internal_revenue_service department of the treasury number release date index number washington dc person to contact telephone number refer reply to cc corp b03 - plr-115379-01 date date parent purchaser target target_affiliate target_affiliate target_affiliate target_affiliate target_affiliate seller country a country b date a date b date c authorized representative parent officials plr-115379-01 dear this responds to authorized representative’s letter dated date submitted on your behalf requesting an extension of time under sec_301_9100-1 through of the procedure and administration regulations to file an election parent is requesting an extension to file an election under sec_338 of the internal_revenue_code with respect to the acquisition of target and the deemed acquisitions of target_affiliate target_affiliate target_affiliate target_affiliate and target_affiliate collectively the target affiliates hereinafter such election is referred to as the election all citations in this letter to regulations under sec_338 are to the regulations as in effect for date a additional information was received in a letter dated date the material information submitted for consideration is summarized below parent was and is the common parent of a consolidated_group parent has a taxable_year ending december and uses the accrual_method of accounting purchaser is a wholly owned subsidiary of parent target is a corporation formed under the laws of country a the target affiliates are wholly owned subsidiaries of target target_affiliate is a country b corporation the other target affiliates are corporations formed under the laws of country a seller is a foreign_corporation prior to its acquisition neither target nor any of the target affiliates were a controlled_foreign_corporation within the meaning of sec_957 a passive_foreign_investment_company for which an election under sec_1295 is in effect a foreign_investment_company or a foreign_corporation the stock ownership of which is described in sec_552 or required under sec_1_6012-2 to file a united_states income_tax return on date a purchaser purchased all of the outstanding shares of target for cash in a fully taxable transaction it has been represented that the acquisition of the stock of target was a qualified_stock_purchase within the meaning of sec_338 parent intended to make the election the election was on date b however for various reasons the election was not filed on date c which is after date b it was discovered that the election was not timely filed subsequently this request was submitted under sec_301_9100-1 for an extension of time to file the election the period of limitations on assessment under sec_6501 has not expired for parent’s consolidated group’s target’s nor any of the target affiliates’ tax years in which the acquisition occurred the taxable_year in which the election should have been filed or for any taxable years that would have been affected by the election had it been timely filed sec_338 permits certain stock purchases to be treated as asset acquisitions if the purchasing_corporation makes or is treated as having made a sec_338 election or a sec_338 election and the acquisition is a qualified_stock plr-115379-01 purchase the term target_affiliate has the same meaning as in sec_338 applied without sec_338 thus a corporation described in sec_338 is considered a target_affiliate for all purposes of sec_338 if a target_affiliate is acquired in a qualified_stock_purchase it is also a target see sec_1_338-1 if an election under sec_338 is made for target old target is deemed to sell target’s assets and new target is deemed to acquire those assets under sec_338 new target’s deemed purchase of stock of another corporation is a purchase for purposes of sec_338 on the acquisition_date of target if new target’s deemed purchase causes a qualified_stock_purchase of the other corporation and if a sec_338 election is made for the other corporation the acquisition_date for the other corporation is the same as the acquisition_date of target however the deemed sale and purchase of the other corporation’s assets is considered to take place after the deemed sale and purchase of target’s assets see sec_1_338-2 under sec_301_9100-1 the commissioner has discretion to grant a reasonable extension of time to make a regulatory election or a statutory election but no more than six months except in the case of a taxpayer who is abroad under all subtitles of the internal_revenue_code except subtitles e g h and i sec_301_9100-1 through provide the standards the commissioner will use to determine whether to grant an extension of time to make a regulatory election sec_301_9100-1 sec_301_9100-2 provides automatic extensions of time for making certain elections sec_301_9100-3 provides extensions of time for making regulatory 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_301_9100-3 in this case the time for filing the election is fixed by the regulations ie sec_1_338-1 therefore the commissioner has discretionary authority under sec_301_9100-1 to grant an extension of time for parent to file the election provided parent shows that it acted reasonably and in good_faith the requirements of sec_301_9100-1 and sec_301_9100-3 are satisfied and granting relief will not prejudice the interests of the government information affidavits and representations submitted by parent parent officials and authorized representative explain the circumstances that resulted in the failure to timely file the valid election the information establishes that the request for relief was initiated before the failure to make the regulatory election was discovered by the internal_revenue_service that qualified_tax professionals were responsible for the election that parent relied on the tax professionals to make the election and that the interests of the government will not be prejudiced if relief is granted see sec_301 plr-115379-01 b i and v based on the facts and information submitted including the representations made we conclude that parent acted reasonably and in good_faith the requirements of sec_301_9100-1 and sec_301_9100-3 are satisfied and granting relief will not prejudice the interests of the government accordingly an extension of time is granted under sec_301_9100-1 until days from the date_of_issuance of this letter for parent to file the election with respect to the acquisition of target and the deemed acquisition of the target affiliates the above extension of time is conditioned on the the filing within days of the issuance of this letter of all returns and amended returns if any necessary to report the transaction in accordance with the election and the taxpayers' parent's consolidated group’s target’s and the target affiliates’ tax_liability if any being not lower in the aggregate for all years to which the election applies than it would have been if the election had been timely made taking into account the time_value_of_money no opinion is expressed as to the taxpayers' tax_liability for the years involved a determination thereof will be made upon audit of the federal_income_tax returns involved further no opinion is expressed as to the federal_income_tax effect if any if it is determined that the taxpayers' liability is lower sec_301_9100-3 parent should file the election in accordance with sec_1_338-1 that is a new election on form_8023 must be executed on or after the date of this letter which grants an extension and filed in accordance with the instructions on the election form together with any information that is required to be attached to the election form a copy of this letter should be attached to the election form parent must file or amend as applicable its returns to report the transaction as a sec_338 transaction for the taxable_year in which the transaction was consummated and for any other affected_taxable_year and to attach to the returns a copy of this letter and a copy of the election no opinion is expressed as to whether the acquisition of the stock of target or the deemed acquisition of the stock of the target affiliates qualifies as a qualified_stock_purchase whether the acquisition of the stock of target or the deemed acquisition of the stock of the target affiliates qualifies for sec_338 treatment or any other tax consequences arising from the election in addition no opinion is expressed as to the tax effects or consequences of filing the election late under the provisions of any other section of the code and regulations or as to the tax treatment of any conditions existing at the time of or tax effects or consequences resulting from filing the election late that are not specifically set forth in the above ruling for purposes of granting relief under sec_301_9100-1 we relied on certain statements and representations made by the taxpayer its employees and representatives however the director should verify all essential facts in addition notwithstanding that an extension is granted under sec_301_9100-1 to file the election penalties and interest that would otherwise be applicable if any continue to apply plr-115379-01 this letter is directed only to the taxpayer s who requested it sec_6110 provides that it may not be used or cited as precedent a copy of this letter is being sent to authorized representative pursuant to the power_of_attorney on file in this office sincerely yours associate chief_counsel corporate by senior technician reviewer branch


internal_revenue_service index no number release date cc dom p si - plr-107492-99 date x a b c d d1 d2 year year year dear this responds to your letter dated date and subsequent correspondence submitted on x’s behalf requesting a ruling under sec_1362 of the internal_revenue_code the information submitted states that x was incorporated on d1 the shareholders of x are a b c and d b as x’s secretary represents that it was the shareholders’ intent that x elect to be an s_corporation effective d2 of year b represents that x relied on x’s outside accountant to prepare a form_2553 election by a small_business_corporation to be effective for x’s year tax_year b further represents that the former bookkeeper for x timely mailed the form_2553 to the appropriate service_center however the service_center has no record of the form_2553 on file for the year year and year tax years x filed its tax_return using form_1120s u s income_tax return for an s_corporation and the shareholders of x filed their returns consistent with x being an s_corporation sec_1362 of the code provides that if-- a an election under sec_1362 is made for any_tax year after the date prescribed by sec_1362 for making such election for such tax_year or no such election is made for any_tax year and b the secretary determines that there was reasonable_cause for the failure to timely make such election the secretary may treat such an election as timely made for such tax_year based solely on the facts and the representations submitted we conclude that x has established reasonable_cause for failing to make a timely election to be an s_corporation for x’s year tax_year accordingly provided that x makes an election to be an s_corporation by filing a completed form_2553 with the appropriate service_center effective for its year tax_year within days of the date of this letter then such election will be treated as timely mad e for x’s year tax_year a copy of this letter should be attached to the form_2553 except as specifically ruled upon above no opinion is expressed concerning the federal tax consequences of the facts described above under any other provisions of the code including whether x was or is a small_business_corporation under sec_1361 of the code this ruling is directed only to the taxpayer who requested it sec_6110 of the code provides that it may not be used or cited as precedent pursuant to the power_of_attorney on file with this office a copy of this letter is being sent to x sincerely yours h grace kim assistant to the chief branch office of the assistant chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes


y t department of the treasury internal_revenue_service washington d c tax_exempt_and_government_entities_division uniform issue list may t ep rats legend company a date e date f date g amount h state l state m ira x dear this is in response to your request dated on date for a ruling to waive the 60-day rollover requirement contained in sec_408 of the internal_revenue_code the code correspondence dated date supplemented the request under penalty of perjury you have submitted the following facts and representations page you maintained ira x with company a on date e you withdrew amount h from ira x you withdrew the funds in order to put a deposit on a new house your company was relocating from state l to state m and you did not have the funds necessary to put a down payment on a house you state that accessing the funds in ira x was your only means of coming up with the deposit a representative from company a advised you that you needed to return the funds to an ira within days or you would be subject_to substantial penalties when the day period expired on date f you did not have sufficient funds to complete a rollover on or about date g after the days had expired you acquired the resources to complete the rollover based on the facts and representations you request that the internal_revenue_service waive the day rollover requirement contained in sec_408 of the code with respect to the distribution of amount h from ira x because the failure to waive such requirement would be against equity or good conscience 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 ra 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 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 day after the day on which the individual receives the payment or distribution or ii 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 day after the date on which the payment or distribution is received except that the maximum amount which may be paid into such plan may not exceed the portion of the amount received which is includible in gross_income determined without regard to sec_408 sec_408 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 1-year period ending on the day of such receipt such individual received any other amount described in section page d a i from an ira which was not includible in gross_income because of the application of sec_408 sec_408 of the code provides a similar 60-day rollover period for partial rollovers sec_408 of the code provides that the secretary may waive the day requirement under sec_408 and sec_408 of the code where the failure to waive such requirement would be against equity or good conscience including casualty disaster or other events beyond the reasonable control of the individual subject_to such requirement only distributions that occurred after date are eligible for the waiver under sec_408 of the code revproc_2003_16 r b date provides that in determining whether to grant a waiver of the 60-day rollover requirement pursuant to sec_408 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 it appears from the facts that you used the you have not presented any evidence to the service as to how any of the factors outlined in revproc_2003_16 affected your inability to timely roll over amount h or any portion thereof to an ira funds from your ira distribution to purchase a home in a transaction that amounts to a short term_loan the committee report describing legislative intent indicates that the congress enacted the rollover provisions to allow portability between eligible plans including iras using a distribution as a short term_loan to cover personal expenses is not consistent with the intent of congress to allow portability between eligible plans the information presented does not demonstrate circumstances that would justify a waiver of the 60-day rollover period pursuant to sec_408 of the code therefore pursuant to sec_408 of the code the service declines to waive the 60-day rollover requirement with respect to the distribution of amount a thus amount a will not be considered a valid rollover because the 60-day requirement under sec_408 of the code with respect to such contribution will not be satisfied 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 a 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 a copy of this letter has been sent to your authorized representative in accordance with a power_of_attorney on file with this office if you wish to inquire about this ruling please contact at please address all correspondence to se t ep ra‘t - id - sincerely yours ys rances v sloan manager employee_plans technical group enclosures deleted copy of ruling letter notice of intention to disclose


department of the treasury internal_revenue_service washington d c date number release date cc el gl br3 tl-n-5854-98 uilc memorandum for south texas district_counsel from lawrence h schattner chief branch general litigation subject refund schemes - prisoner returns this responds to your memorandum dated date which you directed to the deputy associate chief_counsel domestic and which was subsequently referred to our office for a response this also responds to questions posed in a memorandum to you dated date from the director of the austin service_center this document is not to be cited as precedent issues can overstatement of income_tax prepayment_credits on an individual_income_tax_return or claim_for_refund_or_credit be considered in a deficiency determination can a fraudulent form_w-2 be considered a fraudulent return does sec_6501 apply to a return based on a false form_w-2 must the civil_fraud penalty be assessed per irm for the unlimited assessment_period of sec_6501 to apply does the period of limitations for making an assessment set forth in sec_6501 and the unlimited period in sec_6501 apply to assessments of overstated prepayment_credits made under sec_6201 can reversal of income_tax prepayment credit on the ground that the credit is overstated and does not exist be considered an assessment under sec_6201 what should be done with the frozen refund cc el gl br3 tl-n-5854-98 page what must be shown at a minimum in order to assert fraud and keep the statute open conclusions an overstatement of income_tax prepayment_credits on an income_tax return cannot be considered in the determination_of_a_deficiency a form_w-2 is an information_return separate and distinct from the income_tax return form_1040 thus a fraudulent form_w-2 does not constitute a fraudulent income_tax return the sec_6501 limitations_period may apply to a return based on a false form_w-2 if the service can show that the income_tax return with respect to which the assessment is being made is false or fraudulent with the intent to evade tax the service is not required to assert or assess the civil_fraud penalty in order for the unlimited period of sec_6501 to apply assessments of the amount of overstated income_tax prepayment_credits under sec_6201 is governed by the applicable_period of sec_6501 including sec_6501 if the overstatement of the credit reported on the return is false or fraudulent with intent to evade the tax a transaction shown on the taxpayer’s account as a reversal of income_tax prepayment credit is not a sec_6201 assessment because a reversal does not comply with the requirements for assessment where the service is successful in freezing the claimed refund before it is paid to the taxpayer the service should adjust the taxpayer’s account by reversing the overstated prepayment credit neither the assessment nor deficiency procedures are necessary and the overstated credit can simply be reversed the service should notify taxpayer of this action by following the refund procedures and issuing a notice of claim disallowance because the taxpayer’s assertion of the credit resulting in a claimed overpayment is a claim_for_refund under the provisions of sec_6532 the taxpayer must file a refund_suit within two years from the date the notice was mailed once the two year period expires the service could move the frozen refunds to the excess collections file since these amounts would then be considered time barred claims for refund after the overstated credit is reversed the service should abate the assessment under sec_6404 since it has been determined that there are no wages and no tax_liability the entire assessment is excessive in amount it may be appropriate to advise the taxpayer in the notice of claim disallowance that the service will also be abating the reported tax_liability to dispel any fears that the service may attempt to collect those amounts cc el gl br3 tl-n-5854-98 page since we recommend that the service simply reverse the overstated credit where no refund is paid to the taxpayer rather than making an assessment under sec_6201 it is unnecessary to determine what must be shown to assert fraudulent conduct for purposes of the statute_of_limitations under sec_6501 facts the questions that were submitted involved the following general scenario an individual files an individual_income_tax_return form 1040ez the return reports taxable_income from employment income_tax income_tax prepayment credit for withholding shown on an attached w-2 and overpayment of income_tax for which refund is claimed the service identifies the return under the questionable refund program designed to detect and stop fraudulent or questionable claims for refund because the return is apparently complete in required detail the return is processed so that the taxpayer’s account shows filing of the return assessment of reported income_tax and posting of reported income_tax prepayment_credits in the factual scenario you presented the service was able to freeze the account so that a refund_or_credit was not made the service investigates the w-2 information and discovers that the taxpayer was not employed by the identified employer for the period covered by the w-2 was incarcerated for most or all of the period covered by the w-2 was not paid income by the identified employer did not have any amount withheld by the identified employer and was not issued a w-2 by the employer identified on the w-2 thus the employment income and withholding information reported on the w-2 are false since the taxpayer did not earn any income at all he is not liable for any_tax liability reported on the return thus the income_tax assessment based on the liability reported on the return is excessive since the withholding items of w-2 information are false the withholding credits reported on the income_tax return are false the return reports more payment credits and thus claims an overpayment and a refund to which the taxpayer is not entitled the basic assessment_period of sec_6501 has now expired a return although it may contain false or fraudulent information must be processed as a return for purposes of sec_6012 where completed in required detail and signed under penalties of perjury see 293_us_172 and 464_us_386 cc el gl br3 tl-n-5854-98 law and analysis page overstatement on an income_tax return or claim_for_refund_or_credit of income_tax prepayment credit for income_tax_withholding or estimated income_tax payment cannot be considered in the determination_of_a_deficiency sec_6211 and the legislative_history to sec_6201 preclude consideration of income_tax prepayment credit or its overstatement in the determination_of_a_deficiency see s rep no 83d cong 2d sess at page h_rep_no 83d cong 2d sess at page a404 attachment dated date to g_c_m the congressional committee reports which accompanied sec_6201 when it was originally enacted in the internal_revenue_code of indicate that the service already had the authority to administratively reverse overstated withholding credits except when the service had already made a refund_or_credit id this legislative_history indicates that the deficiency procedures were not intended to apply to an overstatement of prepayment_credits since the service had the authority to reverse the credits before the enactment of sec_6201 without following the deficiency procedures id moreover the definition of a deficiency explicitly does not consider the payment of estimated_taxes or withholding of taxes in the calculation sec_6211 provides in part the tax imposed by subtitle a and the tax_shown_on_the_return shall both be determined without regard to payment on account of estimated_tax without regard to the credit under sec_31 the amounts withheld from wages are credits under sec_31 and estimated_taxes are credits under sec_6315 thus the amount of the overstatement is immediately assessable under sec_6201 in the same manner as a mathematical_or_clerical_error under sec_6213 except that the taxpayer cannot force the use of the deficiency procedures sec_6501 provides that in the case of a fraudulent return with the intent to evade tax the tax may be assessed at any time the return in this provision is the return on which the tax_liability is reported and with respect to which the assessment is made a form_w-2 is an information_return on which no tax is reported and with respect to which the service makes no assessment the form_w-2 is separate and distinct from the income_tax return form_1040 thus a fraudulent form_w-2 does not constitute a fraudulent income_tax return and the unlimited limitations_period under sec_6501 would not apply merely because the form_w-2 is fraudulent on the other hand the c limitations_period may apply to an income_tax return based on a false form_w-2 if the service can show that the income_tax return is false or fraudulent with intent to evade the tax the addition_to_tax for fraud is not required to be assessed before the limitations_period under sec_6501 is triggered statute_of_limitations sought to be applied to bar rights of the government must be strictly construed in favor of the government 464_us_386 in badaracco the supreme court recognized that filing a fraudulent return had distinct implications for criminal prosecution for additions to tax for fraud and for the assessment_period set cc el gl br3 tl-n-5854-98 page out in sec_6501 id at the supreme court concluded that the plain and unambiguous language of sec_6501 permits assessment at any time where the taxpayer files a false_or_fraudulent_return id at this section is separate and distinct from the provisions for additions to tax for fraud and makes no reference to any requirement that an addition_to_tax for fraud must be asserted or assessed as a precondition to its application sec_6501 by its terms simply does not require a fraud_penalty assertion or assessment for its application the purpose of irm is to give guidance on how to handle a case after it has been closed by the examination_division these instructions are premised on the supposition that an addition_to_tax for fraud has been asserted along with a proposed deficiency thus if the addition_to_tax for fraud cannot be established by the government then there could be no reliance on sec_6501 sec_6201 authorizes the secretary to make assessments of the amount of an overstatement of income_tax_withholding credits the authority in this subsection is included within the general authority under sec_6201 to make assessments of taxes it is our position that the placement of the assessment authority regarding overstated credits within the general assessment authority of sec_6201 is indicative of congressional intent that an assessment under a is within the sec_6201 term taxes and that a sec_6201 overstatement is assessed as a tax the congressional intent that the amount assessed under sec_6201 is of a tax is also reflected in the legislative_history which provides there is also a material_change from existing law in subsection a of this section relating to erroneous credits for prepayment of income_tax prepayment through credit for tax withheld at source and payments of estimated_tax under this new paragraph refunds caused by erroneous payment credits may be recovered by assessment in the same manner as in the case of a mathematical error on the return for example assume a case in which the tax_shown_on_the_return is dollar_figure the claimed prepayment credit is dollar_figure and a refund of dollar_figure is made and it is later determined that the prepayment_credits should have been only dollar_figure under existing law dollar_figure the tax_shown_on_the_return less the dollar_figure credit can be immediately assessed as tax_shown_on_the_return which was not paid but the remaining dollar_figure must be recovered by suit in court under the new provision the entire dollar_figure can be assessed and collected since an overstatement within sec_6201 is claimed on an income_tax return and since the government has the ability to match tax_payments shown by w-2s and estimated_tax vouchers it appears likely that congress intended that the assessment of sec_6201 overstatements be in the same manner as the tax cc el gl br3 tl-n-5854-98 page reported on the return see also 421_f2d_105 6th cir sec_6201 assessment upheld where made within the sec_6501 period we believe that the applicable assessment_period of sec_6501 applies to assessment under sec_6201 of an overstatement of income_tax prepayment credit sec_6501 applies to assessment of tax imposed by this title in respect of a return it is our position that an assessment under sec_6201 is of a tax imposed by that section in the amount of the overstatement of income_tax prepayment credit claimed by the taxpayer on an income_tax return or claim_for_refund_or_credit see eg 35_fedclaims_214 at fn crticizing a rationale in derochemont v united_states cls ct we therefore conclude that sec_6201 imposes a tax and creates a tax_liability which is immediately assessable since the amount assessable under subsection a is treated as a tax imposed by code this assessment is governed by the statute_of_limitations under sec_6501 see brister supra we also believe that the unlimited period of sec_6501 applies to a sec_6201 assessment where overstatement of income_tax prepayment credit is false or fraudulent in brister supra the taxpayer reported overstated withholding credits on his returns and obtained refunds the service reversed the credits and made sec_6201 assessments for the amounts refunded the assessments were collected by refund offsets although the reversals and assessments were performed outside the sec_6501 three year period for assessment the government asserted that the assessments were timely under the unlimited assessment_period of sec_6501 the court agreed finding that the government established that the returns were knowingly false in discussing the intent to evade tax component of sec_6501 the court recognized that reversing the withholding credits would not actually cause plaintiff to pay additional income_tax for the years at issue nonetheless the court explained that plaintiff’s actions affected the credit side of the debit and credit elements used to calculate net tax_liability and the plaintiff thus evaded tax if the assessment periods set forth under sec_6501 do not apply an argument could be made that the period for making assessments under sec_6201 is unlimited whether or not a claim to income_tax prepayment_credits is fraudulent 980_f2d_872 2d cir in capozzi the court_of_appeals had to determine the correct statute_of_limitations on the assessment_period for sec_6700 penalties for promotion of abusive tax_shelters the court_of_appeals held that there would be an unlimited statute_of_limitations on the assessment_period where congress does not clearly specify whether a limitation period applies to a particular provision id pincite see also 952_f2d_920 6th cir unlimited statute_of_limitations on assessment cc el gl br3 tl-n-5854-98 page furthers the interests of congress in combating fraud relating to the filing of various tax documents it appears to us that if sec_6501 does not apply then the rationale of capozzi would since there is no other specific section of the code that deals with making assessments pursuant to sec_6201 contra derochemont supra but compare brister supra a transaction shown on the taxpayer’s account as a reversal of an income_tax prepayment credit is not a sec_6201 assessment the requirements for assessment provided in sec_301_6203-1 specify that an assessment must be recorded by a summary record of assessment a form 23c or racs signed by an assessment officer and the date of such signing is the date of assessment the service does not assess reversal of payment credits the secretary is authorized to make assessments of taxes and reversal of a payment credit does not impose a tax_liability that is assessable under the secretary’s general assessment authority as noted above the taxpayer’s return was processed as a valid_return so that the taxpayer’s account shows the filing of the return assessment of the income_tax reported on the return and posting of the withholding credits claimed on the return subsequently the return is identified as questionable and the amount claimed as a refund based on the claimed withholding credits is frozen before the refund is generated and paid to the taxpayer the service later determines that the taxpayer has not earned_income and has not incurred a tax_liability and that no employer has incurred a withholding requirement in fact taxes were not withheld and paid over to the service in respect of employment of this taxpayer the service should adjust the taxpayer’s account by reversing the claimed withholding credits since the taxpayer claimed a refund based on the withholding credits reported on the return the refund procedures should be employed to notify the taxpayer of the claim disallowance if a timely refund_suit is not filed the service could move the frozen refunds to the excess collections file since these amounts would then be considered time barred claims for refund the reversal of the overstated credits are mere accounting adjustments and do not trigger the deficiency or assessment procedures the legislative_history of sec_6201 clearly indicates that the service already possessed the authority to reverse overstated credits before it was granted the authority to assess these overstatements in a and thus it is our view the service is not required to use its assessment authority if it chooses instead to simply reverse the overstated credits once the service reverses the overstated credit the taxpayer’s account still reflects an assessment of a tax which the taxpayer never incurred and will subject the taxpayer to collection activity unless the assessment is removed the service is authorized to abate assessments under sec_6401 that are excessive in amount the entire assessment in this case is excessive in amount and therefore should be abated we recommend that the taxpayer be notified that the cc el gl br3 tl-n-5854-98 page assessment will be abated when the taxpayer is sent the notice of claim disallowance alternatively the service could assess the entire amount of the overstated credit under sec_6201 and apply this assessment against the reported withholding credit under this provision the mathematical error assessment procedures apply to allow a summary_assessment however this assessment is exempted from the normal math error procedures which would otherwise require that the assessment be abated if protested by the taxpayer however in the case where no refund has been paid to the taxpayer this procedure is cumbersome and unnecessary morever if the normal three year period for making an assessment under sec_6501 has expired the service may be required to show that the income_tax return is false or fraudulent with intent to evade the tax in order to permit assessment under the unlimited period of sec_6501 proof of knowingly false or fraudulent conduct is determined by the facts and circumstances of each case while case law has given guidance concerning what would be an indicia of fraud we do not think it appropriate to establish some sort of minimum demonstration test to cover all potential cases in any event a response to this question is unnecessary in light of our recommendation that the service should reverse the overstated credits rather than making a sec_6201 assessment if you have any questions please call


tcmemo_2009_195 united_states tax_court intermountain insurance service of vail limited_liability_company thomas a davies tax_matters_partner petitioner v commissioner of internal revenue respondent docket no filed date p moved for summary_judgment on the ground that r’s partnership_item adjustments were made after the general year period of limitations for assessing tax had expired r argues that an extended 6-year period of limitations applies held the 3-year period of limitations is applicable thus p’s motion for summary_judgment will be granted steven r anderson for petitioner gary j merken for respondent memorandum opinion wherry judge this case is before the court on petitioner’s date motion for summary_judgment the sole issue for decision is whether a basis overstatement constitutes a substantial omission from gross_income that can trigger an extended 6-year period of limitations see secs c e a we follow our opinion in 128_tc_207 affd 568_f3d_767 9th cir and hold that the extended limitations_period does not apply background intermountain insurance service of vail llc intermountain engaged in a series of transactions--some of which increased tax basis--culminating in the sale of business_assets on date for dollar_figure it reported the dollar_figure gross_sales price and after deducting dollar_figure of allowed_or_allowable depreciation claimed a stepped-up dollar_figure basis in the assets on a form_4797 sales of business property attached to its form_1065 u s partnership return of income it filed that return on date 1unless otherwise indicated all section references are to the internal_revenue_code_of_1986 as amended and in effect for the tax_year at issue code and all rule references are to the tax_court rules_of_practice and procedure almost years later on date respondent issued a notice of final_partnership_administrative_adjustment fpaa with respect to intermountain’s tax_year respondent found that some of the transactions intermountain engaged in were improper and ineffective for federal_income_tax purposes and consequently determined that intermountain had improperly claimed a dollar_figure expense overstated capital contributions by dollar_figure overstated outside partnership basis by dollar_figure and improperly claimed an dollar_figure loss petitioner challenges the timeliness of the fpaa arguing that the general 3-year period of limitations had already expired when respondent issued the fpaa petitioner further cites bakersfield energy partners lp v commissioner supra for the proposition that a basis overstatement cannot trigger an extended 6-year period of limitations under either section c or e a respondent asserts that we decided bakersfield incorrectly and urges us to overrule it discussion summary_judgment is intended to expedite litigation and avoid unnecessary and expensive trials fla peach corp v commissioner 90_tc_678 a party moving for summary_judgment bears the burden of demonstrating that no 2respondent provides no other reason--beyond the application of sec_6501 a --why the period of limitations would have remained open genuine issue of material fact exists and that he or she is entitled to judgment as a matter of law 98_tc_518 affd 17_f3d_965 7th cir cert_denied 513_us_821 facts are viewed in the light most favorable to the nonmoving party 85_tc_812 where a motion for summary_judgment has been properly made and supported by the moving party the nonmoving party may not rest upon the mere allegations or denials contained in that party’s pleadings but must by affidavits or otherwise set forth specific facts showing that there is a genuine issue for trial rule d the code does not provide a period of limitations within which the commissioner must file an fpaa see curr-spec partners l p v commissioner __ f 3d __ 5th cir date affg tcmemo_2007_289 114_tc_533 however any partnership_item adjustments made in an fpaa will be time barred at the partner level if the commissioner does not issue the fpaa within the applicable_period of limitations for assessing tax attributable to partnership items curr-spec partners l p v commissioner supra at ____ slip op pincite rhone-poulenc surfactants specialties l p v commissioner supra pincite the general period of limitations for assessing tax i sec_3 years from the filing of a federal_income_tax return sec_6501 that period is extended to years if the taxpayer omits_from_gross_income an amount properly includible therein which is in excess of percent of the amount of gross_income stated in the return sec_6501 for the assessment of tax attributable to a partnership_item the period of limitations remains open at least for years after the date the partnership return was filed or years after the last day disregarding extensions for filing the partnership return whichever is later sec a the period of limitations for assessing tax attributable to partnership items remains open for at least years after the later of the two dates described in section a if any partnership omits_from_gross_income an amount properly includible therein which is in excess of percent of the amount of gross_income stated in its return sec c for the purpose of ruling on petitioner’s motion for summary_judgment we view the facts in the light most favorable to respondent and assume that the adjustments that respondent made in the fpaa to intermountain’s partnership return are correct the parties agree that respondent issued the fpaa after the year periods described in sections a and a had expired but they disagree whether a basis overstatement by intermountain could have extended the period of limitations for assessing tax under either section c or sec_6501 our opinion in 128_tc_207 is directly on point 3respondent argues that sec_6501 applies but he mostly likely meant to cite sec c sec_6501 refers to a taxpayer’s omission from gross_income the amount of gross_income stated on a taxpayer’s federal_income_tax return and a period running from the filing of a taxpayer’s return respondent however has only provided information about intermountain’s omission from gross_income the amount of gross_income stated on intermountain’s partnership return and the period running from the filing of that partnership return these are considerations directly relevant to sec c and only tangentially relevant to sec_6501 4under 54_tc_742 affd 445_f2d_985 10th cir we follow a court_of_appeals decision which is squarely in point where appeal from our decision lies to that court_of_appeals see 99_tc_490 if the court_of_appeals has not yet decided the issue however we will give effect to our own views id petitioner states in his petition that intermountain has no principal_place_of_business suggesting that--absent stipulation to the contrary--this case may be appealable to the court_of_appeals for the district of columbia circuit see sec_7482 respondent adds that the case may be appealable to the court_of_appeals for the eighth circuit if intermountain continued to have a place of business while it was winding up its affairs if that is the case we question whether an appeal might actually lie in the court_of_appeals for the tenth circuit because intermountain was organized under the laws of colorado and at least at one point had its principal_place_of_business in that state ultimately we do not need to answer the question of proper venue because none of those courts of appeals has decided the issue before us we will therefore follow our opinion in 128_tc_207 affd 568_f3d_767 9th cir in bakersfield energy partners lp v commissioner supra pincite we held that a basis overstatement is not an omission from gross_income we applied the supreme court’s holding in 357_us_28 and stated that the extended period of limitations applies to situations where specific income receipts have been ‘left out’ in the computation of gross_income and not when an understatement of gross_income resulted from an overstatement of basis bakersfield energy partners lp v commissioner supra pincite paraphrasing colony the court_of_appeals for the ninth circuit affirmed our opinion in bakersfield concluding that under colony bakersfield’s allegedly overstated basis is not an omission from gross_income under sec_6501 or c bakersfield energy partners lp v commissioner f 3d pincite the court_of_appeals_for_the_federal_circuit also recently held that colony controlled the disposition of a sec_6501 case involving a basis overstatement salman ranch ltd v united_states __ f 3d __ __ fed cir date slip op pincite our holding today is consistent with the date decision of the ninth circuit in bakersfield see also beard v commissioner tcmemo_2009_184 we hereby reaffirm our holding in bakersfield and decline respondent’s invitation to overrule it the court has considered all of respondent’s contentions arguments requests and statements to the extent not discussed herein we conclude that they are meritless moot or irrelevant to reflect the foregoing an order and decision for petitioner will be entered 5respondent insists that we should not rely on 357_us_28 asserting that the supreme court did not interpret the applicable version of the statute and that its holding was nevertheless limited to situations involving trade_or_business income from the sale_of_goods or services as we stated in bakersfield energy partners lp v commissioner supra pincite we are unpersuaded by respondent’s attempt to distinguish and diminish the supreme court’s holding in colony moreover even if we were to agree with respondent which we do not we would be hesitant to contradict the supreme court’s ruling in colony the supreme court has advised lower courts that if a precedent of this court the supreme court has direct application in a case yet appears to rest on reasons rejected in some other line of decisions the lower courts should follow the case which directly controls leaving to this court the prerogative of overruling its own decisions rodriguez 490_us_477


department of the treasury internal_revenue_service washington d c number info release date uil date dear this is in response to your letter to commissioner rossotti concerning a question about short-term_capital_gains distributed by mutual funds your question relates to the federal tax status of a regulated_investment_company ric which is sometimes referred to as a mutual_fund a ric is actually a domestic_corporation for federal tax purposes not a pass-through entity such as a partnership in general a distribution from a corporation is either a dividend or a return_of_capital this is the case even where a distribution from a corporation might be attributed to a capital_asset for example if a corporation sells a long-term asset such as a piece of real_estate for a gain and then decides to distribute the gain to its shareholders the shareholders receive a dividend not a capital_gain_distribution this is in contrast to a distribution from a partnership from a similar transaction where the capital_gain character of the transaction would pass through to the partner generally dividends_paid by corporations are treated as ordinary_income to the shareholder in the case of a ric however congress granted special permission to pay dividends that are not ordinary dividends in addition to an ordinary dividend in certain cases a ric may pay a capital_gain dividend or an exempt-interest dividend a ric is required to send its shareholder a form 1099-div or similar statement to tell the shareholder the kind of distribution he or she receives sec_852 of the internal_revenue_code limits the amount of a ric’s capital_gain dividend to the mutual fund’s net_capital_gain sec_1222 defines the term net_capital_gain as the excess of the net_long-term_capital_gain for the taxable_year over the net_short-term_capital_loss for that year sec_1222 defines the term net_long-term_capital_gain as the excess of long-term_capital_gains for the taxable_year over the long-term_capital_losses for that year sec_1222 defines the term net_short-term_capital_loss as the excess of short- term capital losses over the short-term_capital_gains for that year if the ric’s short-term_capital_gains exceed the short-term_capital_losses this excess does not fall within the definition of net_capital_gain and cannot therefore be designated by the ric as a capital_gain dividend dividends not designated by the mutual_fund as capital_gain dividends or as exempt-interest dividends are ordinary dividends includible in income of the recipient as ordinary_income we hope this information will be helpful if we can be of any further assistance please call pamela lew at sincerely yours acting associate chief_counsel financial institutions products by alice m bennett chief branch


internal_revenue_service number release date index number ----------------------------- ------------------------------- ------------------------------ --------------------------- re -------------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ----------------------- -------------- telephone number --------------------- refer reply to cc psi b04 plr-125942-15 date date legend taxpayer spouse date date date date year trust other trust x y z ------------------------- ------------------------- ------------------------- ------------------------- --------------------------- ----------------------- ------------------------- ------------------ ------- ------------------------------------------------ -------------------------------------------- ----------- -------- --------- dear ------------------------------- this letter responds to a letter from your authorized representative dated date and other correspondence requesting an extension of time pursuant to sec_2642 of the internal_revenue_code and sec_301_9100-3 of the procedure and administration regulations to allocate generation-skipping_transfer gst_exemption the facts and representations submitted are as follows on date taxpayer and spouse created an irrevocable_trust trust on date taxpayer and spouse created another irrevocable_trust other trust trust and other trust have gst tax potential plr-125942-15 on date taxpayer transferred dollar_figurex to trust on date taxpayer transferred dollar_figurey to other trust date and date are in the same year year taxpayer and spouse filed form sec_709 united_states gift and generation-skipping_transfer_tax returns for year reporting the gifts and electing pursuant to sec_2513 to treat the gifts as made one- half by taxpayer and one-half by spouse on their returns taxpayer and spouse each allocates z of gst_exemption but failed to attach a notice of allocation and to sign his or her respective return accountant prepared the returns and advised taxpayer and spouse to affirmatively allocate gst_exemption to the transfers the failures were later discovered taxpayer and spouse have requested an extension of time under sec_2642 and sec_301_9100-1 and sec_301_9100-3 to allocate gst_exemption to the transfers sec_2601 imposes a tax on every gst which is defined under sec_2611 as a taxable_distribution a taxable_termination and a direct_skip sec_2602 provides that the amount of the gst tax is the taxable_amount multiplied by the applicable_rate sec_2641 defines applicable_rate as the product of the maximum_federal_estate_tax_rate and the inclusion_ratio with respect to the transfer sec_2642 provides that for purposes of chapter the inclusion_ratio with respect to any property transferred in a gst is generally defined as the excess if any of one over the applicable_fraction the applicable_fraction as defined in sec_2642 is a fraction the numerator of which is the amount of gst_exemption allocated to the trust or to property transferred in a direct_skip and the denominator of which is the value of the property transferred to the trust or involved in the direct_skip sec_2631 as in effect at the time of the transfer provides that for purposes of determining the inclusion_ratio every individual shall be allowed a gst_exemption of dollar_figure that may be allocated by such individual to any property with respect to which such individual is the transferor under sec_2513 if both spouses have signified their consent a gift made by one spouse to any person other than his spouse shall for purposes of the gift_tax be considered as made one-half by him and one-half by his spouse plr-125942-15 sec_26_2632-1 of the generation-skipping_transfer_tax regulations provides that an allocation of gst_exemption to property transferred during the transferor's lifetime is made on form_709 sec_2642 provides that except as provided in sec_2642 if the allocation of the gst_exemption to any transfer of property is made on a gift_tax_return filed on or before the date prescribed by sec_6075 for such transfer the value of such property for purposes of sec_2642 shall be its value as finally determined for purposes of chapter within the meaning of sec_2001 sec_2642 provides that the secretary shall by regulation prescribe such circumstances and procedures under which extensions of time will be granted to make an allocation of gst_exemption described in sec_2642 or and an election under sec_2632 or c sec_2642 provides that in determining whether to grant relief the secretary shall take into account all relevant circumstances including evidence of intent contained in the trust instrument or instrument of transfer and such other factors as the secretary deems relevant for purposes of determining whether to grant relief the time for making the allocation or election shall be treated as if not expressly prescribed by statute notice_2001_50 2001_2_cb_189 provides that under sec_2642 the time for allocating the gst_exemption to lifetime transfers and transfers at death the time for electing out of the automatic allocation rules and the time for electing to treat any trust as a gst_trust are to be treated as if not expressly prescribed by statute the notice further provides that taxpayers may seek an extension of time to make an allocation described in sec_2642 or b or an election described in sec_2632 or c under the provisions of 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 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_9100-3 provides the standards used 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 under sec_301_9100-1 a regulatory election includes an election whose due_date is prescribed by a notice published in the internal_revenue_bulletin in accordance with sec_2642 and notice_2001_50 taxpayers plr-125942-15 may seek an extension of time to make an allocation described in sec_2642 under the provisions of sec_301_9100-3 requests for relief under sec_301_9100-3 will be granted when the taxpayer provides the 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 the taxpayer reasonably relied on a qualified_tax professional including a tax professional employed by the taxpayer and the tax professional failed to make or advise the taxpayer to make the election based on the facts submitted and the representations made we conclude that the requirements of sec_301_9100-3 have been satisfied taxpayer and spouse are granted an extension of time of days from the date of this letter to allocate gst_exemption with an attached notice of allocation to their transfers as described above the allocations will be effective as of the date of the transfers and the value of the transfers as determined for federal gift_tax purposes will be used in determining the amount of taxpayer’s and spouse’s gst_exemption to be allocated the allocations should be made on a form_709 united_states gift and generation- skipping transfer_tax return for the year in which the transfer was made and filed with the internal_revenue_service center cincinnati ohio a copy of this letter should be attached to the form_709 a copy is enclosed for this purpose except as expressly provided herein we express no opinion on the federal tax consequences of the transaction under the cited provisions or under any other provisions of the code this ruling is directed only to the taxpayers requesting it sec_6110 of the code provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representatives the ruling contained in this letter is based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement plr-125942-15 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 sincerely associate chief_counsel passthroughs special industries leslie h finlow leslie h finlow senior technician reviewer branch enclosures copy for sec_6110 purposes two copies of this letter


internal_revenue_service number release date index number cc psi 6-cor- date re request to revoke sec_179 election tax_year dear this letter is in response to your letter dated date to commissioner of internal revenue concerning revocation of an election made under sec_179 of the internal_revenue_code in a telephone conversation on date with our office you clarified that the issue addressed in your letter relates to the depreciation of your condominium units as residential_rental_property under sec_168 of the internal_revenue_code we hope that you find the following general information to be helpful and for references we have enclosed publication how to depreciate property and publication basis of assets in general sec_168 of the code provides a modified accelerated_cost_recovery_system macrs for depreciable tangible_property placed_in_service after date depreciation_deductions are computed under the macrs’s general depreciation system prescribed in sec_168 by use of the applicable_depreciation_method applicable_recovery_period and applicable convention determined under sec_168 c and d publication describes the depreciation method recovery_period and convention of depreciable_property under the general depreciation system for residential_rental_property the depreciation method and recovery_period are the straight_line method and a -year recovery_period respectively and the applicable convention for residential_rental_property is the mid-month_convention see publication page sec_26 sec_29 and sec_30 cor-101785-01 publication explains how a taxpayer can recover the cost of business or income-producing property through depreciation it shows how to figure the depreciation deduction and how to fill out form_4562 depreciation and amortization starting on page of publication under the heading how to figure the deduction using percentage tables there is a discussion on how a taxpayer can figure the depreciation deduction for each taxable_year the depreciable_property can be depreciated under sec_168 of the code the internal_revenue_service has established percentage tables for a taxpayer to use to figure the depreciation deduction for each year the depreciable_property can be depreciated table a-6 in appendix a of publication provides the correct percentage table to use in determining the depreciation deduction for residential_rental_property a taxpayer begins depreciating depreciable_property when the taxpayer has placed the property in service for use in the taxpayer’s trade_or_business or for the taxpayer’s production_of_income activity a taxpayer stops depreciating property either when the taxpayer has fully recovered the cost or investment in the property or when the taxpayer has retired the property from service whichever happens first emphasis added property is retired from service when the taxpayer permanently withdraws it from use in the taxpayer’s trade_or_business or from use in the taxpayer’s production_of_income activity the retirement_of_property from service would include the sale_or_exchange of the property by the taxpayer page of publication under the heading incorrect amount of depreciation deducted notes that if a taxpayer made a mathematical error resulting in the deduction of an incorrect amount of depreciation on the taxpayer’s return for the taxable_year the taxpayer may be able to correct the error by filing an amend return note also that there is a requirement for an adjustment to the basis of the depreciable_property even if the taxpayer does not claim depreciation that the taxpayer is entitled to deduct under such circumstances before figuring gain_or_loss on a sale exchange or other_disposition of the property taxpayer must reduce the basis of the property by the full amount of depreciation that the taxpayer could have deducted on the tax returns under the method_of_depreciation the taxpayer chose see publication under heading adjusted_basis pages and publication under subheading basis_adjustment page this letter has called your attention to certain general principles of tax law it is intended for informational purposes only and does not constitute a ruling see section cor-101785-01 dollar_figure of revproc_2001_1 a copy of which is enclosed we hope the materials enclosed will be helpful to you however if you should have any additional questions or comments please contact our office at sincerely yours charles b ramsey charles b ramsey chief branch office of associate chief_counsel passthroughs and special industries enclosures


t c summary opinion united_states tax_court norma a ramirez-ota petitioner v commissioner of internal revenue respondent docket no 1951-00s filed date norma a ramirez--ota pro_se rachael j zepeda for respondent goldberg special_trial_judge this case was heard pursuant to the provisions of sec_7463 of the internal_revenue_code in effect at the time the petition was filed the decision to be entered is not reviewable by any other court and this opinion should not be cited as authority unless otherwise indicated subseguent section references are to the internal_revenue_code in effect for the years in issue and all rule references are to the tax_court rules_of_practice and procedure respondent determined deficiencies in petitioner’s federal income taxes in the amounts of dollar_figure and dollar_figure for tax years and respectively the issues for decision after concessions by respondent are whether petitioner is entitled to head_of_household status and whether petitioner is entitled to the earned_income_credit for the years in issue some of the facts in this case have been stipulated and are so found the stipulation of facts and the exhibits received into evidence at trial are incorporated herein by this reference at the time the petition was filed petitioner lived in tempe arizona during petitioner and her two minor daughters collectively the children lived on and off in her former in- laws’ home located pincite west montebello tempe arizona montebello residence petitioner and her ex-husband divorced in but were trying to patch things up because of the kids sometime during petitioner’s ex-husband was ina car accident and was hospitalized petitioner did not pay rent to her former in-laws while she and her children stayed at the montebello residence however petitioner testified that during respondent concedes that petitioner is entitled to two dependency_exemption deductions claimed for her minor daughters in and respondent further concedes that petitioner is entitled to the child_tax_credit of dollar_figure in her former in-laws did not provide any other financial assistance to her or the children during petitioner’s former father-in-law worked for the state of arizona department of highways and petitioner’s former mother-in-law was studying to become a teacher despite the above petitioner stipulated that during and she and her children lived in a 3-bedroom home located pincite w manhattan tempe arizona manhattan residence owned by her brother esau ramirez iii brother petitioner’s parents hsau g and adelina b ramirez parents her brother and her younger sister also resided at the manhattan residence while petitioner lived at the manhattan residence she paid a monthly rent including utilities ranging from dollar_figure to dollar_figure in petitioner paid the cable bill approximately dollar_figure per month for months during the years in issue petitioner paid for the children’s clothing school supplies and some food while at the montebello residence petitioner’s former in-laws paid for a majority of the food and groceries the record does not establish the amount of utilities mortgage payment or other expenses necessary to maintain the montebello residence while at the manhattan residence petitioner’s parents and her brother paid for a majority of the food and groceries petitioner’s brother further testified and petitioner did not dispute at trial that monthly expenses including the water bill of approximately dollar_figure the electricity bill of approximately dollar_figure the mortgage payments of dollar_figure and the telephone bill of approximately dollar_figure were paid_by either petitioner’s brother or petitioner’s parents petitioner estimated her monthly expenses in and as follows car and insurance payments dollar_figure rent including utilities dollar_figure petitioner spent approximately dollar_figure per child for school clothing the record does not reflect the amount_paid by petitioner for her children’s school supplies during the years in issue petitioner was employed as a clerk typist iii at the attorney general’s office in phoenix arizona both petitioner’s gross wage and adjusted_gross_income for and were dollar_figure and dollar_figure respectively petitioner filed her and federal_income_tax returns as head_of_household and claimed the earned_income credits petitioner’s parents reported adjusted_gross_income for and of dollar_figure and dollar_figure respectively petitioner’s brother filed his federal_income_tax returns as head_of_household for the years in issue respondent determined that petitioner’s filing_status was single not head_of_household because she did not provide over half of the cost to maintain the household during the years in issue further respondent disallowed the earned_income credits because petitioner’s parents also qualify to claim the earned_income_credit for the children during the years in issue respondent’s determination is generally presumed to be correct and petitioner bears the burden of proving that it is incorrect rule a 290_us_111 head_of_household status according to the relevant part of sec_2 an individual shall be considered a head_of_household if such individual is not married at the close of the taxable_year and maintains as her home a household which constitutes for more than one-half of the taxable_year the principal_place_of_abode of a person who is a dependent of the taxpayer if the taxpayer is entitled to a deduction for the taxable_year for such person under sec_151 an individual is considered as maintaining a household only if she provides over half of the cost of maintaining the household during the taxable_year sec_2 wooten v commissioner tcmemo_2000_54 respondent’s examination of petitioner’s case began after date however since sec_7491 does not alter the taxpayer’s burden_of_proof where the taxpayer has not complied with all applicable substantiation requirements sec_7491 does not apply in this case 116_tc_438 in this case or petitioner for more than one-half of the taxable_year petitioner has petitioner was not married at the close of and it is undisputed that the children stayed with however not established that she provided over half of the cost of maintaining the household during each taxable_year in issue the record is not clear as to where petitioner and her children resided during if we find that petitioner lived with her former in-laws during most of at the montebello residence no evidence a sec_1 e mortgage grocery bills sec_1_2-2 not testify at memo moreover children lived at the manhattan residence petitioner would not prevail on this issue we have to the annual cost of maintaining this household payments utility bills telephone bills food or and other expenses relating to the household_income tax regs petitioner’s former in-laws did trial see briggsdaniels v commissioner t c if we were to find that petitioner and her with her parents and siblings during most of the result would not change based upon the testimony at trial and the stipulation of facts the overall monthly household expenses of the manhattan residence for and were as follows mortgage dollar_figure brlectricity water cable phone _ total dollar_figure petitioner contributed approximately dollar_figure to dollar_figure per month in petitioner also rent and a portion of the utilities contributed to the household by paying the cable bill for months in however based upon the total expenses for the household in and it is clear that petitioner did not provide more than half of the cost of maintaining the household therefore on the basis of the record we hold that petitioner is not entitled to file her and federal_income_tax returns as head_of_household brarned income credit the relevant parts of sec_32 provide that an individual is eligible for the earned_income_credit if the individual has a gualifying child a qualifying_child is a son or daughter of the taxpayer who has not attained the age of at the end of the taxable_year and shares the same principal_place_of_abode in the united_states with the taxpayer for more than one-half of the the record is unclear how this amount was calculated for rent or utilities ‘ we also note that the list of household expenses is not complete the list does not include expenses for gas and other utility charges property taxes upkeep and repairs property insurance and food consumed on the premises sec_1_2-2 income_tax regs the record is absent any evidence to support a finding that petitioner contributed any amount of the listed household expenses taxable_year sec_32 c petitioner’s children are qualifying children under the requirements of sec_32 however even if a taxpayer meets all of the requirements under sec_32 she may not be eligible to claim the earned_income_credit if there are two or more persons who are eligible for the earned_income_credit with respect to the same qualifying_child in that situation only the individual with the highest modified_adjusted_gross_income shall be treated as an eligible_individual with respect to the qualifying_child sec_32 c in the instant case the children are also qualifying children of petitioner’s parents on the other hand for if petitioner and her children lived with her former in-laws for most of the year petitioner failed to show that her adjusted_gross_income exceeded that of her former in-laws therefore petitioner has not met her burden in this scenario in and petitioner’s parents had adjusted_gross_income of dollar_figure and dollar_figure respectively petitioner’s adjusted_gross_income for the years in issue was dollar_figure and dollar_figure respectively there is no dispute that petitioner’s parents had the greater adjusted_gross_income during the years in issue because petitioner has failed to show that she is entitled to the earned_income credits for the years in issue respondent 1s sustained on this issue sutherland v commissioner tcmemo_2001_8 reviewed and adopted as the report of the small_tax_case division decision will be entered under rule


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 corp b06 plr-126373-14 date date parent -------------------------------------------------------------------- ------------------------------------------------------------ ---------------- date date ------------------------ ------------------------ -------------------------------------------------------------------------------- company official -------------------------------------------------------------------------------------------------------------------- ----------------------------------------------- tax professional -------------------------------------------------------------------- --------------------------------------------------------------------------------- dear ------------- this is in response to a letter dated date submitted on behalf of parent requesting an extension of time under sec_301_9100-1 through of the procedure and administration regulations to file an election the extension is being requested for parent to file an election under sec_1_1502-21 to relinquish the entire carryback period for the parent consolidated group's consolidated net operating losses cnols for the tax_year ending date the election additional information was submitted in a letter dated date the material information submitted for consideration is summarized below parent is the common parent of a consolidated_group parent group parent group incurred a cnol for the tax_year ending date parent has represented that parent group has not and will not carry any portion of the cnol to a prior consolidated_return_year of parent group parent has also represented that no member of the consolidated_group of which parent was the common parent for the tax_year ending date had a plr-126373-14 separate_return_year within the meaning of sec_1_1502-1 at any time during the carryback period parent has also represented that parent group is not seeking to alter a return position for which an accuracy-related_penalty has been or could be imposed under sec_6662 parent intended to file the election the election was required to be filed by date but for various reasons parent failed to file a valid election the period of limitations on assessment under sec_6501 has not expired for parent group's tax_year ending date or any subsequent taxable_year sec_1_1502-21 provides that a consolidated_group may make an irrevocable election under sec_172 to relinquish the entire carryback period with respect to a cnol for any consolidated_return_year the election is made in a separate statement entitled this is an election under sec_1_1502-21 to waive the entire carryback period pursuant to sec_172 for the insert consolidated_return_year cnols of the consolidated_group of which insert name and employer_identification_number of common parent is the common parent sec_1_1502-21 also provides that the statement must be filed with the group's income_tax return for the consolidated_return_year in which the loss arises under sec_301_9100-1 the commissioner has discretion to grant a reasonable extension of time to make a regulatory election or a statutory election but no more than six months except in the case of a taxpayer who is abroad under all subtitles of the internal_revenue_code except subtitles e g h and i sec_301_9100-1 through provide the standards the commissioner will use to determine whether to grant an extension of time to make a regulatory election sec_301_9100-1 sec_301_9100-2 provides automatic extensions of time for making certain elections requests for relief under sec_301_9100-3 will be granted when the taxpayer provides evidence to establish 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 in this case the time for filing the election is fixed by the regulations ie sec_1 b i therefore the commissioner has discretionary authority under sec_301 to grant an extension of time for parent to file the election provided parent shows it acted reasonably and in good_faith the requirements of sec_301_9100-1 and sec_301_9100-3 are satisfied and granting relief will not prejudice the interests of the government information affidavits and representations submitted by parent company official and tax professional explain the circumstances that resulted in the failure to timely file the election the information establishes that parent reasonably relied on a qualified_tax plr-126373-14 professional who failed to make or advise parent to make the election and that the request for relief was filed before the failure to timely make the election was discovered by the internal_revenue_service see sec_301_9100-3 and v based on the facts and information submitted including the representations made we conclude that parent has shown it acted reasonably and in good_faith the requirements of sec_301_9100-1 and sec_301_9100-3 are satisfied and granting relief will not prejudice the interests of the government accordingly an extension of time is granted under sec_301_9100-1 until days from the date on this letter for parent to file the election with respect to the relinquishment of the entire carryback period for the cnol for the tax_year ending date as described above the above extension of time is conditioned on the taxpayers' parent's and the members of its consolidated_group tax_liability if any being not lower in the aggregate for all years to which the election applies than it would have been if the election had been timely made taking into account the time_value_of_money no opinion is expressed as to the taxpayers' tax_liability for the years involved a determination thereof will be made by the director's office upon audit of the federal_income_tax returns involved parent should file the election in accordance with sec_1_1502-21 parent group's returns must be amended to attach the election statement required by sec_1 b i a copy of this letter should be attached to the election statement alternatively if parent group files its returns electronically parent may satisfy this latter requirement by attaching a statement to its return that provides the date and control number of this letter_ruling we express no opinion as to the tax effects or consequences of filing the election late under the provisions of any other section of the code or regulations or as to the tax treatment of any conditions existing at the time of or effects resulting from filing the election late that are not specifically set forth in the above ruling for purposes of granting relief under sec_301_9100-1 we relied on certain statements and representations made by parent company official and tax professional however the director should verify all essential facts moreover notwithstanding that an extension is granted under sec_301_9100-1 to file the election penalties and interest that would otherwise be applicable if any still apply this ruling is directed only to the taxpayer s requesting it sec_6110 of the code provides that it may not be used or cited as precedent plr-126373-14 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 _ken cohen__________________ ken cohen senior technician reviewer branch office of associate chief_counsel corporate


id office uilc cca_2012020108440237 ---------- number release date from -------------------- sent wednesday february am to ------------------------- cc ------------ subject re issue reallocation of partnership items in accordance with the partnership special_allocation agreement is a partnership_item under sec_301_6231_a_3_-1 that must be reflected in the fpaa in order to have effect i understand that the fpaa has done that that is the bare minimum that is required -------------------------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------


t c memo united_states tax_court elgin e flagg petitioner v commissioner of internal revenue respondent docket no filed date elgin e flagg pro_se linas n udrys for respondent memorandum opinion laro judge this case is before the court fully stipulated see rule elgin e flagg petitioned the court on date to redetermine respondent's determination of the following deficiencies in his and federal income taxes and additions thereto additions to tax sec year deficiency a sec dollar_figure big_number big_number big_number big_number big_number big_number big_number big_number dollar_figure big_number big_number big_number dollar_figure following respondent's concession that petitioner is not liable for the additions to tax under sec_6651 and sec_6654 and that petitioner actually overpaid his taxes in each of these years we must decide whether petitioner is entitled to refunds greater than the amounts proffered by respondent we hold he is not section references are to the internal_revenue_code in effect for the years in issue rule references are to the tax_court rules_of_practice and procedure background all of the facts have been stipulated and are so found the stipulated facts and exhibits submitted therewith are incorporated herein by this reference petitioner resided in san juan capistrano california when he petitioned the court he began working for general electric ge in or around he retired from ge in and began receiving a pension in the same year he received payments of interest in each of the subject years except petitioner did not file a timely federal_income_tax return for any of the subject years with respect to his returns for each of the years and the time for filing was extended until august of the year in which the return was due on date respondent issued petitioner two notices of deficiency one for and and the other for and before date respondent had prepared returns for petitioner for each of the subject years under the authority of sec_6020 after receiving the notices of deficiency petitioner filed a return for each subject year he filed his return on date his return on date his return on date his return on date and his return on date with the exception of a claimed capital_loss deduction for respondent accepted each return as filed petitioner amended his returns for and respondent accepted the amended returns as filed prior to petitioner purchased limited and general_partnership interests in several oil_and_gas ventures these ventures realized operating losses and petitioner reported his shares of these losses on schedule c profit or loss from business or profession and schedule e supplemental income petitioner also purchased various securities and he reported on his returns capital losses attributable to worthless securities petitioner was entitled to carry over the losses that he was unable to recognize in the year realized due to the limitation_on_capital_losses set forth in sec_1211 for each year in issue petitioner's income_tax_liability tax withheld overpayment and the amount of the overpayment that was attributable to worthless securities and oil_and_gas ventures are as follows tax_liability dollar_figure dollar_figure dollar_figure dollar_figure dollar_figure amounts withheld by ge big_number big_number big_number big_number --- pension trustee --- --- --- big_number big_number interest payers --- big_number total big_number big_number big_number big_number big_number overpayment big_number big_number big_number attributable to worthless securitie sec_960 oil gas ventures big_number big_number big_number big_number discussion respondent concedes that petitioner is entitled to refund of dollar_figure dollar_figure dollar_figure and dollar_figure for the respective years from through respondent argues that petitioner is not entitled to a refund of any other overpaid amount because the amounts paid for were paid_by petitioner more than years before the issuance of the notice_of_deficiency and the disputed amounts paid for each other year were paid_by petitioner more than years before the issuance of the notice_of_deficiency and none of these amounts were attributable to items listed in sec_6511 that would extend this period beyond years petitioner argues that percent of the overpayments were attributable to worthless debts or worthless securities which makes them refundable in full under the 7-year rule_of sec_6511 petitioner alleges in his brief that the overpayments were attributable to debts and securities which were worthless and he attached certain documents to his brief which he claims support his allegation petitioner argues that each return prepared by respondent under sec_6020 was a return for purposes of sec_6511 and he contends in his brief that respondent prepared the returns on date petitioner contends in his brief that respondent offered him a settlement under which he would have been allowed the overpayment in full and he argues that the respondent's offer proves his right to the refund we hold for respondent petitioner must prove that the disputed amounts were attributable to worthless debts or worthless securities 290_us_111 see also 95_tc_82 fact that case submitted to the court fully stipulated under rule does not change or otherwise lessen taxpayer's burden affd 943_f2d_22 8th cir drum v commissioner tcmemo_1994_433 same affd without published opinion 61_f3d_910 9th cir and petitioner must demonstrate that his claim_for_refund was timely michelson v commissioner tcmemo_1997_39 although sec_6512 bestows jurisdiction on this court to determine the existence and amount of any overpayment_of_tax to be refunded for a year before us sec_6512 prohibits the court from awarding a refund unless we determine that the amount in question was paid within the period which would be applicable under sec_6511 or d if on the date of the mailing of the notice_of_deficiency a claim had been filed whether or not filed stating the grounds upon which the tax_court finds that there is an overpayment see also commissioner v lundy u s 116_sct_647 the relevant provision of sec_6511 provides that when a claim_for_refund is outside the 3-year period of sec_6511 the amount of the refund may not exceed the amount of tax paid within the years preceding the claim_for_refund sec_6511 sec_6511 provides that a claim_for_refund generally must be made within years from the time the return was filed or if no return was filed by the taxpayer within years from the time the tax was paid the relevant provision of sec_6511 provides that in the case of a refund that relates to an overpayment_of_tax imposed on account of a worthless_debt under sec_166 or a worthless_security under sec_165 or the effect that the deductibility of such a debt or security has on the application to the taxpayer of a carryover in lieu of the 3-year period of limitation prescribed in subsection a the period shall be years from the date prescribed by law for filing the return for the year with respect to which the claim is made sec_6511 petitioner has not proven that the disputed amounts were attributable to worthless debts or worthless securities his allegation in his brief that the disputed amounts stemmed from debts and securities which became worthless is unsupported by the record the documents attached to his brief are not part of that record rule b see 12_bta_798 see also saunders v commissioner tcmemo_1992_361 and the cases cited therein nor does the evidence of record persuade us that respondent offered petitioner a settlement under which he would be refunded any of the overpayment nor do we agree with petitioner's claim that respondent's returns are a return for purposes of sec_6511 they are not see sec_6501 see also 983_f2d_25 5th cir the commissioner's execution of a return under sec_6020 does not relieve the taxpayer of his or her obligation to file a return in re 949_f2d_341 10th cir same 829_f2d_1477 9th cir same 722_f2d_193 5th cir same affg tcmemo_1983_20 even if they were we find no evidence that respondent prepared these returns on date we apply the established law on the refund of overpayments to the stipulated amounts shown in the chart above each of the withheld amounts was deemed withheld and paid on april of the year in which the return was due and the fact that petitioner received an extension of time to file some of the returns did not change the date as of which the tax is deemed paid sec_6513 and b respondent issued the notices of deficiency to petitioner on date and as of that date petitioner had not yet filed his returns thus apart from the effect of sec_6511 petitioner is generally limited to a refund of only amounts that he paid during the 2-year period prior to date commissioner v lundy u s at s ct pincite respondent has conceded that sec_6511 entitles petitioner to a refund of the overpayments for each subject year except to the extent that the overpayments are attributable to worthless debts or worthless securities accordingly petitioner is entitled to a refund of those amounts with respect to the overpayment however respondent has not made a similar concession because all of the underlying amounts were paid more than years before the notice_of_deficiency was issued we hold that petitioner is not entitled to a refund of this amount in reaching our holdings herein we have considered all arguments made by petitioner for contrary holdings and to the extent not discussed above find them to be irrelevant or without merit to reflect the foregoing decision will be entered under rule