t c memo united_states tax_court shirley renee burton petitioner v commissioner of internal revenue respondent docket no 9946-02l filed date shirley renee burton pro_se sean r gannon for respondent memorandum opinion chiechi judge this case is before the court on respon- dent’s motion for summary_judgment respondent’s motion we 1although the court ordered petitioner to file a response to respondent’s motion petitioner failed to do so shall grant respondent’s motion background the record establishes and or the parties do not dispute the following petitioner resided in chicago illinois at the time she filed the petition in this case on date and date respectively respondent issued to petitioner notices of deficiency with respect to her taxable years and which she received in the notice_of_deficiency notice relating to petitioner’s taxable_year respondent determined a deficiency in and additions under sec_6651 and sec_6653 to peti- tioner’s federal_income_tax tax for that year in the respective amounts of dollar_figure dollar_figure and dollar_figure in the notice relating to petitioner’s taxable_year respondent determined a defi- ciency in petitioner’s tax for that year of dollar_figure petitioner did not file a petition in the court with respect 2respondent concedes in respondent’s motion that the col- lection actions taken against petitioner as they relate to petitioner’s income_tax_liability for tax_year are im- proper respondent further states that respondent is in the process of abating the assessment of petitioner’s income_tax_liability and additions to tax for taxable_year in light of respondent’s concession with respect to petitioner’s taxable_year we shall address the collection actions at issue only with respect to petitioner’s taxable years and 3all 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 to the notice relating to her taxable_year or the notice relating to her taxable_year on date respondent assessed petitioner’s tax as well as additions to tax and interest as provided by law for her taxable_year on date respondent also assessed petitioner’s tax as well as interest as provided by law for her taxable_year we shall refer to those as- sessed amounts as well as interest as provided by law accrued after date as petitioner’s unpaid liabilities for and respondent issued to petitioner the notices and demand for payment required by sec_6303 with respect to petitioner’s unpaid liabilities for and on or about date respondent filed a notice_of_federal_tax_lien tax_lien_filing with the recorder of deeds cook county chicago illinois with respect to inter alia petitioner’s unpaid liabilities for and the tax_lien_filing listed petitioner’s name and the address of her residence on date respondent issued to petitioner a notice_of_federal_tax_lien filing and your right to a hearing notice of tax_lien with respect to inter alia her unpaid liabilities for and on date respondent issued to petitioner a final notice_of_intent_to_levy and notice of your right to a hearing notice_of_intent_to_levy with respect to inter alia those unpaid liabilities on or about date in response to the notice of tax_lien and the notice_of_intent_to_levy petitioner filed form request for a collection_due_process_hearing form and requested a hearing with respondent’s appeals_office appeals_office on date a settlement officer with respondent’s appeals_office settlement officer held a telephonic appeals_office hearing with petitioner with respect to the notice of tax_lien and notice_of_intent_to_levy during the telephonic appeals_office hearing the settlement officer relied on a transcript of petitioner’s account with respect to each of her taxable years and on date the appeals_office issued to petitioner a notice_of_determination concerning collection action s under sec_6320 and or notice_of_determination an attach- ment to the notice_of_determination stated in pertinent part issues raised in appeal the under-lying liability was challenged on the form the taxpayer also stated she did not own the property located at the address listed on the notice_of_federal_tax_lien a telephone conference was held with the taxpayer on she stated she did not feel the figures reflected on the lien or notice were correct because she did not materially participate in the examination of the subject returns in addition she stated she was unable to pay any amount due because she did not have steady income the settlement officer provided details concerning the and tax years in that she did provide the examiner with information that was used to adjust the calculation of tax penalty and interest the statu- tory notices of deficiency were mailed to her and she did not respond the services’ policy with regard to filing a lien is to file the lien in the county of residence using the last_known_address of record the ownership of the subject property does not dictate a lien filing the assessments were made in accordance with established procedures for billing and demand per sec_6321 collection or payment alternatives were discussed with the taxpayer two potential alternatives are an in- stallment agreement and an offer_in_compromise these cannot be considered until the taxpayer is in full compliance with all filing_requirements and submits detailed financial information neither compliance or financial information were provided to the settlement officer during this appeal process the taxpayer was advised interest and penalty will continue to accrue until the subject liabilities are paid in full or settled in some other manner verification of legal and procedural requirements prior to the lien being filed the tax assessments were made in accordance with established procedures notice_and_demand made and no payment remitted a notifica- tion dated was sent to the taxpayers’ address informing her of the potential for lien filing no response or payment in full resulted in the filing of a federal_tax_lien sources of collection were identified prior to issuance of the notice_of_intent_to_levy the under-lying assessments were made in accordance with established procedures recommendation all administrative procedures were followed by the service_center prior to issuance of the notice of lien and the notice_of_intent_to_levy both actions are sustained the levy action is necessary in the inter- est of effective tax_administration because the tax- payer has not fully cooperated with the service_center or appeals and has not filed tax returns for the years thru reproduced literally discussion the court may grant summary_judgment where there is no genuine issue of material fact and a decision may be rendered as 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 in her petition petitioner alleges i should not owe any taxes nor penalties inter- est for neither of these three tax years i do not know why i owe for i participated in an audit face-to-face for and gave all documents requested to prove any claimed deductions the irs audit person concluded after about 1½ year sic and had not fin- ished to my memory the paperwork i saw disal- lowed many legitimate deductions and i don’t understand that 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 actions as determined in the notice_of_determination with respect to petitioner’s taxable years and we have considered all of petitioner’s contentions argu- ments and requests that are not discussed herein and we find them to be without merit and or irrelevant on the record before us we shall grant respondent’s motion to reflect the foregoing and the concession of respondent an order granting respondent’s motion and an appropriate decision will be entered 4as noted in supra note respondent concedes that the collection actions with respect to petitioner’s taxable_year are improper


internal_revenue_service number release date index number -------------------------------------- ------------------------------ ------------------------- --------------------------------- in re ----------------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact -------------------- id no ------------------ telephone number ---------------------- refer reply to cc psi b04 plr-120677-16 date date legend decedent spouse date date ------------------------------------------------------ ------------------------- --------------------------- ---------------------------- dear -------------------- this letter responds to your personal representative’s letter of date requesting an extension of time pursuant to sec_301_9100-3 of the procedure and administration regulations to make the election under sec_2010 of the internal_revenue_code portability election to allow a decedent’s surviving_spouse to take into account that decedent’s deceased spousal unused exclusion dsue amount the facts and representations are as follows decedent died on date survived by spouse date is a date after the effective date of the amendment to sec_2010 which provides for portability of a dsue amount to a surviving_spouse to obtain the benefit of portability of decedent’s dsue amount to spouse decedent’s estate was required to file form_706 united_states estate and generation-skipping_transfer_tax return on or before the date that is nine months after decedent’s date of death or the last day of the period covered by an extension decedent’s form_706 was due on date but the estate did not file a form_706 to make the portability election by that date the estate discovered its failure to elect portability after the due_date for making the election at death all of decedent's assets passed directly to spouse either by designation tenancy with survivorship or state law accordingly spouse is considered the executor under section sec_2203 of the code and sec_20_6018-2 of the estate_tax regulations spouse represents that the value of decedent's gross_estate and adjusted_taxable_gifts is less than the basic exclusion amount in the year of the decedent's death plr-120677-16 spouse requests an extension of time pursuant to sec_301_9100-3 to elect portability of decedent's dsue amount pursuant to sec_2010 law and analysis sec_2001 imposes a tax on the transfer of the taxable_estate of every decedent who is a citizen or resident_of_the_united_states sec_2010 provides that a credit of the applicable credit_amount shall be allowed to the estate of every decedent against the tax imposed by sec_2001 sec_2010 provides that the applicable credit_amount is the amount of the tentative_tax that would be determined under sec_2001 if the amount with respect to which such tentative_tax is to be computed were equal to the applicable_exclusion_amount on date congress amended sec_2010 effective for estates of decedents dying and gifts made after date to allow portability of a decedent’s unused applicable_exclusion_amount between spouses tax relief unemployment insurance reauthorization and job creation act of pub_l_no sec_303 124_stat_3296 sec_2010 provides that the applicable_exclusion_amount is the sum of the basic exclusion amount and in the case of a surviving_spouse the dsue amount sec_2010 generally provides that the basic exclusion amount is dollar_figure to be adjusted for inflation annually after calendar_year sec_2010 defines the dsue amount to mean the lesser_of a the basic exclusion amount or b the excess of -- i the applicable_exclusion_amount of the last deceased spouse of the surviving_spouse over ii the amount with respect to which the tentative_tax is determined under sec_2001 on the estate of such deceased spouse sec_2010 provides that a dsue amount may not be taken into account by a surviving_spouse under sec_2010 unless the executor of the estate of the deceased spouse files an estate_tax_return on which such amount is computed and makes an election on such return that such amount may be so taken into account the election once made shall be irrevocable no election may be made if such return is filed after the time prescribed by law including extensions for filing such return sec_2010 provides that the secretary shall prescribe regulations as may be necessary or appropriate to implement sec_2010 plr-120677-16 sec_20_2010-2t a of the estate_tax regulations as in effect on date provides that to allow a decedent’s surviving_spouse to take into account that decedent’s dsue amount the executor of the decedent’s estate must elect portability of the dsue amount on a timely filed form_706 under sec_20_2010-2t a the due_date of an estate_tax_return required to elect portability is nine months after the decedent’s date of death or the last day of the period covered by an extension if an extension of time for filing has been granted under sec_20_2010-2t a the portability election is made by timely filing a complete and properly prepared estate_tax_return unless the executor satisfies the requirements for the election not to apply in sec_20_2010-2t a i sec_20_2010-2 provides that if there is no appointed executor any person in actual or constructive possession of any property of the decedent may timely file the estate_tax_return on behalf of the estate of the decedent and in so doing elect portability of the decedent’s dsue amount sec_301_9100-1 provides that the commissioner may grant a reasonable extension of time under the rules set forth in sec_301_9100-2 and sec_301_9100-3 to make a regulatory election or a statutory election but no more than six months except in the case of taxpayer who is abroad under all subtitles of the code except subtitles e g h and i sec_301_9100-1 provides that the term statutory election means an election whose due_date is prescribed by statute the term regulatory election means 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_9100-3 provides the standards the commissioner will use to determine whether to grant an extension of time to make an election whose due_date is prescribed by a regulation and not expressly provided by statute a request for relief under sec_301_9100-3 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 that granting relief will not prejudice the interests of the government sec_301_9100-3 provides that a taxpayer is deemed to have acted reasonably and in good_faith if after exercising reasonable diligence taking into account the taxpayer’s experience and the complexity of the return or issue the taxpayer was unaware of the necessity for the election the due_date for the portability election is prescribed by statute in the case of an estate required to file an estate_tax_return under sec_6018 see sec_2010 sec_6075 and sec_6018 in the case of an estate that is not required to file an estate_tax_return plr-120677-16 under sec_6018 the due_date is prescribed by regulation see sec_20_2010-2t a see also sec_20_2010-2 and revproc_2014_18 2014_7_irb_513 sec_2 accordingly in the latter case a taxpayer may seek an extension of time to elect portability under the provisions of sec_301_9100-3 sec_6018 requires the filing of an estate_tax_return in all cases where the gross_estate exceeds the basic exclusion amount in effect under sec_2010 for the calendar_year which includes the date of death for purposes of this determination under sec_6018 the basic exclusion amount is reduced but not below zero by the sum of a the amount of the adjusted_taxable_gifts within the meaning of sec_2001 made by the decedent after date plus b the aggregate amount allowed as a specific exemption under sec_2521 as in effect before its repeal by the tax reform act of with respect to gifts made by the decedent after date spouse represents that based on the value of the gross_estate and taking into account any taxable_gifts decedent’s estate is not required to file an estate_tax_return under sec_6018 under these facts the commissioner has discretionary authority under sec_301 to grant to decedent’s estate an extension of time to elect portability based on the facts submitted and the representations made we conclude that the requirements of sec_301_9100-3 have been satisfied accordingly we grant an extension of time of days from the date of this letter in which to elect portability under sec_2010 the election should be made by filing a form_706 together with a copy of this letter within days from the date of this letter to the cincinnati service_center at the following address internal_revenue_service cincinnati service_center stop cincinnati oh for purposes of electing portability the form_706 filed by decedent's_estate within days from the date of this letter will be considered to be timely filed the rulings contained in this letter are based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in support of the request for rulings it is subject_to verification on examination if it is later determined that based on the value of the gross_estate and taking into account any taxable_gifts decedent’s estate is required to file an estate_tax_return pursuant to sec_6018 the commissioner is without authority under sec_301_9100-3 to grant to decedent’s estate an extension of time to elect portability and the grant of the extension referred to in this letter is deemed null and void this ruling is directed only to the taxpayer requesting it sec_6110 provides that it may not be used or cited as precedent plr-120677-16 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 associate chief_counsel passthroughs special industries by karlene lesho karlene lesho senior technician reviewer branch office of associate chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes


internal_revenue_service number release date index number ------------------- -------------------------------------------------- -------------------------------------- ------------------------------ - department of the treasury washington dc third party communication none date of communication not applicable_person to contact --------------------------- id no ------------- telephone number --------------------- refer reply to cc psi b01 plr-121972-06 date date legend x a state date1 dear ------------ ------------------------------------------------- ------------------------ ------------------- -------------------------- ------ -------------------- this letter responds to your letter dated date and related correspondence written on behalf of x requesting an extension of time under sec_301_9100-3 of the procedure and administration regulations to file a form_8832 entity classification election electing under sec_301_7701-3 to treat x as an association_taxable_as_a_corporation and under sec_1362 of the internal_revenue_code to file a late form_2553 electing to treat x as an s_corporation facts the information submitted states that x was formed as a limited_liability_company under the laws of state on date1 x intended to be an s_corporation effective date1 but the elections form and form were not filed plr-121972-06 law and analysis sec_301_7701-3 provides that a business_entity not classified as a corporation under sec_301_7701-2 or an eligible_entity can elect its classification for federal tax purposes sec_301_7701-3 provides that except as provided in sec_301 b relating to eligible entities existing prior to the effective date of this section unless the entity elects otherwise a domestic eligible_entity is classified as a partnership if it has two or more members and is disregarded as an entity separate from its owner if it has a single owner sec_301_7701-3 provides that an eligible_entity may elect to be classified other than as provided under sec_301_7701-3 by filing form_8832 entity classification election with the appropriate service_center under sec_301 c iii this election will be effective on the date specified by the entity on form_8832 or on the date filed if no such date is specified the date specified on form_8832 cannot be more than days prior to the date on which the election is filed under sec_301_9100-1 the commissioner may grant a reasonable extension of time to make a regulatory election or a statutory election but no more than six months except in the case of a taxpayer who is abroad under all subtitles of the code except e g h and i sec_301_9100-1 defines the term regulatory election as including an election whose deadline is prescribed by a regulation published in the federal_register sec_301_9100-1 through provide the standards the commissioner will use to determine whether to grant an extension of time to make an election sec_301_9100-2 provides automatic extensions of time for making certain elections sec_301_9100-3 provides extensions of time for making elections that do not meet the requirements of sec_301_9100-2 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_1362 provides that a small_business_corporation may elect to be an s_corporation sec_1362 provides the rule on when an s election will be effective if an s election is made within the first two and one-half months of a corporation's taxable_year then the corporation will be treated as an s_corporation for the year in which the election is made if the election is made after the first two and one-half months of a corporation's taxable_year then the corporation will not be treated as an s_corporation until the taxable_year after the year in which the s election is made plr-121972-06 sec_1362 provides that if no election is made pursuant to sec_1362 or if made the election is made after the date prescribed for making such an election and the secretary determines there was reasonable_cause for the failure to timely make the election then the secretary may treat such an election as timely made for such taxable_year and effective as of the first day of that tax_year conclusion based solely on the facts submitted and representations made we conclude that the requirements of sec_301_9100-3 are satisfied as a result x is granted an extension of time of days from the date of this letter to make an entity classification election by filing a form_8832 effective date1 with the appropriate service_center a copy of this letter should be attached to the election a copy of this letter is attached for this purpose further we conclude that x will be recognized as an s_corporation effective date1 provided that x otherwise qualifies as a subchapter_s_corporation and within days from the date of this letter x submits a properly completed form_2553 with a copy of this letter attached to the relevant service_center except as specifically set forth above we express or imply no opinion concerning the federal tax consequences of the facts described above under any other provision of the code this ruling is directed only to the taxpayer requesting it sec_6110 provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office a copy of this letter is being mailed to your authorized representative sincerely heather maloy associate chief_counsel office of the associate chief_counsel passthroughs special industries enclosures copy of this letter copy of this letter for sec_6110 purposes


department of the treasury internal_revenue_service washington d c tax_exempt_and_government_entities_division date apr its significant index no employer_identification_number legend contact person identification_number telephone number bs dear sir or madam this is in reference to a request dated date submitted by representatives of x the foundation for a ruling that for purposes of the minimum_investment_return calculation under sec_4942 of the internal_revenue_code the code the foundation's assets do not include the value of collateral that is received in connection with the foundation's securities_lending program the foundation has been recognized as exempt from federal_income_tax as an organization described in sec_501 of the code and has been classified as a private_foundation within the meaning of sec_509 the foundation is dedicated to the promotion of charitable purposes in the areas of arts and culture civic and public affairs education health and human services under a securities_lending and guaranty arrangement in place with y the bank the foundation loans certain securities included in its investment portfolio to approved borrowers the loans are terminable upon 5-days notice by the foundation the bank acts as custodian on these transactions to receive from the borrowers collateral with a value of at least percent of the market_value of the loaned securities the collateral is adjusted daily as the market_value of the loaned securities fluctuates the collateral which is held by the bank is invested in commingled cash management funds as approved by the foundation the foundation cannot acquire access to sell or pledge the collateral and the collateral will not be disposed of or realized upon unless and until the borrower defaults the foundation must approve investment vehicles for the collateral and the foundation bears market risk for any decrease in the value of the collateral investments upon the termination of the lending arrangement the foundation is entitled to receive back from the borrowers either the original securities or securities identical to those loaned the bank as custodian indemnifies the foundation for borrower defaults as compensation_for the loan of its securities the foundation receives a share of the earnings on the collateral both the securities loaned and the revenue generated by the foundation's investment of the posted collateral are included in the foundation's assets and investment_income for purposes of calculating the minimum_investment_return under sec_4942 of the code prior to the foundation's financial statements did not reflect either the collateral received in the securities_lending transactions as assets or the offsetting obligation to repay the collateral upon the termination of the transaction as a liability you state that in date the financial_accounting standards board issued statement of financial_accounting standards no accounting for transfers and servicing of financial_assets and extinguishments of liabilities fasb you also state that fasb replaced fasb statement no in its entirety and is effective with respect to disclosures regarding securitizations and collateral in financial statements for fiscal years ending after date you note that under the revised rules of fasb a secured borrowing such as the foundation's securities_lending transactions through the bank must be disclosed on the lending entity's financial statements by means of exactly offsetting asset and liability entries on the balance_sheet the asset is the amount of collateral received and the offsetting liability is the exactly corresponding obligation to return that collateral when the borrowed securities are returned the foundation's auditors have determined that under fasb for financial statement purposes the foundation's transfers of portfolio securities to the bank pursuant to the securities_lending transactions must be accounted for in this manner as a secured borrowing accordingly on its financial statements for the year ended date the foundation reflected the collateral received and the corresponding obligation to return the collateral under securities_lending transactions as assets and liabilities respectively on its balance sheets specifically the cash collateral received which is held by the bank as custodian is considered the amount borrowed and recorded as a foundation asset on the balance_sheet the foundation’s corresponding and exactly offsetting obligation to return the collateral to borrowers is recorded as a foundation liability the securities loaned continue to be reflected as assets on the books of the foundation and are included in the foundation's audited financial statements as investments thus you state that while fasb now requires disclosure of the collateral received and the obligation to return it on the balance_sheet there is no impact on the foundation's net assets sec_4942 of the code imposes an excise_tax on the undistributed_income_of_a_private_foundation for any taxable_year the term undistributed_income is defined in sec_4942 as for any taxable_year as of any time the amount by which the statutorily required distributable_amount exceeds qualifying distributions made before such time out of the distributable_amount the distributable_amount for any taxable_year is an amount equal to the sum of the minimum_investment_return plus the amounts described in sec_4942 reduced by the taxes imposed on the foundation for the taxable_year under subtitle a and sec_4940 sec_4942 requires that the foundation must include in the distributable_amount certain amounts that constitute repayments or other returns of amounts previously accounted for as qualifying distributions mo - sec_4942 of the code defines minimum_investment_return as five percent of the excess of the aggregate fair_market_value of all assets of the foundation other than those directly used to carry out the foundation's exempt_purpose over the acquisition_indebtedness with respect to such assets determined under sec_514 without regard to the taxable_year in which the indebtedness was incurred sec_53_4942_a_-2 of the foundation and similar excise_taxes regulations regulations excludes future interests assets of an estate until such assets are distributed to the foundation or the estate is terminated present interests in trusts created and funded by another person pledges and any assets used or held for use directly in carrying out the foundation's exempt_purpose the regulation further defines assets used or held for use directly in carrying out exempt purposes to include administrative assets real_estate buildings and physical facilities used directly in exempt_activities interests in functionally related businesses or in program-related investments reasonable cash balances and property leased by a foundation in carrying out its exempt_purpose either at no cost or for a program-related purpose sec_512 of the code in part excludes from the computation of unrelated_business_taxable_income payments_with_respect_to_securities_loans as defined in sec_512 sec_512 of the code provides that the term payments_with_respect_to_securities_loans includes all amounts received with respect to a security transferred by the owner to another person including income from collateral security for such loan sec_514 of the code provides that payments_with_respect_to_securities_loans as defined in sec_512 shall be deemed to be derived from the securities loaned and not from collateral security or the investment of collateral security from such loans sec_514 provides that any deductions that are directly connected with collateral security for such loan or with the investment of collateral security shall be deemed to be deductions that are directly connected with the securities loaned sec_514 provides that an obligation to return collateral security shall not be treated as acquisition_indebtedness as defined in sec_514 in order to determine whether the foundation has complied with the requirements under sec_4942 of the code it is necessary to calculate the minimum_investment_return under sec_4942 which refers to the aggregate fair_market_value of the foundation's assets with regard to the foundation's securities_lending program the question presented is whether collateral received by the foundation must be taken into account in determining its assets sec_4942 and sec_53_4942_a_-2 of the regulations provide that assets used or held for use directly in carrying out the foundation's exempt_purpose are excluded from calculating its minimum_investment_return sec_53_4942_a_-2 excludes certain other assets from such calculations none of these provisions addresses the treatment of collateral in connection with securities_lending transactions nevertheless for purposes of preparing its financial statement the foundation may include as an asset collateral received in connection with its securities_lending transactions and as a liability its obligation to return the collateral to the borrowers by reflecting such offsetting amounts in its financial statement the foundation may comply with the advice of its auditors while not increasing the size of its assets for purposes of sec_4942 of the code the mete foundation's changing of its financial_accounting to reflect collateral as an asset offset by the liability will not change the substance of the underlying obligation to return such collateral as a securities_lending transaction and will not increase the foundation's payout requirements under ‘ sec_4942 the securities loaned and revenue generated by investing the collateral should continue to be included in the foundation's assets for purposes of computing the minimum_investment_return under sec_4942 accordingly we rule as follows for purposes of calculating the minimum_investment_return under sec_4942 of the code the foundation's assets do not include the value of the collateral received in connection with the foundation’s securities_lending program this ruling is based on the understanding that there will be no material changes in the _ tax exempt and facts upon which it is based any such change should be reported to the government entities te_ge customer service office because it could help resolve questions concerning your federal tax status this ruling should be kept in your permanent records a copy of this letter is being forwarded to the te_ge customer service office except as we have specifically ruled herein we express no opinion as to the consequences of these transactions under the cited provisions or under any other provisions of the code this ruling is directed only to the organization that requested it sec_6110 of the code provides that this ruling may not be used or cited by others as precedent if you have any questions about this ruling please contact the person whose name and telephone number are shown in the heading of this letter sincerely signed robert c harper jr robert c harper jr manager exempt_organizations technical group i g a


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 b03 plr-134489-12 date date legend --------------------------------------------------------------------------------------------------------------------- ------ --------------------------------------------------------------------------------------------------------------------- ----------------------------- --------------------------------------------------------------------------------------------------------------------- ---------------------------- ------------------------- ---------------------- ------------------------- ------------------------- ------------ x a b date date date date state dear ------------- this responds to a letter dated date and subsequent correspondence submitted on behalf of x by x’s authorized representatives requesting relief pursuant to sec_301_9100-3 of the procedure and administration regulations that x be granted an extension of time to elect to treat a and b as qualified subchapter_s subsidiaries qsubs under sec_1361 of the internal_revenue_code plr-134489-12 facts the information submitted states that x incorporated under the laws of state on date and filed an s_corporation_election effective for its taxable_year beginning date on date a was incorporated and elected to be treated as an s_corporation effective date all of a’s stock was acquired by x on date x intended to treat a as a qsub effective date on date a acquired all of the outstanding_stock of b an s_corporation x intended for b to be treated as a qsub effective date however due to inadvertence forms qualified_subchapter_s_subsidiary election were not timely filed for a and b x represents that x a and b have filed tax returns for all of the relevant tax years consistent with the tax treatment of a and b as qsubs law and analysis sec_1361 provides that except as provided in regulations prescribed by the secretary for purposes of title_26 - i a corporation which is a qsub shall not be treated as a separate corporation and ii all assets liabilities and items of income deduction and credit of a qsub shall be treated as assets liabilities and such items as the case may be of the s_corporation sec_1361 defines the term qualified_subchapter_s_subsidiary as a domestic_corporation which is not an ineligible_corporation as defined in sec_1361 if percent of the stock of the corporation is held by an s_corporation and the s_corporation elects to treat the corporation as a qsub sec_1_1361-3 of the income_tax regulations provides the time and manner of making a qsub election a taxpayer makes a qsub election for a subsidiary by filing form_8869 with the appropriate service_center sec_1_1361-3 provides that a qsub election cannot be effective more than two months and days prior to the date of filing sec_1_1361-3 provides that an extension of time to make a qsub election may be available under sec_301_9100-1 and sec_301_9100-3 sec_301_9100-1 provides that the commissioner has discretion to grant a reasonable extension of time under the rules set forth in sec_301_9100-2 and sec_301_9100-3 to make a regulatory election or a statutory election but no more than six months except in the case of a taxpayer who is abroad under all subtitles of the code except subtitles e g h and i sec_301_9100-1 defines a regulatory election to include an election whose due_date is prescribed by a regulation published in the federal_register plr-134489-12 sec_301_9100-2 provides automatic extensions of time for making certain elections sec_301_9100-3 provides extensions of time for making elections that do not meet the requirements of sec_301_9100-2 sec_301_9100-3 provides that requests for relief subject_to sec_301_9100-3 will be granted when the taxpayer provides the evidence including affidavits described in sec_301_9100-3 to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and the grant of relief will not prejudice the interests of the government conclusion based on the facts submitted and representations made we conclude that the requirements of sec_301_9100-3 have been satisfied consequently we grant x an extension of time of one hundred twenty days from the date of this letter to elect to treat a as a qsub effective date and b as a qsub effective date each election should be made by filing form_8869 with the appropriate service_center a copy of this letter should be attached to each election except as expressly provided herein we express or imply no opinion concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter specifically we express or imply no opinion concerning whether x is a valid s_corporation or whether a and b are eligible to be qsubs 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 a power_of_attorney on file with this office we are sending a copy of this letter to your authorized representatives plr-134489-12 the ruling contained in this letter is based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in support of the ruling_request it is subject_to verification on examination sincerely associate chief_counsel passthroughs special industries by ______________________________________ richard t probst senior technician reviewer branch office of the associate chief_counsel passthroughs special industries enclosures a copy of this letter a copy for sec_6110 purposes cc


t c memo united_states tax_court patricia ann blocker petitioner v commissioner of internal revenue respondent docket no 3129-04l filed date donald r williams for petitioner daniel n price for respondent memorandum findings_of_fact and opinion cohen judge this proceeding was commenced in response to a notice_of_determination concerning collection action s under sec_6320 and or the issue for decision is whether respondent correctly assessed petitioner’s underlying tax_liability which in turn depends on whether the statutory notice for not received by petitioner was sent to petitioner’s last_known_address findings_of_fact petitioner resided in san marcos texas at the time that she filed her petition in this case she was divorced from her former husband in petitioner married her present husband william p blocker blocker in petitioner and blocker did not file tax returns for or until date as a result of their failure_to_file timely income_tax returns and various employment tax-related matters in or about petitioner and blocker attempted to resolve their outstanding tax_liabilities by an offer_in_compromise in those efforts petitioner and blocker were aided by an enrolled_agent kathryn womack womack womack was informed that the offer_in_compromise would not be considered unless and until petitioner and blocker filed delinquent tax returns womack prepared and submitted for petitioner a tax_return on which petitioner’s total_tax was reported as dollar_figure the internal_revenue_service irs did not receive a federal_income_tax return from petitioner prior to receipt of the return prepared by womack in on date the irs sent to petitioner a letter stating that the irs had no record of receiving a return for that letter was sent to an address on bering drive in houston texas on date the irs sent to petitioner a notice_of_deficiency determining a deficiency in tax of dollar_figure for and additions to tax under sec_6651 and sec_6654 that letter was sent to an address on roydon drive in houston texas the notice_of_deficiency was returned to the irs marked moved left no address the deficiency determination was based on third-party reporting of wages earned by petitioner in the notice_of_deficiency set forth total income reported by payers see income sources dollar_figure the amounts included in the notice were reported to the irs on forms w-2 wage and tax statement that reflected an address for petitioner on jeanetta in houston texas when petitioner failed to respond to the date notice_of_deficiency on date the irs assessed the amounts determined in the notice and accrued interest when the irs received petitioner’s form_1040 u s individual_income_tax_return in the irs assessed an additional_amount of dollar_figure the difference between the amount determined in and the amount of tax reported on petitioner’s return filed in on date the irs sent to petitioner a notice_of_federal_tax_lien filing and your right to a hearing under sec_6320 the notice set forth petitioner’s unpaid liability for as dollar_figure which included the two assessments of tax and accrued additions to tax penalties and interest petitioner submitted a request for a collection_due_process_hearing on date a notice_of_determination concerning collection action s under sec_6320 and or sustaining the filing of the notice_of_federal_tax_lien was sent to petitioner that notice_of_determination is the basis of the current action on or about date petitioner submitted to the irs an amended return in the amended_return petitioner claimed a business loss on schedule c profit or loss from business and claimed an exemption for a dependent not previously claimed as a result petitioner contended that her total_tax liability for was dollar_figure petitioner never presented substantiation of the deductions claimed on the amended_return the claimed dependent filed her own return for and claimed an exemption for herself opinion the record in this case is cluttered with irrelevant arguments and factual assertions by both parties that are not supported by evidence in the record it is undisputed however that petitioner did not receive the statutory notice sent in with respect to her federal_income_tax liability for therefore we examine de novo petitioner’s underlying liability for that year as determined in the undelivered statutory notice see sec_6330 114_tc_604 petitioner contends that she filed a timely federal_income_tax return for showing an address on jeanetta in houston texas where she had lived since records of the irs consistently reflect that no return was filed for until the return filed by petitioner in petitioner’s assertion with respect to timely filing is uncorroborated in petitioner married blocker and they failed to file returns for several years thereafter on this record we cannot accept petitioner’s testimony that she filed a timely return for in addition we can give no credence to the deductions that petitioner claimed on her amended_return for filed in because she has presented no evidence to substantiate those deductions whether petitioner’s underlying liability exists therefore depends on whether the amounts assessed in were validly assessed which depends in turn on whether the statutory_notice_of_deficiency sent date was sent to petitioner’s last_known_address irs records reflect the roydon drive address from through the delinquent filing of returns by petitioner and blocker in petitioner has presented no evidence that she gave clear and concise notice of a change_of address to the irs at any time prior to petitioner does not deny that she lived at the roydon drive address in houston at some time her testimony is vague about where she lived at any time and is uncorroborated by any records the only thing clear is that she moved many times she contends that she lived with her former husband for a few months in that she lived on westerland avenue at the time of her divorce and that she lived at the jeanetta address in houston commencing in respondent contends without persuasive evidence in the record that petitioner rented the roydon drive address beginning in and then provided that address to the irs given petitioner’s failure to communicate with the irs it is more likely that the royden drive address was shown on a return filed for in any event prior to the roydon drive address was the address for petitioner reflected in irs records which were not changed again until petitioner also claims that the statutory notice should have been mailed to a bering drive address which was used on a letter sent to petitioner in date there is no explanation in the record as to how that address would have become known to the irs the bering drive address was not the address shown on any return filed by petitioner and there is no evidence as to whether or when she lived at that address the bering drive address thus cannot be considered her last_known_address petitioner contends that the irs should have mailed the notice_of_deficiency or remailed the notice_of_deficiency to the jeanetta address shown on the forms w-2 for sent to the irs by third-party payers of the income respondent argues that forms w-2 and other third-party payer reports do not constitute clear and concise notification of a change_of address for a taxpayer sec_6212 provides that a notice_of_deficiency in respect of an income_tax shall be sufficient if it is mailed to the taxpayer at his last_known_address generally the commissioner has no duty to effectuate delivery of the notice after it is mailed 93_tc_22 we have defined last_known_address as the address to which in light of all the surrounding facts and circumstances the commissioner reasonably believed the taxpayer wished the notice_of_deficiency to be sent 74_tc_430 see also 907_f2d_517 5th cir revg 92_tc_949 snow v commissioner tcmemo_1996_457 generally a taxpayer's last_known_address is the address shown on his or her most recently filed and properly processed return absent clear and concise notice of a different address 91_tc_1019 the notice_of_deficiency is deemed to have been mailed to petitioner at her last_known_address unless she provided respondent with clear and concise notice of a change_of address or prior to the mailing of the notice_of_deficiency respondent knew of a change in petitioner's address and did not exercise due diligence in ascertaining petitioner's correct address see abeles v commissioner supra 74_tc_377 62_tc_367 affd without published opinion 538_f2d_334 9th cir perkins v commissioner tcmemo_2002_174 petitioner has failed to show that she provided clear and concise notification of a change from the roydon drive address as to petitioner’s contention that respondent should have used the address listed on the forms w-2 for we stated in farnham v commissioner tcmemo_1991_642 that a requirement that the commissioner use addresses shown on such documents would not only impose an unreasonable administrative burden on respondent to record every address for every taxpayer but would cause uncertainty by requiring respondent to use an address which the taxpayer did not communicate to him and which the taxpayer did not clearly tell respondent to use id see also stroupe v commissioner tcmemo_1998_380 thiele v commissioner tcmemo_1994_33 another question in this case is whether the irs should have exercised diligence and located an additional address for petitioner after the statutory_notice_of_deficiency was returned undelivered whether the commissioner has exercised reasonable care and diligence is a question of fact 81_tc_42 the relevant facts are those known before the notice_of_deficiency was mailed such as return of letters sent to the taxpayer on earlier dates see 855_f2d_208 5th cir revg tcmemo_1987_363 in 864_f2d_1191 5th cir the court_of_appeals for the fifth circuit stated the relevant statutes simply require that the deficiency_notice be mailed to the taxpayer's last_known_address not that it be received the code does not require remailing the notice and nothing in the statute suggests that respondent would be obligated to take additional steps to effectuate delivery if the notice is returned monge v commissioner supra pincite a notice that is returned undelivered is still valid as long as it was sent to the last_known_address stroupe v commissioner supra thus respondent was not required to investigate further when the notice_of_deficiency was returned undelivered see monge v commissioner supra pincite snow v commissioner supra we have considered the other arguments of the parties and they are irrelevant and or lack merit to reflect the foregoing decision will be entered for respondent


internal_revenue_service number info release date date index no the honorable member u s house of representatives attention dear of mr this letter is in response to your inquiry dated date on behalf of your seeks guidance on constituent mr taxation issues related to a rental unit that he acquired in it appears from his letter that he acquired the unit in a like-kind_exchange under sec_1031 of the internal_revenue_code we are pleased to provide you with general information under the like-kind_exchanges rules no gain_or_loss is recognized on the exchange of property held for productive use in a trade_or_business or for investment if the property is exchanged solely for property of like_kind that is to be held either for productive use in a trade_or_business or for investment a taxpayer must report the exchange of business or investment_property for property of a like_kind on form_8824 like-kind_exchanges investment_property such as a rental unit is considered a capital_asset thus a taxpayer who sells a rental unit recognizes a capital_gain or loss from the sale of the unit a taxpayer who converts a rental unit to a personal_residence may after a 5-year period be able to exclude all or part of the gain from the sale of the principal_residence subject_to the rules of sec_121 under sec_121 a taxpayer may generally be able to exclude from income up to dollar_figure dollar_figure on a joint_return in most cases of gain from the sale of the taxpayer’s principal_residence to exclude gain under this section a taxpayer must have owned and lived in the property as the taxpayer’s main home for at least years during the 5-year period ending on the date he sells the residence i hope this information is helpful if you have any further questions please call identification_number at sincerely associate chief_counsel income_tax accounting _____________________ heather c maloy associate chief_counsel income_tax accounting


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-123989-04 date december legend x a b c d trust trust trust date date date date date --------------------------- ein ---------------- -------------------- --------------------- ssn ------------------ ------------------ ssn ------------------ ----------------- ssn ------------------ ------------------------------------------- ein ---------------- -------------------------------------- -------------------------------------------- ein ---------------- ---------------- -------------------------- -------------------- -------------------- -------------------- ------------------------ ------- ------- ------- ------- ------- ------- ------- ------- ---- ------ plr-123989-04 date year year year year year year year year y state dear ------------ this is in reply to your letter dated date and subsequent correspondence submitted on behalf of x requesting a ruling under sec_1362 of the internal_revenue_code the information submitted states that x was incorporated under the laws of state in year effective in year x elected to be an s_corporation on date a created trust on date a transferred y shares of x stock to trust trust was a revocable_trust at the time of the transfer of x stock to trust the shareholders of x were a b and c on date a died upon a’s death trust ceased to qualify as a grantor_trust trust continued to qualify as a subchapter_s_trust under sec_1361 for the 2-year period beginning on the day of the deemed owner’s death and ending on date trust did not distribute the shares of x stock on or before date accordingly trust ceased to qualify as an eligible shareholder on date pursuant to the terms of trust the assets of trust were to be held in a marital trust trust and a non-marital trust trust on date the y shares of x were transferred to trust trust was intended to qualify as a qualified_subchapter_s_trust plr-123989-04 qsst under sec_1361 however due to an oversight d the beneficiary of trust failed to file the qsst elections required under sec_1361 x represents that all of its shareholders have filed their returns in a manner consistent with x’s treatment as an s_corporation x also represents that the terminating event trust ceasing to be an eligible shareholder was not motivated by tax_avoidance or retroactive tax planning for the taxable_year year and part of year trust was treated as the owner of the x stock and filed its returns accordingly since date trust has been treated as the owner of the x stock and filed its returns accordingly x and x’s shareholders agree to make any adjustments consistent with the treatment of x as an s_corporation that the secretary may require sec_1361 of the code provides that an s_corporation means a small_business_corporation for which an election under sec_1362 is in effect for the taxable_year sec_1361 provides that the term small_business_corporation is a domestic_corporation which is not an ineligible_corporation and which does not have as a shareholder a person other than an estate and other than a_trust described in sec_1361 or an organization described in sec_1361 who is not an individual sec_1361 provides that for purposes of sec_1361 a_trust all of which is treated under subpart e of part i of subchapter_j of chapter i as owned by an individual who is a citizen or resident_of_the_united_states may be a shareholder sec_1362 provides that a_trust which was described in clause i immediately before the death of the deemed owner and which continues in existence after such death but only for the year period beginning on the day of the deemed owner’s death may be a shareholder sec_1361 provides that in the case of a qsst with respect to which a beneficiary makes an election under sec_1361 such trust shall be treated as a_trust described in sec_1361 and for purposes of sec_678 the beneficiary of such trust shall be treated as the owner of that portion of the trust which consists of stock in an s_corporation with respect to which the election under sec_1361 is made sec_1361 provides that a beneficiary of a qsst or his legal_representative may elect to have sec_1361 apply sec_1362 provides that an election under sec_1361 shall be effective up to days and months before the date of the election sec_1_1361-1 of the income_tax regulations provides that the current income_beneficiary of the trust must make the election under sec_1361 by signing plr-123989-04 and filing with the service_center with which the corporation files its income_tax return the applicable form or a statement including the information listed in sec_1_1361-1 sec_1362 provides that an election under sec_1362 shall be terminated whenever at any time on or after the first day of the taxable_year for which a corporation is an s_corporation such corporation ceases to be a small_business_corporation a termination of an s_corporation_election under sec_1362 is effective on and after the date of cessation sec_1362 provides that if an election under sec_1362 by any corporation a was not effective for the taxable_year for which made determined without regard to sec_1362 by reason of a failure to meet the requirements of sec_1361 or to obtain shareholder consents or b was terminated under paragraph or of sec_1362 the secretary determines that the circumstances resulting in such ineffectiveness or termination were inadvertent no later than a reasonable period of time after discovery of the circumstances resulting in such ineffectiveness or termination steps were taken a so that the corporation is a small_business_corporation or b to acquire the required shareholder consents and the corporation and each person who was a shareholder in the corporation at any time during the period specified pursuant to sec_1362 agrees to make such adjustments consistent with the treatment of the corporation as an s_corporation as may be required by the secretary with respect to such period then notwithstanding the circumstances resulting in such ineffectiveness or termination the corporation shall be treated as an s_corporation during the period specified by the secretary based solely on the facts submitted and the representations made we conclude that x’s s election was terminated on date the day after the two year period that began on date because trust was no longer an eligible shareholder of x we conclude that this termination was inadvertent within the meaning of sec_1362 furthermore if the s_corporation_election had not been otherwise terminated on date x’s s election would have terminated on date when trust an ineligible shareholder first acquired x stock this potential termination would have also been an inadvertent termination under sec_1362 accordingly under the provisions of sec_1362 x will be treated as continuing to be an s_corporation from date and thereafter provided that x’s s election was valid and was not otherwise terminated under sec_1362 this ruling is contingent on x and all of its shareholders treating x as having been an s_corporation for the period beginning date and thereafter accordingly all of the shareholders in x in determining their respective income_tax liabilities for the period beginning date and thereafter must include their pro_rata share of the separately_stated and non-separately computed items of x as provided in sec_1366 make any adjustments to basis provided in sec_1367 and take into account any distributions made by x as provided in sec_1368 if x or its shareholders fail to treat themselves as described above this ruling shall be null and void plr-123989-04 furthermore this ruling is contingent on trust making a qsst election effective date with the appropriate service_center within days of the date of this letter and attaching a copy of this letter to the election this ruling is also contingent on trust and d amending their respective tax returns for taxable_year year and year in order to conform with the proper treatment of trust as a qsst except as specifically ruled upon above we express no opinion concerning the federal tax consequences of the transactions described above under any other provisions of the code specifically no opinion is expressed on whether x is otherwise eligible to be treated as an s_corporation or whether trust is eligible to be a qsst this ruling is directed only to the taxpayer who requested it sec_6110 provides that it may not be used or cited as precedent pursuant to the power_of_attorney on file with this office a copy of this letter is being sent to the taxpayer sincerely j thomas hines chief branch associate chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes


internal_revenue_service number release date index number 468a ---------------------------- ------------------------------------------------------------ ---- -------------------------- ------------- ---------------------------------- --------------------------------------- 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 b6 plr-114659-08 date date re schedule of deductions ----------------------------------------------------------------------- legend taxpayer company a company b plant -------------------------- ein ---------------- ------------------------------------------- ein ---------------- ---------------------------------------------- ein ---------------- --------------------------------------------------------------------------------- -------------------------------------------------------------------------------- location independent study ----------------------------------------------------------------------------------------------------------- method commission order fund director --------------------------------------------------------------------------------- ----------- ---------------------------------------------------- ------------------------------------------------------------------ ------------------------------------------- --------------------------------------------------------------------------------- --------------------------- --------------------------------------------------------------------------------- dear ------------ this letter responds to your request dated --------------------- for an initial schedule of deduction amounts pursuant to sec_1_468a-8t c of the income_tax regulations and a mandatory request for a revised schedule of ruling amounts pursuant to sec_468a of the internal_revenue_code and regulations sec_1 468a- 3t f iii for the fund taxpayer was previously granted schedules of ruling amounts most recently on --------------------------- taxpayer submitted supplemental information plr-114659-08 by letter on --------------------and -------------------- information was submitted pursuant to sec_1_468a-3t e taxpayer represents the facts and information relating to its requests as follows taxpayer a corporation is a holding_company and the sole member of company a a single member limited_liability_company that is disregarded for federal_income_tax purposes company b the legal owner of the plant is a single-member limited_liability_company that is disregarded for federal_income_tax purposes and is wholly-owned by company a taxpayer files a consolidated federal_income_tax return with its affiliated companies taxpayer owns a --- percent interest in the plant through company a and company b the plant is situated at location 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 -------- percent of taxpayer’s --- percent interest commission approved taxpayer’s request to reduce revenue recovered through the nuclear decommissioning costs adjustment with respect to the unit by issuing order based upon the assumptions used in taxpayer’s most recent schedule of ruling amounts as adopted by commission it is estimated that fund assets will earn an after- tax_rate of return of ---- percent the total cost of decommissioning taxpayer’s interest in the plant is estimated to be dollar_figure----------------- in ------- dollars this base cost of decommissioning plant is escalated at a ---- percent yearly rate resulting in a total future cost of decommissioning taxpayer’s interest in the plant of dollar_figure------------------- in --- ------- through ------- dollars under ratemaking assumptions used during the first proceeding before commission a the plant would no longer be included in rate base in ------- in the prior schedule of ruling amounts issued under sec_468a of the code as in effect prior to the estimated_useful_life of the plant is --- years --------------- and the estimated period for which the fund is to be in effect is --- years --------------- thus the percentage of the total estimated costs qualifying for deduction in the schedule of ruling amounts under prior_law was -------- percent sec_468a as amended by the energy tax incentives act of the act publaw_109_58 119_stat_594 allows an electing taxpayer to deduct payments made to a nuclear decommissioning reserve fund plr-114659-08 sec_468a limits the amount that may be paid into the nuclear decommissioning fund in any year to the ruling_amount applicable to that year prior to the changes made by the act the deduction was limited to the lesser_of the amount included in the utility’s cost of service for ratemaking purposes or the ruling_amount generally as a result only regulated utilities could take advantage of sec_468a the act amendment of sec_468a eliminated the cost-of-service limitation accordingly decommissioning costs of an unregulated nuclear power plant may now be funded by deductible contributions to a qualified nuclear decommissioning fund 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 the total nuclear decommissioning cost of that nuclear power plant over 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 prior to the changes made by the act deductible contributions were limited to the amount necessary for an electing taxpayer to fund the plant’s post-1983 nuclear decommissioning costs determined as if decommissioning costs accrued ratably over the estimated_useful_life of the plant provided that the taxpayer elected to establish a fund in prior_law also did not allow a taxpayer electing to establish a fund later than to contribute to that fund any amount in excess of that amount necessary to fund the ratable portion of the plant’s nuclear decommissioning costs beginning in the year the fund is established sec_468a now allows a taxpayer to contribute to a nuclear decommissioning fund the entire cost of decommissioning the plant including both the pre-1984 amount that was denied under the law prior to the act as well as any amount attributable to any year after in which a taxpayer had not established a fund under sec_468a sec_468a provides that the deduction for the contribution of the previously-excluded amount is allowed ratably over the remaining useful_life of the nuclear plant 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 2½ months after the close of the tax_year this section applies to payments made pursuant to either a schedule of ruling amounts or a schedule of deduction amounts sec_1_468a-1t a provides that an eligible_taxpayer may elect to deduct nuclear decommissioning costs under sec_468a of the code an eligible_taxpayer as plr-114659-08 defined under sec_1_468a-1t b of the regulations is a taxpayer that has a qualifying interest in any portion of a nuclear power plant a qualifying interest is among other things a direct ownership_interest sec_1_468a-2t b 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 ruling_amount applicable to the nuclear decommissioning fund for such taxable_year the limitation on the amount of cash payments for purposes of sec_1 468a- 2t b does not apply to any special transfer permitted under sec_1_468a-8t sec_1_468a-3t a 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-3t a provides that to the extent consistent with the principles and provisions of this section each schedule of ruling amounts shall be based on reasonable assumptions concerning the after-tax rate of return to be earned by the amounts collected for decommissioning the total estimated cost of decommissioning the nuclear plant and the frequency of contributions to a nuclear decommissioning fund for a taxable_year under sec_1_468a-3t a 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-3t a provides that the taxpayer bears the burden of demonstrating that the proposed schedule of ruling amounts is consistent with the principles of the regulations and that it is based on reasonable assumptions that section also provides additional guidance regarding how the service will determine whether a proposed schedule of ruling amounts is based on reasonable assumptions for example if a public_utility commission established or approved the currently applicable rates for the furnishing or sale by the taxpayer of electricity from the plant the taxpayer can generally satisfy this burden_of_proof by demonstrating that the schedule of ruling amounts is calculated using the assumptions used by the public_utility commission in its most recent order in addition a taxpayer that owns an interest in a deregulated nuclear plant may submit assumptions used by a public_utility commission that formerly had regulatory jurisdiction over the plant as support for the assumptions used in calculating the taxpayer’s proposed schedule of ruling amounts with the understanding that the assumptions used by the public_utility commission may be given less weight if they are out of date or were developed in a proceeding for a different taxpayer the use of other industry standards such as the assumptions underlying the taxpayer's most recent financial assurance filing with the nrc are described by the plr-114659-08 temporary regulations as an alternative means of demonstrating that the taxpayer has calculated its proposed schedule of ruling amounts on a reasonable basis sec_1_468a-3t a further provides that consistency with financial_accounting statements is not sufficient in the absence of other supporting evidence to meet the taxpayer’s burden_of_proof sec_1_468a-3t b provides that in general the ruling_amount for any_tax year in the funding_period shall not be less than the ruling_amount for any earlier tax_year under sec_1_468a-3t c the funding_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 of the taxable_year that includes the last day of the estimated_useful_life of the nuclear power plant to which the fund relates sec_1_468a-3t c provides rules for determining the estimated_useful_life of a nuclear plant for purposes of sec_468a in general under sec_1_468a-3t c i a if the plant was included in rate base for ratemaking purposes for a period prior to date the date used in the first such ratemaking proceeding as the estimated date on which the nuclear plant will no longer be included in the taxpayer’s rate base is the end of the estimated_useful_life of the nuclear plant sec_1_468a-3t c i b provides that if the nuclear plant is not described in sec_1_468a-3t c i a the last day of the estimated_useful_life of the nuclear plant is determined as of the date the plant is placed_in_service under sec_1_468a-3t c i c any reasonable method may be used in determining the estimated_useful_life of a nuclear power plant that is not described in sec_1_468a-3t c i a sec_1_468a-3t d 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 sec_1_468a-3t d 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 sec_1_468a-3t e 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-3t f 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-3t e 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 plr-114659-08 sec_1_468a-8t a provides that under the provisions of sec_468a as described above a taxpayer may make a special transfer of cash or property to the nuclear decommissioning fund this special transfer is not subject_to the sec_468a limitation the amount of the special transfer is the present_value of the pre-2005 nonqualifying percentage of the estimated future costs of decommissioning the nuclear plant that was disallowed under sec_468a prior to the act sec_1_468a-8t a defines the pre-2005 nonqualifying percentage as equal to percent reduced by the sum of the qualifying percentage used in determining the taxpayer’s last schedule of ruling amounts for the fund under sec_468a as it existed prior to the act and the percentage transferred in any previous special transfer sec_1_468a-8t a provides that the taxpayer is not required to transfer the entire amount eligible for the special transfer in one year but must take any prior special transfers into account in calculating the pre-2005 qualifying percentage further pursuant to sec_1_468a-8t c a taxpayer making a special transfer in more than one year must request a new schedule of deduction amounts in connection with each special transfer sec_1_468a-8t b provides that the deduction for the special transfer is allowed ratably over the remaining useful_life of the nuclear plant under sec_1 468a- 8t b iii the deduction for property contributed in a special transfer is limited to the lesser_of the fair_market_value of the property or the taxpayer’s basis in the property under sec_1_468a-8t b the taxpayer recognizes no gain_or_loss on the special transfer of property the taxpayer’s basis in the fund is not increased by reason of the special transfer of property and the fund’s basis in the property transferred in the special transfer is the same as the transferee’s basis in that property immediately prior to the special transfer sec_1_468a-8t c provides that taxpayer may not make a special transfer to a qualified nuclear decommissioning fund unless the taxpayer requests from the irs a schedule of deduction amounts in connection with such transfer a request for a schedule of deduction amounts may be made in connection with a request for a schedule of ruling amounts but in such case the calculations for both the schedule of ruling amounts and the schedule of deduction amounts must be separately_stated as stated above prior to the changes made by the act deductible contributions were limited to the lesser_of the amount necessary to fund the plant’s post-1983 nuclear decommissioning costs or the amount necessary to fund the plant’s decommissioning costs for that portion of the plant’s estimated_useful_life for which a fund had been established under that prior_law taxpayer was allowed to contribute --- -------- percent of the amounts necessary to fully decommission its share of the plant sec_468a allows a taxpayer to contribute to the nuclear decommissioning fund the pre-1984 amount that was denied under the law prior to the act taxpayer is able to plr-114659-08 contribute the additional -------- percent of the amounts necessary to decommission its ownership share of plant this special transfer occurred in ------- 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 conclude that because the useful_life of the plant as defined by sec_1_468a-3t c ends in ------- taxpayer may make a special transfer of dollar_figure--------------- in ------- and may deduct the amount contributed in ------- as set forth below schedule of deduction amounts year ------- deduction amount dollar_figure---------------- the special transfer amount stated above is the maximum amount permitted to be transferred to the fund under sec_468a if taxpayer transfers a lesser amount to the fund the taxpayer may deduct that lesser amount ratably over the period of years described above further in the event that taxpayer transfers a lesser amount for ----- ------- in order to make an additional special transfer in a later year including a special transfer of the difference between the special transfer amount stated above and the lesser amount transferred in ------- taxpayer must request a new schedule of deduction amounts and in that request must take the ------- transfer into account and recalculate the pre-2005 qualifying percentage in such request we note that if taxpayer elects to make a special transfer of property for all or a portion of this special transfer the amount of the deduction is the lesser_of the fair_market_value of the property transferred or the basis of the property in the hands of the taxpayer immediately prior to the transfer in either event the deduction of the taxpayer with respect to the property is limited to the taxpayer’s basis in the property 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 pursuant to sec_1_468a-3t a taxpayer has met its burden of demonstrating that the proposed schedule of ruling amounts is consistent with the principles of the code and regulations and is based on reasonable assumptions taxpayer has a qualifying interest in the plant and is therefore an eligible_taxpayer under sec_1_468a-1t b of the regulations plr-114659-08 taxpayer as owner of the plant has calculated its share of the total decommissioning costs under sec_1_468a-3t d of the regulations pursuant to sec_1_468a-3t a taxpayer has demonstrated that by following the assumptions approved by the commission the proposed schedule of ruling amounts is consistent with the principles of sec_468a and the regulations thereunder and that such schedule is based on reasonable assumptions the maximum amount of cash payments made or deemed made to the fund during any_tax year is restricted to the ruling_amount applicable to the fund as set forth under sec_1_468a-2t b 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 we have approved the following revised schedule of ruling amounts approved schedule of ruling amounts year ------- deduction amount dollar_figure-- if any of the events described in sec_1_468a-3t f 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 plr-114659-08 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 power_of_attorney on file with this office a copy of this letter is being sent to your authorized representatives we are also sending a copy of this letter_ruling to the director pursuant to sec_1_468a-7t a 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 peter c friedman senior technician reviewer branch passthroughs special industries