for delay frivolous and or groundless contentions argu- ments and requests thereby causing the court to waste its limited resources we shall impose a penalty on petitioners pursuant to sec_6673 in the amount of dollar_figure on the record before us we shall grant respondent’s motion to reflect the foregoing an order granting respondent’s motion and decision will be entered for respondent


internal_revenue_service department of the treasury number release date index numbers washington dc person to contact refer reply to cc corp plr-152858-02 date date legend parent purchaser target seller date a date b tax professional dollar_figurex dear this letter responds to a letter dated date submitted on behalf of parent requesting an extension of time under sec_301_9100-3 of the procedure and administration regulations to file an election parent is requesting an extension to file a sec_338 election under sec_338 with respect to purchaser’s acquisition of the stock of target hereinafter referred to as the election on date a additional information was received in a letter dated date the material information is summarized below plr-152858-02 parent is the common parent of a consolidated_group purchaser a foreign_corporation is an indirect subsidiary of parent after the purchase target became a subsidiary of purchaser and a foreign indirect subsidiary of parent on date a purchaser acquired all of the stock of target from seller a foreign individual in exchange for dollar_figurex it is represented that purchaser’s acquisition of the stock of target qualified as a qualified_stock_purchase as defined in sec_338 prior to the acquisition target did not file a united_states income_tax return was not subject_to united_states income_taxation nor was required under sec_1_6012-2 to file a united_states income_tax return in addition target was not a controlled_foreign_corporation within the meaning of sec_957 a passive_foreign_investment_company for which an election under sec_1295 was in effect or a foreign_investment_company or a foreign_corporation the stock ownership of which is described in sec_552 the election was due on date b but for various reasons a valid election was not filed subsequently this request was submitted under sec_301_9100-3 for an extension of time to file the election the period of limitations on assessment under sec_6501 has not expired for parent’s consolidated group’s or target’s taxable years in which the acquisition occurred the taxable years in which the election should have been filed or any taxable years that would have been affected by the election had it been timely filed sec_338 permits certain stock purchases to be treated as asset acquisitions if the purchasing_corporation makes or is treated as having made a sec_338 election or a sec_338 election and the acquisition is a qualified_stock_purchase under sec_301_9100-1 the commissioner has discretion to grant a reasonable extension of time to make a regulatory election or a statutory election but no more than six months except in the case of a taxpayer who is abroad under all subtitles of the internal_revenue_code except subtitles e g h and i sec_301_9100-1 through provide the standards the commissioner will use to determine whether to grant an extension of time to make a regulatory election sec_301_9100-1 sec_301_9100-2 provides automatic extensions of time for making certain elections requests for relief under sec_301_9100-3 will be granted when the taxpayer provides evidence to establish that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government sec_301_9100-3 in this case the time for filing the election is fixed by the regulations ie sec_1_338-2 therefore the commissioner has discretionary authority under sec_301_9100-3 to grant an extension of time for parent to file the election provided parent acted reasonably and in good_faith the requirements of sec_301_9100-1 and plr-152858-02 are satisfied and granting relief will not prejudice the interests of the government information affidavits and representations submitted by parent and tax professional explain the circumstances that resulted in the failure to timely file a valid election the information establishes that parent reasonably relied on a qualified_tax professional who failed to make or advise parent to make the election the request for relief was filed before the failure to make the election was discovered by the internal_revenue_service and that the government will not be prejudiced if relief is granted see sec_301_9100-3 and v based on the facts and information submitted including the representations made we conclude that parent has shown it acted reasonably and in good_faith the requirements of sec_301_9100-1 and sec_301_9100-3 are satisfied and granting relief will not prejudice the interests of the government accordingly an extension of time is granted under sec_301_9100-3 until days from the date on this letter for parent to file the election with respect to the acquisition of the stock of target as described above within days of the date on this letter parent must file the election on form_8023 executed on or after the date on this letter in accordance with sec_1_338-2 sec_1_338-2 and the instructions to the form a copy of this letter must be attached to form_8023 within days of the date on this letter all relevant parties must file or amend as applicable all returns and amended returns if any necessary to report the transaction as a sec_338 transaction for the taxable_year in which the transaction was consummated and for any other affected_taxable_year a copy of this letter and a copy of form_8023 must be attached to the returns the above extension of time is conditioned on the taxpayers' parent's consolidated group’s and target’s tax_liability if any being not lower in the aggregate for all years to which the election applies than it would have been if the election had been timely made taking into account the time_value_of_money no opinion is expressed as to the taxpayers’ tax_liability for the years involved a determination thereof will be made by the applicable director’s office upon audit of the federal_income_tax returns involved further no opinion is expressed as to the federal_income_tax effect if any if it is determined that the taxpayers’ tax_liability is lower sec_301_9100-3 we express no opinion as to whether the acquisition of the target stock qualifies as a qualified_stock_purchase under sec_338 or any other tax consequences arising from the election plr-152858-02 in addition we express no opinion as to the tax consequences of filing the election late under the provisions of any other section of the code and regulations or as to the tax treatment of any conditions existing at the time of or resulting from filing the election late that are not specifically set forth in the above ruling for purposes of granting relief under sec_301_9100-3 we relied on certain statements and representations made by the taxpayers however the director should verify all essential facts in addition notwithstanding that an extension is granted under sec_301_9100-3 to file the election penalties and interest that would otherwise be applicable if any continue to apply this letter is directed only to the taxpayer s who requested it sec_6110 provides that it may not be used or cited as precedent pursuant to the power_of_attorney on file in this office a copy of this letter is being sent to your authorized representative sincerely ken cohen senior technician reviewer branch office of associate chief_counsel corporate


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 corp b2 plr-119979-14 date date internal_revenue_service number release date index number --------------------- ----------------------------- ---------------------------------- -------------------------------------------------- ------------------------------------- legend date date date m n o ------------------ ------------------ ---------------------- --------------- ------ -------- agreement x ----------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------- ---------- dear ----------- this letter responds to your representative’s date letter requesting that we supplement a private_letter_ruling dated date plr-137279-13 the original ruling the information submitted for the original ruling and this supplemental request is summarized below capitalized or underlined terms not defined in this letter have the meanings assigned to them in the original ruling the rulings contained in this letter are based upon facts and representations submitted by the taxpayer and accompanied by a penalties of perjury statement executed by an appropriate party this office has not verified any of the materials submitted in support plr-119979-14 of the request_for_ruling verification of the information representations and other data may be required as part of the audit process supplemental facts due to certain developments distributing plans to make the distribution on a later date within the planned time frame on date and date distributing acquired dollar_figurem worth of controlled stock on the open market the purchased shares as a result and taking into account subsequent exercises of controlled stock_options distributing currently owns approximately n percent of controlled distributing was in control of controlled at the time of the acquisition distributing may also delay the distribution beyond the original planned time frame if the distribution is delayed until after date in order for distributing to maintain control_over controlled prior to the distribution distributing and controlled are contemplating entering into certain arrangements to supplement the separation agreement additional financial information has been submitted indicating that segment has had gross_receipts and operating_expenses representing the active_conduct_of_a_trade_or_business for each of the past five years distributing is also considering additional restructuring transactions including without limitation the separation of segment of business a which has recently been renamed from segment of business a after the distribution proposed transaction for what are represented as valid business reasons distributing proposed the following transaction the proposed transaction sec_1 for purposes of the distribution the distributing rsu holders will be treated by distributing as distributing shareholders and will receive controlled stock in the transaction nevertheless distributing will take actions as necessary and permitted to ensure it distributes control of controlled to actual distributing shareholders in the distribution sec_2 if the distribution is postponed until after date or in connection with the occurrence of certain exigent circumstances controlled may issue tandem stock appreciation rights the tandem sars to certain controlled option holders the tandem sars will grant the option holders the right to a cash settlement of the related option sec_3 in connection with the issuance of the tandem sars distributing and controlled may enter into a purchase agreement the purchase agreement under the plr-119979-14 purchase agreement distributing will purchase from controlled a specified amount of controlled stock for cash shares so purchased would be subject_to the transfer restrictions of sec rule distributing’s cash purchase would be intended to fund controlled’s cash settlement of the tandem sars the cash purchases under the purchase agreement and the separation agreement are collectively referred to as the cash contribution following the distribution distributing may retain certain shares in controlled distributing will retain controlled stock subject_to sec rule transfer restrictions if any and will distribute such shares to distributing shareholders at a later date to the extent necessary for distributing to distribute control in controlled to distributing’s shareholders the retained shares the retained shares will have been acquired by distributing pursuant to the separation agreement and or the purchase agreement immediately upon expiration of the sec rule transfer restrictions distributing will distribute the retained shares to distributing’s shareholders and rsu holders of record as of the distribution date as described above distributing may also retain shares of controlled stock for future sale in the open market or in other taxable transactions the retained sale shares the retained sale shares may have been acquired as purchased shares or pursuant to the purchase agreement or the separation agreement the retained sale shares will constitute the percentage of controlled stock owned by distributing prior to the distribution in excess of o percent provided that in all events distributing shall distribute an amount of controlled stock to its shareholders and not taking into account any controlled shares distributed to distributing’s rsu holders in the distribution constituting control the retained sale shares are retained for sale to help raise cash for distributing’s business operations supplemental representations the taxpayer makes the following representations for the proposed transaction a b the taxpayer reaffirms all of the facts representations and statements contained in the original ruling as modified herein and as modified by the supplemental submissions no part of the consideration to be distributed by distributing in the distribution will be received by a shareholder of distributing as a creditor or an employee or in any capacity other than that of a shareholder of distributing except in the case of a distributing shareholder that also holds distributing rsus and to the extent such holder receives a distribution of controlled stock with respect to its rsus in the distribution in addition the distribution of controlled stock to distributing’s shareholders in the distribution is with respect to their ownership of distributing stock plr-119979-14 c d e f g h i j k distributing will distribute to its shareholders an amount of stock in controlled constituting control within the meaning of sec_368 distributing will hold the retained sale shares if any following the distribution to provide flexibility in obtaining working_capital to and reducing the indebtedness if any of distributing any retained sale shares will be sold as soon as commercially practicable but in no event later than five years after the distribution after the distribution distributing will vote the retained sale shares if any in proportion to votes cast by the other controlled shareholders and will grant to controlled a proxy for the retained sale shares requiring this manner of voting from the date of the distribution until the date distributing has disposed of all retained sale shares no director or officer of distributing or any of its subsidiaries will be a director or officer of controlled or any of its subsidiaries except for a distributing officer board member and a distributing board member who will each serve on controlled’s board after the distribution solely to accommodate controlled’s business needs the total adjusted_basis of the assets transferred to controlled in the cash contribution will exceed the sum of i the total liabilities assumed as determined under sec_357 by controlled if any and ii the total amount of any money and the fair_market_value of any other_property within the meaning of sec_361 received by distributing from controlled and transferred to distributing’s creditors in connection with the reorganization the total fair_market_value of the assets transferred to controlled in the cash contribution will exceed the sum of i the amount of any liabilities assumed as determined under sec_357 by controlled in connection with the cash contribution if any ii the amount of any liabilities owed to controlled by distributing that will be discharged or extinguished in connection with the cash contribution if any and iii the amount of any cash and fair_market_value of any other_property other than stock and securities permitted to be received under sec_361 without the recognition of gain received by distributing in connection with the cash contribution if any the fair_market_value of the assets of controlled will exceed the amount of its liabilities immediately after the cash contribution the aggregate fair_market_value of the assets distributing transfers to controlled in the cash contribution will equal or exceed the aggregate adjusted_basis of those assets plr-119979-14 l m n o no two parties to the distribution are investment companies as defined in sec_368 and iv distributing and controlled and their respective shareholders will each pay their own expenses if any incurred in connection with the distribution each reference to business a in the representations set forth in the original ruling shall refer to segment of business a the distribution without regard to any transaction contemplated under agreement x is not part of a plan or series of related transactions within the meaning of sec_1_355-7 pursuant to which one or more persons will acquire directly or indirectly stock representing a 50-percent_or_greater_interest within the meaning of sec_355 in distributing or controlled including any predecessor or successor of either corporation supplemental rulings based solely on the information submitted and the representations set forth above and provided that i the distribution of controlled stock to distributing’s shareholders in the distribution is with respect to their ownership of distributing stock ii any money property or stock contributed by distributing to controlled in the cash contribution is exchanged or deemed exchanged solely for stock_or_securities of controlled and iii any other transfer of stock money or property between distributing controlled or any distributing shareholder is respected as a separate transaction we rule as follows the proposed transaction will not adversely affect the original ruling which will remain in full force and effect except as modified herein the cash contribution if any together with the distribution will be a reorganization within the meaning of sec_368 distributing and controlled will each be a_party_to_a_reorganization within the meaning of sec_368 distributing will recognize no gain_or_loss on the cash contribution sec_357 and sec_361 controlled will recognize no gain_or_loss on the cash contribution sec_1032 provided that controlled is a member of the distributing sag within the meaning of sec_1_355-2 after the acquisition of the purchased shares sec_355 will not treat as other_property any part of the purchased shares plr-119979-14 if the cash contribution occurs earnings_and_profits will be allocated between distributing and controlled in accordance with sec_312 and sec_1_312-10 and sec_1_1502-33 the retention of the retained sale shares if any by distributing following the distribution will not be pursuant to a plan having as one of its principal purposes the avoidance of federal_income_tax within the meaning of sec_355 caveats temporary or final regulations pertaining to one or more of the issues addressed in this ruling have not yet been adopted therefore this ruling will be modified or revoked by the adoption of temporary or final regulations to the extent the regulations are inconsistent with any conclusion in the letter_ruling see section dollar_figure of revproc_2014_1 2014_1_irb_1 however when the criteria in section dollar_figure of revproc_2014_1 2014_1_irb_1 are satisfied a ruling is not revoked or modified retroactively except in rare or unusual circumstances additionally except as specifically provided herein we express no opinion concerning the tax consequences of any aspect of any matter or item discussed or referenced in this letter moreover no opinion is expressed about the tax treatment of the transaction or of any other matter under other provisions of the code or regulations or about the tax treatment of any conditions existing at the time of or effects resulting from the proposed transaction not specifically covered by the above rulings in particular no opinion is expressed regarding i ii whether the distribution satisfies the business_purpose requirement of sec_1_355-2 whether the distribution is used principally as a device for the distribution of the earnings_and_profits of distributing or controlled or both see sec_355 and sec_1_355-2 iii whether the distribution is part of a plan or series of related transactions pursuant to which one or more persons will acquire directly or indirectly stock representing a percent or greater interest in distributing or controlled see sec_355 and sec_1_355-7 or iv the tax consequences to distributing and distributing’s rsu holders upon the distribution of controlled stock to distributing’s rsu holders plr-119979-14 procedural statements this letter is directed only to the taxpayer who requested it sec_6110 of the code provides that this letter may not be used or cited as precedent 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 in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representatives sincerely _____________________________ gerald b fleming senior technician reviewer branch office of associate chief_counsel corporate


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 plr-121891-09 date date ---------------------------------------------- x -------------------------------------------------- country ---------------------- -------------------------- date dear ------------------ this responds to a letter dated date 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 make an entity classification election the information submitted states that x was formed under the laws of country x represents that x is a foreign_entity eligible to be treated as a disregarded_entity but that it failed to timely file form_8832 entity classification election 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 a business_entity is any entity recognized for federal tax purposes that is not properly classified as a_trust under sec_301_7701-4 or otherwise subject_to special treatment under the internal_revenue_code 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 only one owner it may elect to be treated as a disregarded_entity pursuant to the rules in sec_301_7701-3 plr-121891-09 sec_301_7701-3 provides that to elect to be classified other than as provided in sec_301_7701-3 an eligible_entity must file form_8832 with the designated service_center and 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 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 and elect to be treated as a disregarded_entity effective date a copy of this letter should be attached to the form_8832 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 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 plr-121891-09 in accordance with a power_of_attorney on file with this office a copy of this letter is being sent to x’s authorized representative sincerely curt g wilson associate chief_counsel office_of_chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes cc


department of the treasury internal_revenue_service washington d c sep tax oxeurn and government entities division uniform issue list se‘tiep qa‘t legend taxpayer a taxpayer b k account c financial_institution d financial_institution e date f date g ira x roth_ira y amount amount dear this is in response to a letter dated date from your authorized representative as supplemented by correspondence dated april and date in which you request relief under sec_301_9100-3 of the procedure and administration regulations the regulations the following facts and representations support your ruling_request taxpayer a and taxpayer b collectively taxpayers are married taxpayer a maintained k account c with financial_institution d on date f upon the advice of her financial advisor at financial_institution d taxpayer a caused amount the entire balance of k account c to be transferred to a traditional_ira ira x a qualified_individual retirement arrangement established and maintained at financial_institution e under the rules of sec_408 of the internal_revenue_code the code on date g upon the advice of her financial advisor at financial_institution d taxpayer a caused ira x which at this time had a balance of amount to be converted to a roth_ira account roth_ira y upon advising taxpayer a to convert ira x into roth_ira y the financial advisor advised taxpayer a of the income limitations found in sec_408a of the code at the time of the conversion the taxpayers believed that their modified_adjusted_gross_income agi for the believed she was eligible to make the conversion described above under sec_408a of the code tax_year would be below dollar_figure and taxpayer a tax_year the taxpayers were not able to ascertain their modified agi tax_year until the issuance of numerous schedule k-1's from the various however because taxpayer b was part-owner of numerous pass-through entities during the 20c for the 20c entities upon receipt of all schedule k-1’s it became apparent that the taxpayers’ modified agi for exceeded the dollar_figure limit found at sec_408a of the code for purposes of determining the taxpayers’ eligibility to make a roth conversion for 20c and thus caused taxpayer a to be ineligible to convert ira x into roth_ira y the taxpayers requested and were granted an extension for filing jointly their federal_income_tax return until october however because certain schedule k-1's were not issued until after that deadline the taxpayers were not able to file their ‘tax return by the deadline as a result when the taxpayers discovered that the rollover of ira x into roth_ira y was not permitted the time for electing to recharacterize taxpayer a's roth_ira into a traditional_ira had already expired the taxpayers had no control_over the issuance of the schedule k-1’s and had no way of knowing what they would show until they were issued prior to being contacted by taxpayer a the internal_revenue_service the service had not discovered taxpayer a's failure to recharacterize as of the date of this ruling_request taxpayer a had not recharacterized her roth_ira ira y to a traditional_ira based on the above you through your authorized representative request the following letter_ruling that pursuant to sec_301_9100-3 of the regulations taxpayer a is granted a period of days from the date of this letter_ruling to recharacterize the failed roth_ira_conversion to a traditional_ira with respect to your request for relief under sec_301_9100-3 of the regulations sec_408a of the code and sec_1_408a-5 of the federal_income_tax regulations the i t regulations provide that except as otherwise provided by the secretary a taxpayer may elect to recharacterize an ira contribution made to one type of ira as having been made to another type of ira by making a trustee-to-trustee transfer of the ira contribution plus earnings to the other type of ira ina recharacterization the ira contribution is treated as having been made to the transferee ira and not the transferor ira under sec_408a and sec_1_408a-5 this recharacterization election generally must occur on or before the date prescribed by law including extensions for filing the taxpayer's federal_income_tax return for the year of contributions aoe 20u956053 sec_1_408a-5 q a-6 of the i t regulations describes how a taxpayer makes the election to recharacterize the ira contribution to recharacterize an amount that has been converted from a traditional_ira to a roth_ira the taxpayer must notify the roth_ira trustee of the taxpayer’s intent to recharacterize the amount the taxpayer must provide the trustee and the transferee trustee if different from the transferor trustee with specified information that is sufficient to effect the recharacterization and the trustee must make the transfer code sec_408a provides in relevant part that an individual with modified_adjusted_gross_income in excess of dollar_figure for a taxable_year is not permitted to make a qualified_rollover_contribution to a roth_ira from an individual_retirement_plan other than a roth_ira during that taxable_year sec_1_408a-4 q a-2 of the i t regulations provides in summary that an individual with modified_adjusted_gross_income in excess of dollar_figure for a taxable_year is not permitted to convert an amount to a roth_ira during that taxable_year sec_1_408a-4 q a-2 further provides in summary that an individual and his spouse must file a joint federal_income_tax return to convert a traditional_ira to a roth_ira and that the modified_adjusted_gross_income subject_to the dollar_figure limit for a taxable_year is the modified_adjusted_gross_income derived from the joint_return using the couple’s combined income sec_301_9100-1 sec_301_9100-2 and sec_301_9100-3 of the procedure and administration regulations in general provide guidance concerning requests for relief submitted to the service on or after date sec_301_9100-1 of the regulations provides that the commissioner of internal revenue in his discretion may grant a reasonable extension of the time fixed by a regulation revenue_ruling revenue_procedure notice or announcement published in the internal_revenue_bulletin for the making of an election or application_for relief in respect of tax under among others subtitle a of the code sec_301_9100-2 lists certain elections for which automatic extensions of time to file are granted sec_301_9100-3 of the regulations generally provides guidance with respect to the granting of relief with respect to those elections not referenced in sec_301_9100-2 the relief requested in this case is not referenced in sec_301_9100-2 sec_301_9100-3 of the regulations provides that applications for relief that fall within sec_301_9100-3 will be granted when the taxpayer provides sufficient evidence including affidavits described in sec_301_9100-3 to establish that the taxpayer acted reasonably and in good_faith and granting relief would not prejudice the interests of the government sec_301_9100-3 of the regulations provides that a taxpayer will be deemed to have acted reasonably and in good_faith i if the taxpayer's request for sec_301_9100-3 relief is filed before the failure to make a timely election is discovered by the service ii if the taxpayer failed to make the election because of intervening events beyond the taxpayer's control iii if the taxpayer failed to make the election because after exercising reasonable diligence the taxpayer was unaware of the necessity for the election iv the taxpayer reasonably relied upon the written advice of the service or v the 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 sec_301_9100-3 of the regulations provides that ordinarily the interests of the government will be treated as prejudiced and that ordinarily the service will not grant relief when tax years that would have been affected by the election had it been timely made are closed by the statute_of_limitations before the taxpayer's receipt of a ruling granting relief under this section in this case taxpayer a was ineligible to convert ira x into roth_ira y since her modified_adjusted_gross_income exceeded the dollar_figure limitation in code sec_408a however until she discovered otherwise she believed she was eligible to convert ira x into roth_ira y taxpayer a filed this request for sec_301 relief after discovering that she was ineligible to convert ira x into roth_ira y calendar_year running federal_income_tax return so the statute_of_limitations for that year has not begun is not a closed tax_year in addition taxpayers have not filed their with respect to your request for relief we believe that based on the information submitted and the representations contained herein the requirements of sec_301_9100-1 and sec_301_9100-3 of the regulations have been met and you have acted reasonably and in good_faith with respect to making the election to recharacterize your roth_ira as a traditional_ira specifically the service has concluded that you have met the requirements of clauses i and ii of sec_301_9100-3 of the regulations therefore you are granted a period of days from the date of the issuance of this letter_ruling to so recharacterize this ruling only applies to amounts converted from traditional_ira x to roth_ira y and not any regular contributions to the roth_ira this ruling is conditioned upon the taxpayers filing their 20c pursuant to the provisions of sec_1_408a-4 q a-2 b of the t regulations federal_income_tax return no opinion is expressed as to the tax treatment of the transaction described herein under the provisions of any other section of either the code or regulations which may be applicable thereto this ruling is based on the assumption that ira x and roth_ira y meet the requirements of code sec_408 and sec_408a respectively at all relevant times this letter is directed only to the taxpayer who requested it sec_6110 of the code provides that it may not be used or cited as precedent zvou9y50vu58 pursuant to a power_of_attorney on file with this office a copy of this letter_ruling is being sent to your authorized representative if you wish to inquire about this ruling please contact government identification_number xx-xxxxx by phone at xxx xxx-xxxx or by fax at xxx xxx-xxxx please address all correspondence to sincerely corder fi uettins carlton a watkins manager employee_plans technical group enclosures deleted copy of letter_ruling notice of intention to disclose cc