titerual revue servi 20060204y uniform issue list oct se t ep ra lye legend individual a company b ira x account c amount amount amount company d dear this is in response to correspondence dated date as supplemented by correspondence dated date in which you requested a waiver of the 60-day rollover requirement contained in sec_408 of the internal_revenue_code the code the following facts and representations have been submitted under penalty of perjury in support of the ruling requested your husband individual a died on january individual a maintained an individual_retirement_arrangement ira ira x and a life_insurance_contract with company b although you knew that ira x was an annuity you were not aware that it was an ira you are the surviving_spouse of individual a and were named as beneficiary of ira x you were also the beneficiary of individual a’s life_insurance_contract your date of birth was march page after his death you received a letter from company b referring to your death claim proceeds this letter stated that your insurance claim had been processed and that account c had been established in your name with the proceeds of your claim account c was anon-ira account your monthly account c_statement confirmed that amount had been deposited into account c on februa deposited into account c on february from company b or the account c monthly statement that any of the funds which were deposited into account c were ever held in an ira there was no indication in the letter and amount had been on june account maintained with company d this company d account was a non-ira account amount exceeded amount you withdrew amount from account c and deposited it into an in january iiiyou received a form 1099-r from company b which indicated that amount had been distributed from an ira when you brought this form to your tax preparer you were informed that the form 1099-r was for a retirement account which had been distributed to account c annuity maintained with company b ira x was an ira annuity maintained as ira x was an ira you would have informed company b to transfer the proceeds to an ira established in your name you currently maintain an ira with company d no amount of the distribution from ira x has been withdrawn or used for any purposes it was at this point that you discovered that the if you had known that the based on the facts and representations you request that the service waive the 60-day rollover requirement contained in sec_408 of the code in this instance sec_408 of the code provides that except as otherwise provided in sec_408 any amount_paid or distributed out of an ira shall be included in gross_income by the payee or distributee as the case may be in the manner provided under sec_72 of the code sec_408 of the code defines and provides the rules applicable to ira_rollovers sec_408 of the code provides that sec_408 of the code does not apply to any amount_paid or distributed out of an ira to the individual for whose benefit the ira is maintained if- i ii the entire amount received including money and any other_property is paid into an ira for the benefit of such individual not later than the 60th day after the day on which the individual receives the payment or distribution or the entire amount received including money and any other_property is paid into an eligible_retirement_plan other than an ira for the benefit of such individual not later than the 60th day after the date on which the payment or distribution is received except that the maximum amount which may be paid into such plan may not exceed the portion of the amount received which is includible in gross_income determined without regard to sec_408 page sec_408 of the code provides that sec_408 does not apply to any amount described in sec_408 received by an individual from an ira if at any time during the one-year period ending on the day of such receipt such individual received any other amount described in sec_408 from an ira which was not includible in gross_income because of the application of sec_408 sec_408 of the code provides that the secretary may waive the 60-day requirement under sec_408 of the code where failure to waive such requirement would be against equity or good conscience including casualty disaster or other events beyond the reasonable control of the individual subject_to such requirement only distributions that occurred after date are eligible for the waiver under sec_408 of the code revproc_2003_16 2003_4_irb_359 date provides that in determining whether to grant a waiver of the 60-day rollover requirement pursuant to sec_408 of the code the service will consider all relevant facts and circumstances including errors committed by a financial_institution inability to complete a rollover due to death disability hospitalization incarceration restrictions imposed by a foreign_country or postal error the use of the amount distributed for example in the case of payment by check whether the check was cashed and the time elapsed since the distribution occurred the information which you have submitted provides that you were not aware that the annuity maintained by individual a ira x was an ira subsequent to individual a’s death company b which maintained ira x and a life_insurance_contract for individual a did not inform you that the contribution into account c of the death_proceeds from these accounts included amounts distributed from an ira received from company b regarding the annuity distribution there was no indication that the funds had been held in an ira annuity in correspondence you therefore pursuant to sec_408 of the code the service hereby waives the ' 60-day rollover requirement with respect to the distribution of amount you are granted a period of days from the issuance of this ruling letter to contribute amount into a rollover ira set up and maintained in your name provided all other requirements of sec_408 of the code except the 60-day requirement are met with respect to such contributions the contribution of amount in your ira will be considered a rollover_contribution within the meaning of sec_408 of the code 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 letter expresses no opinion as to whether the ira described herein satisfied the requirements of sec_408 of the code 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 page if you wish to inquire about this ruling please contact not a toll-free number please address all correspondence to d at sincerely yours see vibe employee_plans technical group manager enclosures deleted copy of ruling letter notice of intention to disclose


dex no 00-c department of the treasury internal_revenue_service washington d c tax_exempt_and_government_entities_division aug re dear this letter is to inform you that your request to use substitute mortality tables for making computations under sec_430 of the internal_revenue_code the code for the plan has been granted with respect to the populations specified in this letter effective for a period of up to years beginning with the plan_year commencing date your request has been granted in accordance with sec_430 of the code and sec_303 of the employee_retirement_income_security_act_of_1974 erisa in granting this approval we have considered only the development of the substitute mortality rates and whether they sufficiently reflect the mortality experience of the applicable_plan populations accordingly we are not expressing any opinion as to the accuracy or acceptability of any calculations or other material submitted with your request age age males male sec_1 permission is herby granted to use the male and female substitute mortality rates shown in the tables below females females males age females age males females age males females age males females the above tables will be used for all male and female participants respectively in the plan the above rates were developed based on an experience study period from october king the base_year for the resulting tables is substitute mortality rates and supporting information and has determined that based on the information submitted the rates sufficiently reflect the mortality experience of the applicable pian populations __ and were calculated using the karup- the service has reviewed the through september your attention is called to sec_430 of the code sec_303 of erisa and sec_1_430_h_3_-2 of the regulations which describe the circumstances in which the use of the substitute mortality_table will terminate before the end of the 10-year period described above in general the substitute mortality tables can no longer be used as of the earliest of the plan_year in which the plan fails to satisfy the requirements of paragraph h -2 c of the regulations requiring that the groups for which substitute mortality tabies is used must have credible mortality experience the plan_year in which the plan fails to satisfy the requirements of paragraph h -2 d of the regulations regarding the requirement that other plans and populations in the controlled_group must use substitute mortality tables unless it can be demonstrated that they do not have credible mortality experience the second plan_year following the plan_year in which there is a significant change in individuals covered by the plan as described in paragraph h -2 d ii of the regulations generally applicable when there is a change_of or more in the number of individuals in the population for which the substitute mortality_table is used the plan_year following the plan_year in which a substitute mortality_table used for a plan population is no longer accurately predictive of future mortality of that population as determined by the commissioner or as certified by the plan’s actuary to the satisfaction of the commissioner and the date specified in guidance published in the internal_revenue_bulletin pursuant to a replacement of mortality tables specified under sec_430 and sec_1_430_h_3_-1 other than annual updates to the static mortality tables issued pursuant to h -1 a of the regulations this ruling is directed only to the taxpayer that requested it sec_6110 of the code provides that it may not be used or cited by others as precedent when filing form_5500 for the plan years for which the substitute mortality tables are used please note the information that is required to be attached to schedule sb actuarial information in accordance with the instructions to that form we have sent a copy of this letter to your authorized representative pursuant to a power_of_attorney on file in this office and to the and to the if you require further assistance in this matter please contact sincerely nl bbo david m ziegler manager employee_plans actuarial group


internal_revenue_service appaals offica marrows road suite newark de number release date wil date date a certified mall dear department of the treasury parson to contact employee id number tal fax refer reply ta ar fe law in re eo determination tax periods ended form required to be filed employer_identification_number cc last day to file a petition with the united_states tax_court this is a final adverse determination revenue code irc it is determined sec_504 to your exempt status under sec_504 of the internal that you do not quaiify as exempt from federal_income_tax under our adverse determination was made for the following reason s you have not demonstrated that you are organized and operated exctusively for charitable educational or other exempt pupose sec_25 required by sec_501 c of the internal revenue gode you operate substantially for non-exempt purposes you are not an organization which operates exclusively for one or more of the exempt purposes which would quatify it as an exempt_organization contributions te your organization are not deductible under code saction you ara required to file federal_income_tax returns on the form indicated above you shauid file these réturns within days from the date of this letter unless a request for an extension of time js granted file the returns in accordance with their instructions and do not send them to this office processing of income_tax returns and assassment of any taxes die will not be delayed because you have filed a petition for declaratory_judgment under code sec_7428 lf you decide to contest this determination under the declaratory_judgment provisions of code sec_7428 a petition io the united_states tax_court the united_states court of claims or the district_court of the united_states for the district of colurnbia must be filed within days from the date this determination was malléd to you contact the clerk of the appropriate court for rules for filing petitions for declaratory_judgment to secure a petition form from the united_states tax_court write to the united_states tax_court second street n vv washington b c we will notify the appropriate state officials ofthis action as required by code sec_6104 you should contact your state officials if you have any questions about how this determination may affect your state responsibilities and requirements if you have any questions please contact the person whose name and telephone number are shown in the heading of this letter sincerely hk pail charles fisher team manager tax_exempt_and_government_entities_division date date legend person association of-profit entity applicant organization department of the treasury internal_revenue_service washington d c contact person identification_number ‘contact number fax number employer_identification_number uil s dear applicant we have considered your application_for recognition of exemption from federal_income_tax under intemai revenue code sec_601 based on the information provided we have concluded that you do not qualify for exemption under code sec_501 c3 the basis for our conclusion is set forth below issues do you m qualify for exemption undar sec_501'3 of the code also if you did qualify for exemption under sec_501 c would exempt status be retroactive to your date of formation facts you ware incorporated over twenty years ago on the date q under the nonprofit laws of the state of o page c 'm your certificate of incorporation you stated your purposes and objectives to be as follows to stimulate and promote the welfare and continued growth of the cattle business and related agriculture endeavors in general provide programs of edueation and other activities for cattiemen and other interested citizens which will benefit and encourage those engaged in livestock agricultural horticultural and other such resources in the county and state ta help increase the facilities of the p county agriculture canter and provide a central organization for cattlemen and thase engaged in related agricultural purposes to buy lease acquire and occupy lands and to erect bulldings and improvements of various kinds thereon and to sell mortgage lease or convey said property of any part thereof in your discretion from time to tima to afflate with the state and national associations of cattlemen and to work with county state and federal governmental agencies and private associations in further development of programs facitiies and other functions that benefit the public through the prosperity of agriculture in general to do any and all things permitted corporations not for profit and permitted to be done under the laws of the state af o b your certificate of incorporation also provided for four classes of membership - active associate ex-officio and honorary - as follows active members shall be restricted to individuals firms or corporations ving in or engaged ig the ownership or active support of the cattle industry or related agriculture activities in p county in the state of associate members shall apply fo individuals firms or corporations engaged in the cattle business or related agricultural activities or the active support thereof not living in or located in p county state of o such associate members shall not be entitled to vote on the floor ex-officio mambars shall consist of the following the p caunty extension director agriculture and the p county attorney honorary membership shall generally be restricted to members of long standing who have actively supported the organization c __ you ara affliated with j a non-profit statewide industry organization exempt as an agricultural_organization under sec_801 those desiring to become a member af your organization must join j and pay duas of dollar_figure j retains dollar_figure and remits dollar_figure dollars to you in addition you are assessed an annual payment of dollar_figure per estimated head of cattle in your county by j you indicated 'n your first response packet dated r that j uses these funds to promote the cattla business within the state organization tn your subsequent third response packet you appeared to contradict this prior statement by stating without substantiation or explanation j says that the monies are not used for advertisement purposes your activities consist mainly of organizing an annual rodeo a team roping event and a bull riding event professional and amateur cowboys participate in the events a rodeo secretary and a professional event organizer are paid to help conduct and manage the events page in addition to your own events another major activity for you is to take part in the county agricultural fair by providing concessions and parking to fair vendors and visitors participation in the fair has generated for you an average net_income of about dollar_figure you also hoid monthly membership meetings approximately months out of each year as stated in your first response packet the meetings provide dinner at jthe applicant's expense and interaction between members with the common goal of promoting the cattie industry in p county the meetings sometimes feature guest speakers concerning forestry land management faed fertilizer and other products for use in the industry the year third response packet showed that speakers were present pincite of the meetings that year planning for the rodeo and other avents also lake place at tha meetings per year over tha past few years meeting lst submitted with your the bulk of your revenue comes from event raceipis and sponsorship contributions event expenses account for the largest part of your expenditures of fotal revenues of over the 4-year period from interest_income of revenues were spent on the conduct of events in spensorship contributions and including dollar_figure ta raceived of revenues wera distributed as scholarships and during the sama period dollar_figure contributions to other organizations of ravenues expenditures_for conferences and meetings were dollar_figure another dollar_figure were for dues payments to affiliates equipment rental and maintenance depreciation and various office and administrative costs altogather these expenditures totaled dollar_figure of revenues after accounting for alt expenses and distributions your net_income over tha o period was dollars of revenues dollars of revenues were spent on banquets remaining expenditures etc totaled dollar_figure ta of revenues and2c your total revenues were over dollar_figurei per year you indicated that financial data were not available in your response packet you stated that your current officers financiat information presented on page of your form_1023 showed that for the year sec_2c prior to and directors are longtime members and have indicated that operations and finances were substantially the same in years prior to as they are currently subsequantiy in your response packet you indicated that you had previously engaged a tax preparer cpa who had advised you hat no returm was raquired and had failed to advise you of the need to complete form_1023 you further indicated that t ax retums wera not filad previous to 2c due ta the fact that the records were destroyed lost by tha former treasurer who is no longer a page mamber of the organization you have submitted a statement signed by an officer reiterating the foregoing circumstances but you have not provided any specifics or indépendant documentation of your relance on the advice of a profassional accountant or of the loss of your pre-2 records annual reports filed with the office of the o secretary of state indicate that your current treasurer has held the position of treasurer since two years prior to your response received on the date of s indicated that professional cowboys as well as amateur cowboys participated in the team raping bull riding and the rodeo events neo monsy was paid to the participants directly from the organization any prize money to-the participants is paid_by the organizer tha event organizer l was paid for their services l was paid dollar_figure in2q revenue was paid to a for-profit entity l in2o of your total therefore in and dollar_figure in20 law sec_501 of the internal_revenue_code code provides in pertinent part for the exemption from federal_income_tax of organizations organized and operated exctusively for charitable or aducational purposes sec_508 a of the code provides that an organization organized after date shall not be traated as an organization described in sec_501 x3 unless it has given natice in such manner as the regulations prescribe that it is applying for recognition of such status an organization shall not be treated as an organization describad in saction for any period before the giving of such notice if such notice is given after the tima prescribed by the regulations for giving such notice sec_1 c a of treasury regulations regulations states that in order to qualify under sec_501 c of the code an organization must de both organized and operated exclusively for one or more exempt purposes if an organization fails to meet either the organizational or operational_test it is not exempt sec_1 c -1 of the regulations states that an organization will be regarded as operated exclusively for one or more exempt purposes only if it engages primarily in activities which accomplish one or more of such exempt purposes specified in sec_504 c of tha code an organization will not be so regarded if more than an insubstantial part of its activities is nat in furtherance of an exempt_purpose section big_number c3 -1 d gi of the regulations states that an organization is not operated exclusively for one or more exempt purposes unless it serves a oublic rather than a private interest the organization must estabtish that it is not organized or operated for the banefit of private interests such as designated individuals the persons who creatad it or shareholders of the organization sec_1 c -1 d i of the reguiations defines the term aducational as including the instruction or training of the individual for the purpose of improving or devaloping his capabilities or he instruction of the public on subjects useful to the individuat and beneficial to the community page sec_1_508-1 of the regulations provides that the notice referred to in section a of the code must be filed within months from tha end of the month in which an organization was organized such notice is fited by submitting a properly completed and executed form_1023 application_for recognition of exemption under sec_501 c of the internal revenue coda sec_301 of the regulations provides for an automatic_extension of months beyond the 15-month period sec_301_9100-3 of the regulations provides for discretionary extensions past the 18-month period and the automatic 12-month extension an organization requesting such extension must show that it acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government by resutting in a lowes tax_liability the organization and any other affected taxpayers in the aggragate for all taxable years affected than if the application had been timely filed in revrul_67_216 it is held that an organization formed and operated exclusively to instruct the pubjic on agricultural matters by conducting annual public fairs and exhibitions of livestock poultry and farm products may qualify for exemption under sec_504 cx3 the organization's activities and exhibits are planned and managed by or in collaboration with person whose business it is to inform and instruct farmers and the generat public on agricultural matters home demonstration agents county agricultural agents and the resulting displays are designed to be instructiva the prasence at the fair of recreational features such as midway shows refreshment stands and a rodeo are incidental to the fairs overall educational purpose in revrul_68_224 an organization that conducts an annual festival centered around regional customs and traditions is determined fo qualify for exemption under sec_50t cx4 the festival takes place in an agricultural region where interest in horses and western traditions runs high and enjoys the broad involvement of local citizens it typically features a banquet or barbecue parade made up of focal organizations and floats depicting community history various contests relating to dress and costumes traditional of the area and a todeo the revenue ruting holds that in carrying on these activities the organization provides recreation for the community and ganerally promoted civic batterments and social improvements revenue ruting considered an organization that was formed for the stated purposes of promoting the health of the general_public by encouraging all persons to improve their physical candition and of fostering by educational means public interest in a particular sport for amateurs its primary activities are directed toward reviving and promoting a sport by circulating printed material about the sport conducting exhibitions to introduce the sport to the public conducting tournaments and giving occasional instructive clinics the revenue_ruling concluded that promotion of a sport in this manner neither improves nor develops the capabilities of the individual nor instructs the public an subjects useful to the individual and beneficial to the cammunity within the meaning of the regulations and that the organization was therefore not qualified for exemption under sec_501 x3 but that since the organization's activities provided wholesome activity and entertainment for the social improvement and welfare of the community it qualified for exemption under sec_801 c page in revrul_85_176 it was held that a_trust that awards scholarships on a preferential basis to family members and relatives of the trust's grantor does not award such scholarships on an objective and nondiscrminatery basis and that such grant program is not consistent with exempt status under sec_501 c because it serves a private purpose of the grantor rather than a public purpose a preference accorded to family mambars and relatives is nota criterion like financial need and academic achievement which is related to the purpose of an educational grant in 326_us_279 tha supreme court considered the question of what it means for an organization te be organized and operated exclusively for charitable cr educational_purposes and concluded that this plainly means that the presence of a single nonexempt purpose if substantial in nature will destroy the exemption regardless of the number or importance of truly exempt purposes application of law you have represented that your monthly meetings rodeos and other events are educationat in and of themselves and that the events also serve as fundraisers enabling you to provide scholarships local youth for postsecondary study and to make distributions te charitable organizations we do not agree with the characterization of your manthly meetings and your rodeo team roping and bull riding events as being exctuslvely educational and wa believe the racord of your distributions as well as your scholarship eligibility critaria do not support conclusion that your activities have been conducted in order to afford charitable of educational distributions with regard to your monthly meatings only half of them include a speaker presentation and thera is no evidence of any other organized aducational activity that takes place at the meetings the only constant of the meetings is the opportunity for members to interact with each cther over the avening meal therefore wa believe that in addition to any educational purpose an equally important purpose of the meetings is to fostar in a relaxed dinner setting socializing and hatworking among your membership with regard to your scholarship awards and contributions to other charitable organizations you distributed only of your total revenues as scholarships over the contributions to other charitable organizations ware even lass accounting for only of total revenues tha amounts distributed iwere also significantly tags than the comparison dollar_figure were spent on your own general expanses including meetings banquets equipment rental and maintenance depreciation various administrative and office expenses and amounts paid to j to cover the dollar_figure you received from sponsor donations and interest_income during this period in per head of cattle assessment_period to through 20_-c- you also accumulated over the years in nat income in your second response packet you indicated that these accumulations were nacessary in order to pay for renewals of scholarships by previous scholarship recipients however you indicated in your third response packet that the money has not been sat aside in a separate fund dedicated to scholarship purposes nor is the applicant obligated to use the money for scholarships since the awards are not automatically ‘enewed but must be applied for each year page in addition up ta december of scholarships were open only to childran and grandchildren of your members while appiicants also had to meet cther criteria the thrashold consideration was the family relationship to a member as discussed in revrul_85_175 a preference accorded to family members and relatives is not a criterion tike financial need and academic achisvement which is related to the purpose af an educational grant instead such preference tands to demonstrate that it is the private interest of tha scholarship grantor that is being served through tha awarding of scholarships rather than the public interest after an initial effort to defend this limit an scholarship eligibility you have now widened passible recipients to include all youths in the community however the scholarship application continues ta place heavy amphasis on the applicant's involvement in your organization and the scholarship committee continues to consist solely of your mambers in sum we believe that the available financial information indicates that your events have not been conducted only to raise funds for scholarships and charitable_contributions but instead serve as your primary means of securing funding for your general operations that cannat be covered by the nominal per person membership fee furthermore of the small percentage of funds that has been expanded as scholarships and charitable contrifutions to other organizations the lion's share has been used to provide a private benefit to your mambers by paying for thelr children or grandchildren's schooling and it is uncertain that you have sufficient controls in place in the operation of your scholarship program to ensure that future distributions would not similarly benefit private interests like the organization in satter business bureau of washington d c inc you are operated to serve a mixture of purposes including not only educational and charitable purposes but also substantial purposes of promoting the cattle industry and recraation neither of which are exempt purposes within the meaning of section o01 cx3 the presence of these substantial nonexempt purposes pracludes axemption under saction 507f n3 we would also note that you have bean and continue ta be affiliated with j the state-lavel cattlamen's indusiry association éxempt under sec_501 c by the terms of such affiliation which requiraéadollar_figure i be paid to j you cannot help but provide financial support to j's general operations and or activities which are not dsdicatad to serving sec_501 c purposes but to the purpose of promoting the cattle industry since you have approximately members you have provided some dollar_figure over a four-year period such as from year through this amount is comparable to the amounts you have distributed in scholarships and charitable_contributions and is before taking into account the additional dollar_figure assessment per person membership fee and an additional dollar_figure lo j each year or about dollar_figure dollars per cattle per head of cattle assessment you have requested reiief under regulations saction for relief fram the prascribad month deadline for filing form_1023 so that you may be treated as a saction 501_c_3_organization ratroactive to your formation date since it is our position that you are not describad under sec_501 x3 this would appsar fo be a moot issue were it not a moot issue we would note that your articlas of incorporation failed to meet the organizational_test of sec_501 prior to in having purposes broader than permissible under that section that you have not provided us with i page any particulars regarding your pre-20 - oparations that would permit us to conclude you were operated in conformance with sec_501 c requirements that you hava indicated no assets and ne liabilities prior to despite having been in existence for over twenty years that prior to december of you provided private benefit to your members in the form of scholarships open only to their close family and that in view of the foregoing it appears likely to be prejudicial to the interests of the government to grant relief applicant's rasponse in your response letter dated date you disagreed with our assertion that while you applied under sec_501 c3 you may be batter described under sec_501 c15 you indicated that your articles and bylaws bath indicate your purposes no changes appear to have been made to the certificate of incorporation until september of _ in the midst of tha exemption application process when amended and restated articles of incorporation ware adopted at a membership meating per urfiled copy submitted with your second response packet dated s responding to our request for additional information regarding your form_1023 application the restated articles limit your purposes to exclusivety religious charitable scientfic litsrary and educational_purposes within the meaning of sec_501 in fact your response raceived t indicated that we no longer subscribe to any of the purposes listed in your original articlas you further indicated that you are iike the organization in rav rul where an organization formed to instruct the residents of neighboring communities on agricultural matters by conducting annual public fairs and exhibitions was exempt from federal_income_tax under sec_501 cx3 of the code you believe that the ruling furthers your position when it states in part that an organization whose purpose and reason for existence is to educate fhe public in useful and beneficial subjects does not fail fo be opersied to educate merely because some entartainment is provided to attract the public this is true even though the recreational attractions and facilities provide an important source of operating revenue agricultural fairs have traciitionally offered entertainment and recreational facilities to atiract the pubic you indicate that you are similar to n created in _n was formed fo encourage and promote the breeding raising and marketing of batter livestock and farm producis at public fairs and to promote and maintain research and educational functions with the livestock industry and granted exemption in your april response summarized your educational_purposes as follows monthly meetings educating mambers on various agricuitural aspects including forestry land management feed fertilizer and conservation of the area's green belt land participation in various events such as rodao agricultural fair and team roping events that foster and continue tha heritage of these activities and traditions encouraging tha county's youth to pursue careers in agricuiture by funding sponsoring cr conducting educational scholarship programs your april response also indicated your charitable purposes of a scholarship program which is now oper to the general_public and financial support of other charitable entities page services response to applicant’s position your articles and bylaws do now indicate charitable and educational_purposes but your operations indicate substantial non-exempt purposes also your website indicates your purpose is the promation of interest in agriculture in general and the beef cattle industry in particular’ furthermore the restated articles make no changes to your membership classes or the eligibility criteria for each class which continua to be directed primarily toward persons that are engaged in the ownership or active support of the cattle industry or related agricultura activities with regard to your claim te be similar to the organization described in revrul_67_216 you have presented no information to support that your events are designed to ba primarily educational in nature instead while spectators might gain some insight into cattle handling methods and western traditions by watching professional cowboys and other experts work with livestock during the events the usual focus of such type events is to anthrall the audience with exciting faats of skill and daring as such the events are no more educational than say watching a game of major league baseball would be to someone seeking to laam the techniques and history of the sport while not antirely lacking in instructive value your events are more akin to the exhibitions and fournaments conducted by the organization in revrul_70_4 in that they serve to promote interest in rodeo and by extension the cattle industry but do not improve or develop individual capabilities or achieve public instruction within the meaning of the term educational as contemplated in the regulations therefore contrary to your assertion that your events are primarily educationat and only incidentally recreational we believa the opposite is irue and that the events are primarily entertainment and only inckientally educational consistent with revenue rulings and both of which characterize rodeas as recreational activities unlike county fair organizations that conduct events designed to be educational your avent 6xpenses do not constitute exempt-purpose expenditures you indicate that you are simifar to n created in while you may have some similarities to n fo receive exemption n had to prove that its activities exclusively served exempt purposes a review of your file and subsequent submissions do not lead us reach a similar conclusion in your case regardless each organization's application must be considered on the facts and circumstances of the particular case and similaritias with an exempt_organization do not guarantes a recognition of exempt status your rasponses summarized your educational and charitable activities while your activities may further some exempt purposes your activities primarily consist of organizing an annual rodeo a team roping event and bull riding event in which professional and amateur cowboys participate in the events the bulk of your revenue comes from avent receipts and spcansorship contributions event sxpsnses account for the largest part of your expenditures of total revenues of dollar_figure ever the 4-year period from - to interest_income dollar_figure and grantad c exemption in in sponsorship contributions and of revenues were spent on the conduct of events including dollar_figure received page your rasponse raceived on the date of s indicated that professionat cowboys as well as amateur cowboys participatad in the team roping bull riding and the radeo events no money was paid ta the participants directly from the organization any prize money to the participants is paid_by the organizer the event organizer l was paid for their services l was paid in2q ravenus was paid to a for-profit entity l in20 of your total therefors in20 anddollar_figure in20 oé6r yaar over the past faw years in addition to your own events ancther major activity for you is to taka part in the county agricultural fair by providing concessions and parking to fair vendors and visitors participation in the fair has ganerated for you an average net_income of about dollar_figure you also have hatd membership meetings approximately times each year as stated in your first response packet the mestings provide dinner at ihe applicant's expense and interaction between members with the common goal of promoting the cattle industry in p county tha meetings sometimes feature quest speakers conceming forestry land management fead fertilizer and other products for use in the industry in 2c speakers wera present pincite of the meetings that year planning for the rodeo and other avants also take place at the meatings therefore your meetings while providing limited educational offarings are primarily for the benefit of your members and to plan for the conduct of your primary activities the rodeo and other events ouring20 contributions to other organizations 4-h futura farmers of america atc totaled of revenues of revanues was distributed by you as scholarships and dollars dollar_figure in the past your scholarships have not been selective instead your policy has been to award a scholarship to all qualified applicants to the extent possible furthermore scholarships were open only te childran and grandchildren of mambers who have been part of your organization for a minimum of two years now you state scholarships will ba open to the general_public however the scholarship application continues ta place heavy emphasis on the applicant's involvement in your organizaiion and the scholarship committee continuss to cansist solely of your members therefore the scholarship program appears to primarily serve the private interests of your memnibership you cite your support for charitable organizations as a positive factor in considering your application_for exemption as mentioned previously of your total revenue from -20 was contributed to exempt_organizations this is an insubstantial amount furthermore there is no evidence in the file that support for othar charitable organizations is a major activity on your part conclusion based on the above we do not believe your purpose as demonstrated by your operations is exclusively charitable or educational within the meaning of sec_501 page your primary activity as shown by your record of operations and financiai submissions consists of organizing an annual rodeo a taam reping event and a bull riding event in which professional and amateur cowboys participate in the events thase activities primarily serve non-exempt purposes your mestings are conducted primarily ta benefit your membership benefits to the public are incidental your schotarship program before 2c precluded exemption bacause it benefited only children or grandchildren of your mambership while you have revised the program it is not evident that the changes will guarantee public purposes are served because the scholarship application continues to place heavy emphasis on the applicant's involvement in your organization and tha scholarship committee continues to consist solely of your members finally your support of other organizations is an insubstantia activity and doas not overcome your other non-exempt activities accordingly we concludes you de not qualify for exemption under code sec_501 therefore you will be traated as a taxable entity and are required to file faderal income_tax tetums was clearly a substantial private banefit that on form contributions to you ara not deductible under sec_170 c of the code retroactive ex tion you have not provided us with any particulars ragarding your pre-20 your articles of incorporation faitad to meat the organizational_test of sec_501 prior te operations that would permit us to conclude you were operated in conformance with section dollar_figure c3 requirements you have indicated no assets and no liabilities priorio despite having been in existance for over twenty years prior to dacember of you provided substan al private benefit to your mambers in the form of scholarships open only to their close family members therefore it would be prejudicial to the intarasts of tha government to grant relief and if the issue should ever become applicable we conclude that retroactive exemption should not be granted non-507 c3 status as you have refused consideration of exempt status under other paragraphs of sec_501 c we did not develop possible non-501 c status appeal rights you have the right to file a protest if you believe this datermination is incorrect to protest you must submit a statement of your views and fully explain your reasoning you must submit the siatament signed by one of your officars within days from the date of this letter we will consider your statement and decide if the information affects our determination if your statement dees not provide a basis to raconsider our determination we will forward your case to our appeals_office you can find more information about the rale of the appeals offica in publication exempt_organization appeal proceduras for unagreed issues page ‘types of information that should be included in your appeal can be found on page of publication under the heading regional_office appeal the statement of facts item must be declared true under penalties of perjury this may be done by adding to the appeal the following signed declaration under penaities of perjury declare that have examined the statement of facts presented in this appeal and in any accompanying schedules and ‘statements and to the best of my knowledge and balief they are true correct and complete your appeal will be considered incomplete without this statement fan organization's representative submits the appeal a substitute declaration must be included stating that the representative prepared the appeal and accompanying documents and whether the representative knows personally that the statements of facts containad in the appeal and accompanying documents are true and correct an attorney certified_public_accountant or an individual enrolled to practice before the intemal revenue service may represent you during the appeal process if you want representation during he appeal process you must file proper power of attomey form_2848 power_of_attorney and declaration of representative if you have not already done so you can find more informetion about representation in publication practice_before_the_irs and pawer of attomey al form sec_4nd publications mentioned in this letter can be found at www its gov forms and publications you do not fla protest within days you will not be able to file a suit for declaratory_judgment in court because the internal_revenue_service irs will consider the failure to appeal a6 a failure to exhaust available administrative remedies code sec_7428 b provides in part that a feclaratory judgment or decree shall not be issued in any proceeding unless the tax_court the united_states court of federal claims or the district_court of the united_states for the district of columbia determines that the organization involvad has exhausted all of the administrative remedies available to it within the irs if you do not intend to protest this determination you do not need to take any further action if we do not hear from you within days we will issue a final adverse determination_letter that letter will provide information about filing tax returns and other matters please send your protest statement form_2848 and any supporting documents to the applicable address mail to deliver to internal_revenue_service eo determinations quality assurance raom p o box cincinnati oh internal_revenue_service eo determinations quality assurance main street room cincinnati oh you may fax your statement using the fax number shown in the heading of this leter if you tax your statement please call the person identified in the heading of this letter to confirm that he or she received your fax we have sent a copy of this letter to your repregentative as indicated in your power of attomey you have any questions please contact the person whose name and telephone number are ‘shown in the heading of this letter page sincerely rob choi director exempt_organizations rulings agreements enclosure publication


internal_revenue_service number release date index no department of the treasury p o box ben franklin station washington dc person to contact telephone number refer reply to cc psi -- plr-142985-02 date date legend taxpayer corp llc1 projectco project partnership state a state b state c county utility vendor vendor agency agency act a plr-142985-02 b c d e f g j o p r s t v w x y z aa bb cc dd dear this letter responds to your letters dated date and date requesting rulings on behalf of project partnership regarding project partnership’s qualification for tax_credits under sec_45 of the internal_revenue_code from an aa megawatt wind-based generation project consisting of bb separate cc mw wind turbine generators located in county project you represent that the facts are as follows plr-142985-02 llc formed projectco on a following the formation of projectco taxpayer acquired a b percent membership interest in projectco in exchange for a cash contribution of dollar_figurec projectco used this cash contribution to purchase ground lease options described below and other development rights for the project from llc1 llc1 acquired various options to lease land for the project the ground lease options the ground lease options grant the holder of the option the right to lease or in certain circumstances to purchase all or part of the land collectively the ground lease llc1 sold the ground lease options to projectco projectco will exercise the ground lease options and will pay rent under the ground lease equal to the greater of i a fixed cash amount per wind turbine generator located on the leased land ii an amount determined by multiplying a unit price by the number of kilowatt- hours of electricity produced by the wind turbine generators located on the leased land or iii a fixed percentage of the gross revenue derived from the sale of electricity produced by the wind turbine generators located on the leased land ground lease rent pursuant to a power purchase agreement the ppa with utility dated d projectco will sell to utility electricity produced from the project that is not needed to operate the project over the ppa’s approximately e-year term at a base price of a fixed amount per mwh projectco entered into an interconnection agreement with utility on f the interconnection agreement pursuant to the interconnection agreement certain interconnection facilities will be constructed at taxpayer’s cost to permit the interconnection of the project with utility’s system projectco will enter into a supply and installation agreement the supply and installation agreement with vendor an unrelated party that is the vendor of the wind turbine generators to be used by the project projectco also expects to enter into a balance of plant engineering procurement and construction agreement with vendor an unrelated party to build the rest of the project the balance of plant agreement both agreements will require the project to be substantially completed by a specified date and will include a liquidated_damages clause providing that in the event of a non- excused delay in project completion projectco will receive liquidated_damages proportional to the length of the delay vendor will also warrant the performance of the installed wind turbine generators and it will pay liquidated_damages to project partnership to the extent that the generators fall below certain performance standards projectco will purchase llc1's b percent interest in projectco at the commencement of construction of the project upon the sale of llc1's interest projectco will be treated as a disregarded_entity for federal tax purposes projectco will borrow from third-party lenders to fund the expected dollar_figurep construction cost of the project the permanent financing for the project is expected to consist of a single tranche of approximately dollar_figuredd combining both a term_loan and a production_tax_credit loan the combined loan in connection with the financing taxpayer will enter into an agreement the equity contribution agreement in favor of the lenders to make contributions to projectco in the amount of dollar_figurer when construction is completed the plr-142985-02 fixed contribution obligation plus additional semi-annual contributions the ptc contribution obligation that are measured by the lesser_of i the debt service on the production_tax_credit portion of the combined loan and ii the product of cc cents as adjusted pursuant to sec_45 and the ptc rate and the number of kilowatt hours of electricity produced by the project during the semi-annual period the contributions to satisfy the ptc contribution obligation are expected to be approximately s percent of the sec_45 tax_credits generated by the project in each semi-annual period over a t-year period commencing when the wind turbines in the project are placed_in_service the partnership_agreement will provide that each partner will be required to contribute its pro_rata share of i an initial equity contribution equal in amount to the initial payment the dollar_figurev initial contribution and ii semi-annual capital contributions the semi-annual partner contributions equal to an agreed percentage of an amount equal to the product of the number of kilowatt hours of electricity produced by the project during the applicable semi-annual period and the ptc rate the initial contribution all semi-annual partner contributions and all current distributions will be made by the partners in accordance with their respective percentage interests all items of income gain loss deduction and credit of project partnership will be allocated to the partners in accordance with their respective percentage interests project partnership will use the initial contribution to make the initial payment pursuant to the purchase and sale agreement the semi-annual partner contributions will be used by project partnership to make the ptc capital_contribution to projectco pursuant to the equity contribution agreement plr-142985-02 projectco will use these contributions together with any available operating cash_flow after payment of expenses including combined loan service and ground lease rent to pay amounts due with respect to the combined loan after providing for such amounts projectco will make distributions to the project partnership which amounts together with the amounts by which the partners semi-annual contribution exceeds the ptc contribution obligation under the equity contributions agreement would be available for the project partnership to make the periodic_payments under the purchase and sale agreement projectco expects to hire an operator to provide operation and certain maintenance services for the project the o m agreement the operator under the o m agreement is expected to be an affiliate of the taxpayer’s parent_corporation taxpayer also expects to enter into a maintenance and service agreement with vendor for the wind-turbine generators and related equipment for an initial y-year period the maintenance and service agreement the compensation paid to the operator under the o m agreement and to the service provider under the services agreement is expected to be a fixed amount per year per wind turbine generator included in the project subject_to an annual adjustment for inflation the terms of the o m agreement and the services agreement will be negotiated at arm’s length and the amounts paid to the operator and service provider will reflect reasonable_compensation for services rendered agency has agreed to provide cash proceeds to projectco under the terms and conditions of an agreement between agency and projectco the agency agreement under the agency agreement agency will disburse the proceeds to projectco when the project is completed and in service the commencement_date in the form of a single advance supplemental production_payment projectco is required to spend the proceeds on operating_expenses during the j-year period beginning on the commencement_date the expenditure requirement projectco will earn the proceeds as it produces and sells electricity during the y-year period commencing with the commencement_date the performance requirement to the extent that either the expenditure requirement or the performance requirement is not satisfied projectco is required to repay agency pursuant to a loan guarantee and reimbursement agreement the agency loan guarantee between projectco and agency agency will provide a loan guarantee in favor of the lender to projectco under the construction and term financing plr-142985-02 the agency loan guarantee will be for approximately z months’ debt service on the combined loan projectco has applied to the relevant local authorities for designation of the project site as an enterprise zone an enterprise zone is an area that meets the requirements set forth in the act the purpose of the act is to stimulate business and industrial growth and retention in and stimulate neighborhood revitalization of areas in which pervasive poverty unemployment and economic distress exist if the project site is designated as an enterprise zone under the act the acquisition of building materials to be incorporated into the project would not be subject_to certain_sales and use taxes imposed by state c taxpayer represents the following the utility is not a related_person to the project partnership within the meaning of sec_45 the electricity generated by the wind turbines within the project is not being sold to a utility pursuant to a contract originally entered into before date the project partnership projects that at the end of the term of the ground lease it will be economically feasible for projectco to remove the project’s wind turbines from the land taxpayer requests the following rulings following the transfer of the projectco membership interests to project partnership the production of electricity from the project wind turbines will be attributable solely to project partnership and as a result project partnership will be entitled to the sec_45 tax_credits for electricity that is sold to unrelated persons the sec_45 credit attributable to project partnership may be passed through to and allocated among the partners of project partnership under the principles in sec_702 in accordance with each partner’s interest in the project partnership at the time the sec_45 credit arises any termination of the project partnership under sec_708 arising from sales or exchanges of interests in project partnership will not preclude project partnership as reconstituted from taking the sec_45 credit for the production and sale of electricity from the project wind turbines to unrelated persons the proceeds from the agency agreement the agency loan guarantee and the state c sales use_tax exemption will not be considered grants provided by the united_states a state or a political_subdivision of a state for use in connection with the project proceeds of an issue of state_or_local_government obligations used to provide financing for the project the interest on which is exempt from tax under sec_103 subsidized_energy_financing provided directly or indirectly under a federal state or local program provided in connection with the project or other credit within the meaning of sec_45 plr-142985-02 under sec_45 the renewable_electricity_production_credit for any taxable_year is an amount equal to the product of cents multiplied by the kilowatt hours of electricity produced_by_the_taxpayer from qualified_energy_resources and at a qualified_facility during the 10-year period beginning on the date the facility was originally placed_in_service and sold by the taxpayer to an unrelated_person during the taxable_year under sec_45 the amount of the credit with respect to any project for any taxable_year is reduced by an amount equal to the product of the amount of the credit otherwise allowable for such year and a fraction the numerator of which is the sum of i grants provided by the united_states a state or a political_subdivision of a state for use in connection with the project ii proceeds of an issue of state_or_local_government obligations used to provide financing for the project the interest on which is exempt from tax under sec_103 iii the aggregate amount of subsidized_energy_financing provided directly or indirectly under a federal state or local program in connection with the project and iv the amount of any other credit allowable with respect to any property which is part of the project and the denominator of which is the aggregate amount of additions to the capital_account for the project for the taxable_year and all prior taxable years a similar reduction exists under sec_29 relating to governmental grants or subsidized_energy_financing provided in connection with a nonconventional source fuel project sec_29 was added to the code as a part of the crude_oil windfall profit tax of section 1980_3_cb_1 the conference_report in explaining the reduction mechanism found in sec_29 states that the sec_29 credit is reduced in proportion to federal grants provided in connection with the construction or acquisition of the facility h_r rep no conf_rep 96th cong 2d sess 1980_3_cb_245 sec_45 defines qualified_energy_resources to include wind sec_45 defines a qualified_facility in the case of a facility using wind to produce electricity as any facility owned by the taxpayer that is originally placed_in_service after date and before date sec_45 does not define the term grant however the term is defined in sec_1_148-6 of the income_tax regulations involving arbitrage_bonds as a transfer for a governmental purpose of money or property to a transferee that is not a related_party to or an agent of the transferor the transfer must not impose any obligation or condition to directly or indirectly repay any amount to the transferor sec_45 provides that for purposes of sec_45 tax-exempt_bonds consist of an issue of state_or_local_government obligations used to provide financing for the project the interest on which is exempt from tax under sec_103 the proceeds of such reduce the amount of credit for any taxable_year plr-142985-02 sec_45 does not define subsidized_energy_financing however under sec_48 the term means financing provided under a federal state or local program a principal purpose of which is to provide subsidized financing for projects designed to conserve or produce energy sec_702 provides that each partner determines the partner’s income_tax by taking into account separately the partner’s distributive_share of the partnership’s other items of income gain loss deductions or credit to the extent provided by regulations prescribed by the secretary under sec_1_702-1 the distributive_share is determined under sec_704 and sec_1_704-1 sec_704 provides that a partner’s distributive_share of income gain loss deduction or credit is except as otherwise provided in chapter of subtitle a of title_26 determined by the partnership_agreement under sec_704 a partner’s distributive_share of income gain loss deduction or credit or item thereof is determined in accordance with the partner’s interest in the partnership determined by taking into account all facts and circumstances if i the partnership_agreement does not provide for the partner’s distributive_share of income gain loss deduction or credit or item thereof or ii the allocation to a partner under the agreement of income gain loss deduction or credit or item thereof lacks substantial economic_effect sec_1_704-1 provides that allocations of tax_credits and tax_credit recapture except for sec_38 property are not reflected by adjustments to the partners’ capital accounts thus these allocations cannot have economic_effect under sec_1_704-1 and the tax_credit and tax recapture must be allocated in accordance with the partner’s interest in the partnership as of the time the credit or recapture arises if a partnership expenditure whether or not deductible that gives rise to a tax_credit in a partnership taxable_year also gives rise to valid allocations of partnership loss or deduction or other downward capital_account adjustment for the year the partners’ interests in the partnership regarding the credit or the cost giving rise to it are in the same proportion as the partners’ respective distributive shares of the loss or deduction and adjustments see sec_1_704-1 example identical principles apply in determining the partner’s interest in the partnership regarding tax_credits that arise from income of the partnership whether or not taxable if a partnership receipt gives rise to a tax_credit such as the credit under sec_45 and that receipt also gives rise to a valid allocation of partnership income the partners’ interests in the partnership with respect to the item of credit will be in the same proportion as the partners’ respective distributive shares of such income see sec_1 b ii sec_708 provides that a partnership will be considered as terminated if within a month period there is a sale_or_exchange of percent or more of the total interests in partnership capital and profits plr-142985-02 under sec_1_708-1 if a partnership is terminated by a sale_or_exchange of an interest the following is deemed to occur the partnership contributes all of its assets and liabilities to a new partnership in exchange for an interest in the new partnership immediately thereafter the terminated partnership distributes interests in the new partnership to the purchasing partner and the other remaining partners in proportion to their respective interests in the terminated partnership in liquidation of the terminated partnership either for the continuation of the business by the new partnership or for its dissolution and winding up sec_7701 provides that the term taxpayer means any person subject_to any internal revenue tax sec_7701 provides that when used in title_26 where not otherwise distinctly expressed or manifestly incompatible with the intent thereof the term person will be construed to mean and include an individual trust estate partnership_association company or corporation sec_301_7701-3 of the procedure and administration regulations provides that unless it elects otherwise a domestic eligible_entity is disregarded as an entity separate from its owner if it has a single owner based solely on the representations and the relevant law and regulations set forth above we conclude as follows following the transfer of the projectco membership interests to project partnership the production of electricity from the project wind turbines will be attributable solely to project partnership and as a result project partnership will be entitled to the sec_45 tax_credits for electricity that is sold to unrelated persons the sec_45 credits attributable to project partnership may be passed through and allocated among the partners of project partnership under the principles of sec_702 in accordance with each partner’s interest in project partnership at the time the sec_45 credit arises a future termination of project partnership under sec_708 will not preclude the reconstituted partnership from claiming the sec_45 credit for the sale of electricity to unrelated persons that is generated from the project wind turbines the proceeds from the agency agreement the agency loan guarantee and the state c sales use_tax exemption will not be considered grants provided by the united_states a state or a political_subdivision of a state for use in connection with the project proceeds of an issue of state_or_local_government obligations used to provide financing for the project the interest on which is exempt from tax under sec_103 subsidized_energy_financing provided directly or indirectly under a federal state or local program provided in connection with the project or other credit within the meaning of sec_45 plr-142985-02 except as specifically set forth above no opinion is expressed concerning the federal_income_tax consequences of the above described facts under any other provision of the code or regulations in particular no opinion is expressed or implied regarding how the partners' interests in the partnership are determined this ruling is directed only to the taxpayer who requested it sec_6110 provides that it may not be used or cited as precedent in accordance with the power_of_attorney filed with this request we are sending copies of this letter_ruling to your authorized representative 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 walter h woo senior technician reviewer branch office of associate chief_counsel passthroughs and special industries enclosure copy


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 ita b06 plr-112526-17 date date legend parent applicant entity entity entity entity year year year -------------------------------------- ------------------------ ----------------------------------------------------- ------------------------ ---------------------------- ------------------------ ------------------------------------ ------------------------ --------------------------------------- ------------------------ -------------------------------- ------------------------ ------- ------- ------- plr-112526-17 dear ----- ----------- this letter is in reply to a request for a private_letter_ruling made by parent on behalf of applicant parent requests an extension of time under sec_301_9100-1 and sec_301_9100-3 of the procedure and administration regulations to file form_970 application to use lifo inventory_method on behalf of applicant for year facts parent represents the following facts on behalf of applicant entity was the common parent of a consolidated_group that included entity and entity entity entity and entity all used the last-in-first-out lifo inventory_method of accounting parent states that each entity had attached a form_970 to the appropriate federal_income_tax return for the taxable_year the method was first used by that entity in accordance with sec_1_472-3 of the income_tax regulations subsequently in year entity and entity merged with entity with entity surviving the merger parent states that the merger transactions qualified as non- taxable mergers under sec_368 of the internal_revenue_code subject_to sec_381 entity continued to use the lifo_method for its own inventories and the inventories acquired from entity and entity after the merger subsequently in year entity decided to restructure its organization and formed entity later renamed applicant entity transferred its manufacturing business operating_assets and inventory to entity applicant in year in a transaction that parent states qualified as a tax free transfer of assets under sec_351 however entity was unaware that it was required to file form_970 on behalf of entity applicant in order for entity applicant to use the lifo_method see revrul_70_564 1970_2_cb_109 as a result entity failed to file the required form_970 on behalf of entity applicant following the transfer of assets entity applicant has used the lifo inventory_method to identify inventory for both tax and financial reporting purposes for year and all subsequent taxable years subsequently in year parent acquired entity which has since renamed itself applicant parent is currently the common parent of a consolidated_group that includes applicant and entity parent realized recently that applicant never properly adopted the lifo inventory_method and as such has filed this request for a private_letter_ruling ruling requested plr-112526-17 parent requests an extension of time under sec_301_9100-1 and sec_301_9100-3 to file form_970 on behalf of applicant to adopt the lifo_method effective for year law and analysis sec_472 provides that a taxpayer may use the lifo_method in inventorying goods specified in an application to use such method filed at such time and in such manner as the secretary may prescribe sec_1_472-3 provides that the lifo inventory_method may be adopted and used only if the taxpayer files with its income_tax return for the taxable_year as of the close of which the method is first to be used a statement of its election to use such inventory_method the statement is to be made on form_970 sec_301_9100-1 provides that the commissioner has the 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 certain regulatory elections sec_301_9100-1 defines a regulatory election as an election whose due_date is prescribed by a regulations published in the federal_register or in a revenue_ruling revenue_procedure notice or announcement published in the internal_revenue_bulletin sec_301_9100-2 provides automatic_extension 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 the requested election is a regulatory election as defined under sec_301_9100-1 because the due_date of the election is prescribed in sec_1_472-3 parent’s request is analyzed under the requirements of sec_301_9100-3 because the automatic provisions of sec_301_9100-2 are not applicable requests for relief under sec_301_9100-3 will be granted when a 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 see sec_301_9100-3 sec_301_9100-3 provides that a taxpayer is deemed to have acted reasonably and in good_faith if the taxpayer i requests relief before the failure to make the regulatory election is discovered by the internal_revenue_service ii failed to make the election because of intervening events beyond the taxpayer’s control iii failed to make the election because after exercising reasonable diligence the taxpayer was unaware of the necessity for the election iv reasonably relied on the written advice of the service or v 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 plr-112526-17 sec_301_9100-3 provides that a taxpayer is deemed not to have acted reasonably and in good_faith if the taxpayer i seeks to alter a return position for which an accuracy-related_penalty was or could be imposed under sec_6662 at the time the taxpayer requests relief and the new position requires or permits a regulatory election for which relief is requested ii was informed in all material respects of the required election and related tax consequences and chose not to file the election or iii uses hindsight in requesting relief sec_301_9100-3 provides that the interests of the government are prejudiced if granting relief would result in the taxpayer having a lower tax_liability in the aggregate for all taxable years affected by the election than the taxpayer would have had if the election had been timely made taking into account the time_value_of_money the section also provides that if the tax consequences of more than one taxpayer are affected by the election the government’s interests are prejudiced if extending the time for making the election may result in the affected taxpayers in the aggregate having a lower tax_liability than if the election had been timely made further sec_301_9100-3 provides in part that the interests of the government are ordinarily prejudiced if the taxable_year in which the regulatory election should have been made or any taxable years that would have been affected by the election had it been timely made are closed by the period of limitations on assessment under sec_6501 before the taxpayer’s receipt of a ruling granting relief under this section conclusion on the basis of parent’s representations we conclude that the requirements of sec_301_9100-3 have been satisfied accordingly we hereby grant an extension of time for parent to file the missing form_970 on behalf of applicant for year this extension shall be for a period of days from the date of this ruling please attach a copy of this ruling to the form_970 filed pursuant to this private_letter_ruling request except as expressly set forth above this office neither expresses nor implies any opinion concerning the tax consequences of the facts described above under any other provision of the code or regulations specifically we have no opinion either expressed or implied as to whether applicant entity entity entity or entity have correctly used or are correctly using the lifo inventory_method we have no opinion as to the propriety of the merger between entity entity and entity in year specifically whether such merger constituted a non-taxable merger for purposes of sec_368 and sec_381 we have no opinion as to whether entity was required to file form_970 to continue to use the lifo inventory_method following the year merger finally we have no opinion as to the propriety of the restructuring activities between entity and applicant in year specifically whether such transfer of assets between entity and applicant constituted a tax-free transfer of assets under sec_351 plr-112526-17 the ruling contained in this letter_ruling is based upon facts and representations submitted by parent on behalf of applicant with accompanying penalties of perjury statements executed by appropriate parties while this office has not verified any of the material submitted in support of this request for an extension of time to file the required form_970 all material is subject_to verification on examination this ruling is directed only to parent who requested it sec_6110 provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with our office we are sending copies of this letter to parent’s authorized representatives sincerely cheryl l oseekey senior counsel branch office of associate chief_counsel income_tax accounting enc copy for sec_6110 purposes cc