t c memo united_states tax_court lee roy sullivan jr petitioner v commissioner of internal revenue respondent docket no 6379-12l filed date p owed federal_income_tax liabilities for tax years and r issued to p a notice of proposed levy to collect those unpaid liabilities p requested a collection_due_process_hearing before irs appeals pursuant to sec_6330 and expressed a desire for a collection alternative--an installment_agreement an offer-in- compromise or currently-not-collectible status--but he did not provide to appeals the financial information that it requested appeals determined that the levy notice was proper and that collection should proceed p filed a timely petition for review of that determination with this court and r moved for summary_judgment held irs appeals did not abuse its discretion and r’s motion for summary_judgment will be granted lee roy sullivan jr for himself steven m webster for respondent memorandum opinion gustafson judge this is a collection_due_process cdp appeal pursuant to sec_6330 in which petitioner lee roy sullivan jr asks this court to review the determination by the office of appeals appeals of the internal_revenue_service irs to proceed with a levy to collect his unpaid federal_income_tax for tax years and the issue is whether appeals abused its discretion in making that determination respondent the commissioner of the irs moved for summary_judgment pursuant to rule and mr sullivan filed an opposition we hold that there is no genuine dispute as to material fact on the issue of whether appeals abused its discretion in determining to proceed with the proposed levy we will therefore grant the commissioner’s motion 1unless otherwise indicated all section references are to the internal_revenue_code_of_1986 as in effect at all relevant times codified in u s c and referred to herein as the code and all rule references are to the tax_court rules_of_practice and procedure background the commissioner’s motion establishes the following facts which mr sullivan did not dispute mr sullivan’s cdp request mr sullivan’s tax_liabilities for the years and were redetermined in three consolidated deficiency cases before this court sullivan v commissioner tcmemo_2010_138 in which final decisions were entered in date the deficiencies were assessed in date when mr sullivan did not pay after notice_and_demand the irs issued a notice_of_intent_to_levy in date mr sullivan timely submitted a form request for a collection_due_process or equivalent_hearing in date on mr sullivan’s form he checked boxes indicating that he was requesting both an installment_agreement and an offer-in-compromise in the space for the reason for his request he wrote see attached and to the form he attached four page sec_2 that consisted of numbered paragraphs and additional matter his attachment stated as follows 2mr sullivan’s attachment presented selected and lightly edited paragraphs from among the boilerplate items in the cdp request at issue in 136_tc_356 see reply to petitioners’ response to motion to dismiss for lack of jurisdiction exhibit a 136_tc_356 docket no 580-10l i hereby request collection alternatives including offer_in_compromise oic payment schedule cnc currently not collectible hardship etc i also request subordination discharge and withdrawal of any liens if appropriate pursuant to sec_6330 i have relevant issues to raise i request relief under sec_6320 from the proposed collection action i agree to provide the requested financial information and to obey all laws passed by the congress pursuant to the constitution including tax laws i hereby request a face-to-face hearing as i have raised relevant issues as listed herein i will bring with me appropriate forms i have relevant information to be considered for collection alternatives i hereby request a reconsideration of the deficiency if i have not previously had the opportunity to do so i will furnish you with your completed forms and file what the law requires collection actions are inappropriate the administrative record is invalid and incomplete procedural defects by internal_revenue_service and irregularities may exist such as issuing a levy to my bank before i have had a cdp hearing collections would be intrusive and place an undue_hardship on me i also request proof of verification from the secretary that all applicable law and administrative procedures have been met pursuant to sec_6320 and sec_6330 3the collection notices at issue are notices of proposed levy and the record does not show that any notices of lien were filed 4in fact mr sullivan had an opportunity to challenge the deficiencies in his prior deficiency cases and he now states that he does not dispute the liabilities i have not neglected or refused to pay a tax_liability please send me copies of the form 17-a the summary record of assessment form 23-c or replacement form the racs report and my form_4340 certificate of assessment and payments etc pursuant to cfr part please send me a copy of the record of assessment with the pertinent parts of the assessment which set forth the name of the taxpayer the date of assessment the character of the liability assessed the taxable_period and the amount assessed please send me a copy of my entire administrative file including the case activity record i hereby notify the appeals_division of my intention to make an audio recording of the hearing pursuant to sec_7521 and will bring with me a court reporter a representative and two witnesses i hereby request that the appeals officer make arrangements for me to bring my tape recorder through the security check point at any conference i hereby withdraw any constitutional moral political religious or conscientious arguments that i have heretofore made although i am not aware of any further i also withdraw any legal positions which are classified and published by the irs as frivolous or groundless if any this includes any arguments that the courts have determined are frivolous or groundless or published on the irs website the proposed levy lien actions are not appropriate based on the reasons to be presented at the hearing the requirements of the applicable law or administrative procedures have not been met and the actions taken were not appropriate under the circumstances the revenue_officer has not followed all legal and procedural requirements making the proposed actions inappropriate under the circumstances 5the record shows that the liabilities remained unpaid after notice_and_demand and mr sullivan does not now contend otherwise the proposed collection action or levy lien action does not balance with the needs for the service to collect the tax and considering the circumstances it is an intrusive action and more intrusive than necessary by sec_6330 c taxpayer has many reasons and justifications for an in-person conference these include tape recording opportunity to present evidence a chance to show my books_and_records and explain them at the same time plus the effect of personal presentation i have tried to explain my position as clearly as possible however if the appeals officer does not understand my position needs more information or has any questions he she can contact me in writing i can explain in more detail my exact position if i am informed where this additional information is needed i hereby request a photocopy of the record of assessment with the requirements of cfr part which states if the taxpayer requests a copy of the record of assessment he shall be furnished a copy of the pertinent parts of the assessment which set forth the name of the taxpayer the date of assessment the character of the liability assessed the taxable_period and the amount assessed i hereby request a verification of accuracy of the tax_liability as required in irm part 5-collection process chapter sec_2 item verification of the accuracy of the tax_liability cqms standard was the accuracy of the tax_liability verified when required definition of the tax_liability initiative was the accuracy of the tax_liability verified when seizure action was taken if after date or at anytime during the case when a taxpayer questioned the accuracy of the stated balance due or the underlying liability examples might include possible unposted payments taxes discharged in bankruptcy substitute for return sec_6020 assessment audit_reconsideration non-master file case trust fund recovery penalty innocent spouse situation other penalties and interest to meet this cqms standard on all seizures occurring after date the revenue_officer must document in the case history that the accuracy of the tax_liability has been verified further anytime during the investigation when a taxpayer questions the accuracy of the balance due or underlying tax_liability the file should reflect that appropriate research was conducted in relation to information presented by the taxpayer in support of his or her query verification of liability must be documented even when it appears that the taxpayer is questioning the liability simply to delay if the research concludes that the recorded liability was accurate was an explanation provided to the taxpayer if the liability was determined to be in error was action initiated to adjust the liability to the proper amount owed i request proof of accuracy of the tax_liability and the documentation of the research of said proof i request documentation of the case history that the accuracy of the tax_liability has been verified the agency-level cdp hearing by letter of date settlement officer patty jensen of the irs office of appeals informed mr sullivan i have scheduled a telephone conference call for you on date pincite am est please call me at the date and time indicated above this call will be your primary opportunity to discuss with me the reasons you disagree with the collection action and or to discuss alternatives to the collection action if this time is not convenient for you or you would prefer your conference to be held by correspondence please let me know within fourteen days from the date of this letter ie by date settlement officer jensen’s letter also stated for me to consider alternative collection methods such as an installment_agreement or offer_in_compromise you must provide any items listed below in addition you must have filed all federal tax returns required to be filed the items to be provided are signed tax_return s for the following tax periods our records indicate they have not been filed type of tax individual federal_income_tax form_1040 period or periods a current completed signed and dated collection information statement form 433-a for individuals with complete supporting documentation complete copies of all pages for your personal bank statements from date thru present current wage statements showing year-to-date earnings current investment statements to consider collection alternatives we will also need a current fee based professional appraisal from a disinterested third party for all real_estate property owned please provide a current mortgage statement showing the principal owed and the amount of your monthly payments you have stated on your form a collection alternative that you are seeking is an installment_agreement please state the amount of your monthly payment and the frequency be advised that any offer proposal will be analyzed as to assets income as well as dissipated assets hence the above aforementioned request for detailed information so as to facilitate the consideration of collection alternatives appeals cannot approve an installment_agreement or accept an offer-in-compromise unless all tax returns are filed and estimated_tax payments are made you must be in compliance with your filing of your tax returns you have stated on your form a collection alternative that you are seeking is an offer_in_compromise please provide form_656 revision stating the amount and terms of the offer_in_compromise along with how you are going to fund the offer also provide the applicable fees and payments appeals cannot approve an installment_agreement or accept an offer-in-compromise unless all tax returns are filed and estimated_tax payments are made you must be in compliance with your filing of your tax returns please send me the items listed or checked above within days from the date of this letter ie by date i cannot consider collection alternatives at your conference nor can i consider alternatives during the hearing process without the information requested above mr sullivan made no reply by the october deadline rather on date mr sullivan mailed a reply to appeals in which he stated 6in his response to the commissioner’s motion for summary_judgment mr sullivan states for the first time that he may have been out of the country in date when settlement officer jensen sent her first letter this would explain petitioners delay in responding emphasis added it would indeed explain the delay but mr sullivan’s statement that he may have been out of the country does not satisfy his obligation under rule d to set forth facts on personal knowledge as opposed to surmise and to do so not merely by allegations in his pleadings but by affidavits or declarations or as otherwise provided in this rule cf rule c statements in briefs do not constitute evidence 88_tc_1132 thank you for your letter dated date granting me a cdp hearing on the tax years shown above i am unable to complete all the necessary paperwork by the date you have given i do intend to complete what is required however i need more time i do not wish to have a telephone hearing i want a face-to-face hearing on the issues i qualify for please schedule the hearing and notify me of the date time and place as i have met the requirements set by congress for the hearing i am asking for a face-to-face hearing on following non-frivolous grounds collection alternatives offer_in_compromise payment schedule possible procedural irregularities for example has the amount of the assessment been verified and have all payments been posted to my account ncc not currently collectible sic challenge the appropriateness of the collection action the irs code is very complex and difficult and i am trying to do my best 7the internal_revenue_code may well be in many respects difficult and complex however mr sullivan’s tax_liability has been resolved and is not in dispute he has not shown any complexity that would be pertinent here and his earnest-sounding plea that the code is complex and difficult and i am trying to do my best is more boilerplate used by him see sullivan v commissioner tcmemo_2010_138 and others see declaration of michael garrett exhibit tarin v commissioner docket no 28327-10l the irs code is very complex and difficult and i am trying to do my best declaration of robert v boeshaar continued the u s congress did not require the documents form 433-a and to be given to you before the hearing those documents can be presented at the face-to-face hearing for point-by-point discussion i would like a copy of all information documentation and administrative records you have on me before the cdp hearing please send me form_4340 with the transcripts and certificate this is necessary for my cdph continued exhibit f delong v commissioner docket no 12624-08l the irs code is very complex and difficult and i am trying to do my best petition exhibit g baxter v commissioner docket no 25628-11l the irs code is very complex and difficult and i am trying to do my best petitioner’s response to respondent’s motion for summary_judgment 21st page jennell v commissioner docket no 6720-09l the irs code is very complex and difficult and i am trying to do my best opposition to motion for summary_judgment exhibit b urtekar v commissioner docket no 25298-06l the irs code is very complex and difficult and i am trying to do my best declaration in support of motion for partial summary_judgment exhibit f haines v commissioner docket no 3648-08l the irs code is very complex and difficult and i am trying to understand it to the best of my ability declaration of appeals team manager debra a dufek exhibit i atkins v commissioner tcmemo_2011_12 docket no 18529-08l the irs code is very complex and difficult and i am trying to understand it to the best of my ability objection to motion for summary_judgment first attachment lindberg v commissioner tcmemo_2010_67 docket no 5421-08l the irs code is very complex and difficult and i am trying to do my best declaration of settlement officer tammy a green exhibit vvv shangler v commissioner docket no 20255-08l the irs code is very complex and difficult and i am trying to understand it to the best of my ability opposition to motion for summary_judgment exhibit a ewing v commissioner docket no 8602-07l the irs code is very complex and difficult and i am trying to do my best i will bring a tape recorder and or court reporter a representative and witnesses to my face to face hearing please give me days written notice of the date time and place of my face to face hearing mr sullivan thus requested more time beyond the settlement officer’s deadline of date but mr sullivan did not request a specific extension of time to a particular date consistent with his november letter mr sullivan did not telephone appeals on date to conduct the telephone hearing that appeals had scheduled for that date on that november date--before receiving mr sullivan’s november letter--settlement officer jensen sent mr sullivan a letter that stated as follows i sent you a letter dated date offering you a telephonic collection_due_process conference the conference was scheduled for date pincite am est you did not call at the scheduled time and you had not called to indicate that this date and or time was not convenient the conference letter also asked that you send me the information i needed to consider the issues you raised in your request for a hearing i never received the information from you please be advised that we will make a determination in the collection_due_process_hearing you requested by reviewing the collection administrative file and whatever information you have already provided if you would like to provide information for our consideration please do so within days from the date on this letter ie by date we will promptly issue you a determination and or decision letter with our findings i look forward to hearing from you if you have questions please call me at the telephone number shown above settlement officer jensen thus gave mr sullivan until date--ie days beyond the original deadline of date--to provide the requested information mr sullivan did not make any response nor provide any information by november nor at any other time he now explains that he was waiting to hear from ms jensen in response to his date letter to tell him when he was to submit his paperwork by petitioner never did hear back from ms jensen regarding this burning question in his mind until he received the notice_of_determination the notice_of_determination on date after waiting an additional two months but having heard no more from mr sullivan appeals issued a notice_of_determination concerning collection action s under sec_6320 and or an attachment to the notice set out in detail settlement officer jensen’s action in the matter and the notice ended with this summary of determination the determination of appeals is that the issuance of the notice_of_intent_to_levy was appropriate and is sustained the irs may proceed with enforced collection action the taxpayer did not call for the scheduled hearing or submit the requested financial information to consider a collection alternative proceedings in this court mr sullivan filed with this court a petition dated date which was not received until date the postmark on the mailing envelope is illegible but we assume it was timely mailed see sec_6330 sec_7502 and the irs has not contended otherwise on date the irs filed a motion for summary_judgment in which it asserts the settlement officer properly determined that petitioner was not eligible for collection alternatives because petitioner did not provide any financial information to the settlement officer and therefore there was no abuse_of_discretion in sustaining the collection action the court instructed mr sullivan to file a response to the irs’s motion and he did so he argues that settlement officer jensen never answered his letter of date or gave him a new deadline for submitting information and he urges petitioner is willing to provide any documentation requested as long a s he is given a date to have it submitted by that is reasonable it is unreasonable for a poor working man to stop working just to fill out a bunch of paperwork that he doesn’t understand and then to have to bother his friends to explain it to him all within fourteen days discussion i general legal principles a summary_judgment under rule the tax court’s analog to rule of the federal rules of civil procedure the court may grant summary_judgment where there is no genuine dispute as to any material fact and a decision may be rendered as a matter of law the moving party here the commissioner bears the burden of showing that no genuine dispute as to any material fact exists and the court will view any factual material and inferences in the light most favorable to the nonmoving party see 98_tc_518 aff’d 17_f3d_965 7th cir in this case the relevant facts on which the commissioner relies are established by documents and are not in dispute b collection review procedure in general if a taxpayer fails to pay any federal_income_tax liability after notice_and_demand sec_6331 authorizes the irs to collect the tax by levy on the taxpayer’s property however congress has added to chapter of the code certain provisions in subchapter_c part i and in subchapter_d part i as due process for collections and those provisions must be complied with before the irs can proceed with a levy the irs must first issue a final notice_of_intent_to_levy and notify the taxpayer of the right to an administrative hearing before appeals sec_6330 and b after receiving such a notice the taxpayer may request an administrative hearing before appeals sec_6320 b administrative review is carried out by way of a hearing before appeals pursuant to sec_6330 and c and if the taxpayer is dissatisfied with the outcome there he can appeal that determination to the tax_court under sec_6330 as mr sullivan has done agency-level review in levy cases at the cdp hearing appeals must make a determination whether the proposed collection action may proceed in the case of a notice_of_levy the procedures for the agency-level cdp hearing before appeals are set forth in sec_6330 appeals is required to take into consideration several things first appeals must verify that the requirements of any applicable law or administrative procedure have been met by irs personnel see sec_6330 the attachment to the notice_of_determination sets forth the settlement officer’s compliance with these requirements and mr sullivan makes no challenge as to verification in his response to the motion for summary_judgment so no verification issues under sec_6330 are at issue second the taxpayer may raise at the hearing any relevant issue relating to the unpaid tax or the proposed levy including challenges to the appropriateness of the collection action and offers of collection alternatives sec_6330 mr sullivan’s contentions pertain to collection alternatives ie an installment_agreement an offer-in-compromise and cnc status8 which we will discuss below additionally the taxpayer may contest the existence and amount of the underlying tax_liability but only if he did not receive a notice_of_deficiency or otherwise have a prior opportunity to dispute the tax_liability sec_6330 mr sullivan did have a prior opportunity to dispute his liability--and did in fact dispute it--in his previous deficiency cases and he now acknowledges that his underlying tax_liability is not at issue here 8part of the internal_revenue_manual irm effective date characterizes cnc status as being not a collection alternative but instead a challenge to the appropriateness of collection action under sec_6330 but this court has treated cnc status as a collection alternative see 133_tc_392 kyereme v commissioner tcmemo_2012_174 marlow v commissioner tcmemo_2010_113 lindberg v commissioner tcmemo_2010_67 and we will do so here see also irm pt dollar_figure date date finally appeals must determine whether any proposed collection action balances the need for the efficient collection_of_taxes with the legitimate concern of the person that any collection action be no more intrusive than necessary sec_6330 the notice_of_determination found that the proposed enforced collections were appropriate and balanced the need for the efficient collection of the taxes with the legitimate concern of the taxpayer that any collection action be no more intrusive than necessary because the taxpayer has not proposed any viable collection alternatives to enforced collections and has not cooperated with the tax mr sullivan’s cdp request states in the most general terms that collection would be more intrusive than necessary but he never elaborated on the point or supported it during the cdp hearing and although his petition in this court likewise stated a generality about intrusiveness he did not repeat it in his opposition to the motion for summary_judgment much less elaborate on it or support it we therefore hold that any distinct contention as to intrusiveness has been abandoned tax_court review when appeals issues its determination the taxpayer may appeal such determination to the tax_court pursuant to sec_6330 as mr sullivan has done as to issues other than the underlying liability which is not at issue here we review the determination for abuse_of_discretion that is we decide whether the determination was arbitrary capricious or without sound basis in fact or law see 125_tc_301 aff’d 469_f3d_27 1st cir we now review appeals’ denial of collection alternatives to determine whether it involved an abuse_of_discretion ii denial of mr sullivan’s request for a collection alternative in order to determine whether a taxpayer ought to be granted an offer-in- compromise based on doubt as to collectibility ought to be granted an installment_agreement or whether the taxpayer’s account ought to be placed in cnc status appeals must of course have information that enables it to evaluate the taxpayer’s financial situation as we have held it is not an abuse_of_discretion for appeals to reject collection alternatives and sustain the proposed collection action on the basis of a taxpayer’s failure to submit requested financial information see wright v commissioner tcmemo_2012_24 huntress v commissioner tcmemo_2009_161 mr sullivan neither proposed specific 9irm pt date appeals may not condition a face- to-face conference on receipt of financial information in a case in which the taxpayer specifically asks to have his her account placed in cnc status was promulgated after mr sullivan’s agency-level cdp hearing and was therefore not in effect as of the time of that hearing respondent’s counsel has stated that the office_of_chief_counsel is reviewing this irm provision terms that appeals could have evaluated nor provided any of the financial information that appeals had requested so appeals certainly did not abuse its discretion in declining to enter into an installment_agreement or to accept an offer- in-compromise likewise mr sullivan’s failure to provide financial information prevented appeals from being able to evaluate his qualification for cnc status so appeals certainly did not abuse its discretion in declining cnc status when it had no basis on which to make that determination mr sullivan contends that he would have produced the information but that he needed and asked for more time which appeals unreasonably denied him it is true that an appeals officer’s unreasonable denial of a request for more time to submit that financial information evidence would be an abuse_of_discretion shanley v commissioner tcmemo_2009_17 slip op pincite but the undisputed facts in this case defeat mr sullivan’s contention appeals did grant him an extension of days--from october to date and appeals deferred ruling for another two months during which mr sullivan could still have submitted the information since it is the policy of appeals to consider financial information submitted past the deadline and up to the time of the issuance of the notice_of_determination see irm pt c date date mr sullivan’s only answer is that he was waiting for appeals to reply to his letter of date which appeals did not have in hand when it sent its letter of date that granted the 24-day extension that is even though the irs’s november letter granted the relief that mr sullivan had requested ie an extension he felt entitled to stand pat until appeals had actually written him a reply to his specific letter this wrong-headed approach is consistent with the general gist of mr sullivan’s statements which assume that the taxpayer is entitled to dictate the course of the cdp proceedings eg please give me days written notice of the date time and place of my face to face hearing that the cdp hearing is an occasion for the taxpayer to make broad demands for information from the irs eg please send me a copy of my entire administrative file including the case activity record that appeals’ requests for information are an unreasonable imposition on a taxpayer forcing him to stop working just to fill out a bunch of paperwork and that the taxpayer can put the ball back in appeals’ court simply by lobbing another letter over the net thereby effectively stalling the cdp hearing this radically misunderstands the cdp process for the earliest year at issue here mr sullivan’s income_tax was due no later than date--more than six years before his cdp hearing his liabilities were adjudicated he certainly owed taxes identified in the levy notice and as of date they were long overdue it was the irs’s responsibility to collect those taxes and the irs was duly fulfilling that responsibility when it served mr sullivan with the levy notice at issue here the cdp request was mr sullivan’s statutorily granted occasion to stay that process in order to attempt to show the agency that it should show forbearance in the collection of his determined overdue liabilities however not to the taxpayer but to the secretary_of_the_treasury is given the duty to prescribe all needful rules and regulations for the enforcement of the internal_revenue_code sec_7805 including the cdp provisionsdollar_figure mr sullivan is entitled to all the rights accorded 10strictly speaking mr sullivan’s letter of date is literally correct in stating that congress did not require the documents form 433-a and to be given to you before the hearing but his point overlooks the fact that congress authorized the agency to establish the cdp procedures when mr sullivan argues that t hose documents can be presented at the face-to-face hearing for point-by-point discussion he imagines a procedure that would prevent appeals from evaluating the taxpayer’s situation in preparation for the hearing in fact sec_301_6330-1 proced admin regs provides that taxpayers will be expected to provide all relevant information requested by appeals including financial statements for its consideration of the facts and issues involved in the hearing since mr sullivan had requested collection alternatives that required the submission of financial information appeals followed the procedure prescribed by the irs by requesting this information from mr sullivan before the granting of a face-to-face cdp hearing see irm pt date and it can hardly be considered an abuse_of_discretion for appeals to do so where that information is necessary for the disposition that the taxpayer has requested ironically on the other hand mr sullivan’s november letter would continued him in the statute and he is entitled to reasonable treatment by the agency but he is not entitled to prescribe the cdp procedures or to set his own deadlines in light of the foregoing the commissioner’s motion for summary_judgment will be granted an appropriate order and decision will be entered continued require appeals to provide to the taxpayer all information documentation and administrative records you have on me before the cdp hearing please send me form_4340 with the transcripts and certificate this is necessary for my cdph emphasis added mr sullivan’s inversion of the actual dynamic reflects his fallacy that the principal purpose of the cdp hearing is he believes to allow scrutiny of the irs by the delinquent taxpayer rather than its actual purpose--ie to enable the irs to evaluate the taxpayer’s circumstances


internal_revenue_service department of the treasury date number release date index nos cc ita - plr-135125-02 dear this is in reference to a form_1128 application to adopt change or retain a tax_year submitted on behalf of the above-named taxpayer requesting permission to change its accounting_period for federal_income_tax purposes from a taxable_year ending december to a taxable_year ending october effective date the taxpayer has requested that the form_1128 be considered timely filed under the authority contained in sec_301_9100-3 of the procedure and administration regulations the taxpayer's form_1128 requesting a change in accounting_period to a tax_year ending date was due on or before date the information furnished indicates that the application_for the change in accounting_period was filed late due to an increased demand of personnel during a major event that was held where taxpayer conducts its business however the form was filed within days of the due_date revproc_2002_37 2002_22_irb_1030 provides procedures by which certain corporations may obtain automatic approval to change their annual accounting periods under sec_442 on the internal_revenue_code a corporation complying with all the applicable provisions of this revenue_procedure has obtained the consent of the commissioner of the internal_revenue_service to change its annual_accounting_period under sec_442 and the income_tax regulations thereunder section provides that a form_1128 filed pursuant to this revenue_procedure will be considered timely filed for purposes of sec_1_442-1 only if it is filed on or before the due_date including extensions for filing the federal_income_tax return for the short_period required to effect such change sec_301_9100-3 provides that requests for extensions of time for regulatory elections that do not meet the requirements of sec_301_9100-2 automatic extensions such as the instant case must be made under the rules of sec_301_9100-3 requests for relief subject_to 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 the granting of relief will not prejudice the interests of the government based on the facts and information submitted and the representations made it is held that the taxpayer has acted reasonably and in good_faith and that the granting of relief will not prejudice the interests of the government accordingly the requirements of the regulations for the granting of relief have been satisfied in this case and the taxpayer's late filed form_1128 requesting permission to change to a tax_year ending october effective for the short_period of date to date is considered timely filed since changes in accounting_period under revproc_2002_37 are under the jurisdiction of the director internal_revenue_service where the taxpayer’s returns are filed we have forwarded the application to the director ogden service_center any further communication regarding this matter should be directed to the ogden service_center the ruling contained in this letter is based upon facts and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party this office has not verified any of the material submitted in support of the request for a ruling verification of the factual information representations and other data may be required as part of an examination process this ruling addresses the granting of sec_301_9100-3 relief only no opinion is expressed regarding the tax treatment of the instant transaction under the provisions of any other sections of the code or regulations that may be applicable thereto or regarding the tax treatment of any conditions existing at the time of or effects resulting from the instant transaction specifically no opinion is expressed as to whether the taxpayer is permitted under the code and applicable regulations to change to the tax_year requested in the subject form_1128 in accordance with the provisions of a power_of_attorney currently on file with this office the original of this letter_ruling is being sent to the taxpayer’s authorized representative and a copy is being sent to the taxpayer this ruling is directed only to the taxpayer that requested it sec_6110 of the internal_revenue_code provides that it may not be used or cited as precedent sincerely s michael j montemurro michael j montemurro senior technician reviewer office of associate chief_counsel income_tax accounting enclosures copy of this letter copy for sec_6110 purposes


t c summary opinion united_states tax_court teresa g murphy petitioner v commissioner of internal revenue respondent docket no 21517-17sl filed date teresa g murphy pro_se jeri l acromite nancy c carver and gretchen w altenburger for respondent summary opinion nega judge this case was heard pursuant to the provisions of sec_7463 of the internal_revenue_code in effect when the petition was filed 1unless otherwise indicated all section references are to the internal continued pursuant to sec_7463 the decision to be entered is not reviewable by any other court and this opinion shall not be treated as precedent for any other case this case was commenced in response to a notice_of_determination concerning collection action s under section s and or notice_of_determination that sustained a final notice_of_intent_to_levy and notice of your right to a hearing notice_of_intent_to_levy with respect to petitioner’s unpaid federal_income_tax liability for year at issue the issues for decision are the extent to which petitioner’s social_security_benefits must be included in her gross_income for the year at issue and whether respondent abused his discretion in sustaining the proposed levy background petitioner resided in colorado when she filed her petition during the year at issue petitioner a calendar_year taxpayer with a filing_status of single received income totaling dollar_figure of which dollar_figure was social_security_benefits on date petitioner untimely filed form_1040 u s individual_income_tax_return for and attached schedule a itemized continued revenue code in effect for the year at issue all dollar amounts are rounded to the nearest dollar deductions petitioner reported dollar_figure of her social_security_benefits as subject_to tax she remitted payment for the tax due as calculated on that return respondent issued a math error notice to petitioner for the reported taxable_amount of her social_security income and changed her taxable social_security_benefits income from dollar_figure to dollar_figure or of dollar_figure as a result of this adjustment respondent determined a balance of dollar_figure comprising unpaid tax an addition_to_tax under sec_6651 and interest collectively unpaid balance petitioner failed to remit payment for this amount on date respondent mailed to petitioner a notice_of_intent_to_levy in response petitioner timely filed a form request for a collection_due_process or equivalent_hearing cdp hearing request in her cdp hearing request petitioner contested respondent’s adjustment on date petitioner and a settlement officer so from the internal_revenue_service office of appeals appeals_office participated in the requested cdp hearing during the hearing petitioner raised the issue of her 2on date the so mailed petitioner a letter scheduling a conference for date this letter incorrectly stated that respondent had made a computation error in determining petitioner’s taxable social_security_benefits and attached a taxable social_security_benefits worksheet reflecting the correction of this purported error during the hearing the so informed petitioner that this worksheet was sent in error and that respondent’s initial computation as continued underlying liability petitioner asserted to the so that per a lawyer with whom she consulted she was not liable for the additional_amount determined by respondent petitioner further stated that cigna petitioner’s employer-provided disability insurer concluded that of her employer-provided disability benefits were nontaxable she also read material to the so concerning the taxability of her employer-provided disability benefits this material was submitted to the so petitioner appeared to argue that a portion of her social_security_benefits ought to be treated as nontaxable because her employer-provided disability plan had the right to reduce the employer-provided disability benefits by the amount of her social_security_benefits the so concluded that none of the evidence presented or arguments raised by petitioner went to the merits of the underlying liability continued to petitioner’s taxable social_security_benefits was correct 3at trial petitioner argued that a portion of her social_security_benefits ought to be treated as nontaxable because her employer-provided disability plan had the right to reduce the benefits it paid to the extent she received social_security disability benefits this in petitioner’s view rendered a portion of the social_security_benefits she received nontaxable income we find this argument unpersuasive and without merit also at trial petitioner furnished documentation showing payments made to the state of colorado and colorado tax accounts for the year at issue but relating to payments made in years after the year at issue petitioner appeared to argue that the payments reflected on these documents affected her unpaid balance for the year at issue we find these payments do not affect the underlying liability the so then informed petitioner that the portion of her social_security_benefits in dispute was not excludable from her gross_income and that the corrections in the math error notice were correct afterwards petitioner submitted several documents to the so these included a document from petitioner’s employer-provided disability provider concerning her income from private insurance a form ssa-1099 social_security_benefit statement and a page from a textbook discussing tax-free health and accident coverage under employer plans after review of the submitted documents and some additional correspondence with petitioner the so again concluded that petitioner was liable for the unpaid balance as previously determined the so noted that petitioner did not request collection alternatives and the record reflects that no issues were raised other than the challenge to the liability on date respondent issued a notice_of_determination sustaining the proposed levy to collect petitioner’s unpaid balance for the year at issue pursuant to sec_6330 on date petitioner timely filed a petition seeking review of respondent’s determination to sustain the proposed levy for the year at issue that petition alleged that respondent erred in determining the amount of taxable social_security_benefits in particular petitioner alleged that respondent incorrectly identified her social_security disability benefits as social_security retirement benefits discussion sec_6330 requires the commissioner to notify a taxpayer if he intends to levy on that taxpayer’s property the notice must inform the taxpayer of his or her right to a cdp hearing regarding the proposed collection action sec_6330 in a cdp hearing taxpayers may raise any relevant issue or request the consideration of a collection alternative sec_6330 taxpayers may not challenge the existence or amount of the underlying tax_liability unless they did not otherwise have an opportunity to do so sec_6330 once the commissioner issues a notice_of_determination at the conclusion of the cdp hearing the taxpayer may seek judicial review by filing a petition with this court sec_6330 this court’s review of the appeals office’s determination is limited to those issues that the taxpayer properly raised at the cdp hearing with the exception that we must review whether the appeals_office verified that the requirements of any applicable law or administrative procedure have been met see 131_tc_197 supplemented by 136_tc_463 sec_301_6330-1 q a-f3 proced admin regs when the underlying tax_liability was properly at issue in the cdp hearing we review the commissioner’s determination de novo 114_tc_604 other administrative determinations made during the cdp hearing are reviewed for an abuse_of_discretion 119_tc_252 an abuse_of_discretion is shown only if the action of the appeals_office was arbitrary capricious or without sound basis in fact or law see 129_tc_107 i petitioner’s underlying liability with respect to petitioner’s claim regarding the underlying liability we review petitioner’s liability de novo see 114_tc_176 petitioner appears to argue that her social_security_benefits are in part exempt from taxation because her employer-provided disability benefits are reduced by the amount of her social_security disability benefits petitioner also seems to argue that there is a difference in tax treatment of her social_security disability benefits and social_security retirement benefits therefore petitioner alleges that respondent erred in determining the proper amount of taxable social_security_benefits sec_86 provides that a taxpayer’s gross_income will include up to of any social_security_benefit received by a taxpayer during his or her taxable_year so long as the taxpayer’s modified_adjusted_gross_income exceeds the threshold established under that section in for single taxpayers sec_86 provides that a taxpayer whose modified_adjusted_gross_income plus one-half of the social_security_benefits received exceeds an adjusted_base_amount of dollar_figure must include of the social_security_benefits in gross_income sec_86 c 123_tc_245 aff’d 436_f3d_344 2d cir thus for purposes of establishing a taxpayer’s gross_income there is no distinction between social_security retirement benefits and social_security disability benefits as both are included in the calculation of gross_income under sec_86 id for petitioner’s modified_adjusted_gross_income plus one-half of the social_security_benefits she received exceeded the adjusted_base_amount and she was appropriately required to include of her social_security_benefits received in taxable_income it is unclear how petitioner calculated the amount of taxable social_security_benefits that she reported petitioner did not offer into the record any credible testimony or documents that might otherwise establish that the income at issue was otherwise exempt or otherwise ought to be excluded from income accordingly on the record before us we hold that petitioner’s social_security_benefits are subject_to the terms of sec_86 and must be included in her gross_income ii abuse_of_discretion petitioner has not advanced any argument or set forth any specific facts that would allow us to conclude that the appeals_office erred in its determination petitioner did not at her cdp hearing or before this court argue that she was wrongly denied consideration for any collection alternative or that the so otherwise committed an abuse_of_discretion in arriving at her determination to sustain the proposed levy the so addressed the lone issue petitioner raised the so confirmed that the math error notice was not in error and that the assessment undertaken pursuant thereto was proper the so confirmed that respondent complied with all legal administrative and procedural requirements in assessing and initiating action to collect petitioner’s unpaid balance for the year at issue iii conclusion in the light of our findings above we hold that respondent’s determination is not in error and we sustain the notice_of_determination we have considered all the other arguments of the parties and to the extent not discussed above find those arguments to be irrelevant moot or without merit to reflect the foregoing decision will be entered for respondent


internal_revenue_service department of the treasury number release date index number washington dc person to contact telephone number refer reply to cc psi - plr-157966-02 date date grantor grantor child child child grandchild grandchild grandchild grandchild grandchild grandchild grandchild trust plr-157966-02 trust trust trust d1 d2 d3 d4 year year year corporation bank trust company state county dear plr-157966-02 this letter responds to a letter dated date and subsequent correspondence submitted on behalf of grandchild by grandchild 7's authorized representative requesting certain rulings under the internal_revenue_code the information submitted states that grantor and grantor collectively the grantors husband and wife both died prior to date survived by child child and child on d1 grantors established three separate irrevocable individual trusts trust trust and trust collectively the d1 trusts for the benefit of their three children the trust agreements have identical terms except that each trust designates a different child as beneficiary the current trustee of the d1 trusts is bank under article i a of each d1 trust the beneficiary shall receive all of the income of his or her trust during his or her lifetime if the beneficiary becomes disabled then the income distributions will be discretionary based on the general comfort well-being education and support of said beneficiary article i b of the d1 trusts provides that upon the death of a beneficiary the trustee is to pay the net_income from the trust estate to his or her descendants per stirpes each d1 trust will terminate twenty years after the death of the last to die of child child and child at which time the trustee will distribute the trust corpus to the beneficiary’s then living issue per stirpes article iii a of the d1 trusts provides that the trustee may hold any shares of corporate stock comprising any part of the trust estate in its own name as trustee or in the name of its nominee or nominees it may give proxies to any person it may select to vote such stock at any stockholders’ meeting of any such corporation but shall during the life of grantor nominate grantor as such proxy in all instances except where grantor shall be unable to serve or be disqualified and following grantor 1's death so long as it shall continue to hold any stock of corporation in the trusts therein created it shall nominate as proxy for the voting of all such shares child article iv of the d1 trusts provides that in the case of a vacancy in the office of trustee resulting from resignation or disqualification for any cause then the trustors or the survivor of them or after their deaths a majority of their living children may nominate a successor trustee but if a majority of the children of the trustors are unable to agree upon a successor trustee within thirty days after such resignation or disqualification then any one of them may apply to any court of original general jurisdiction in the county and state for the appointment of a new trustee on such notice as shall be in accordance with the rules and practice of that court on d2 grantor established an inter_vivos revocable_trust trust pursuant to article viii of the trust agreement on grantor 1's death in year the trust corpus was divided into two equal parts the deceased spouse’s share and the surviving plr-157966-02 spouse’s share under article xii the surviving spouse’s share was held for the exclusive benefit of grantor grantor had the power during her lifetime to invade trust corpus for any amount or for any purpose on her death a portion of the trust was to be distributed to a private_foundation and the balance pursuant to grantor 2's exercise of a general power to appoint the trust corpus in default of exercise the trust corpus was to be added to the deceased spouse’s share in general under article xi the deceased spouse’s share was administered for the benefit of grantor and the grantors’ children pursuant to article xiii on grantor 2's death in year the remaining balance of the deceased spouse’s share and additions from the surviving spouse’s share was divided into three parts each part constituting a separate trust share for the benefit of each of the grantors’ three children child child and child and their descendants the current trustee of trust is bank article xiv paragraph b of the trust agreement defines beneficiary to include each named child if he or she is living at the death of grantor sec_1 or whichever event occurs later and all the descendants of the named child born prior to the termination of trust under article xv paragraph a of the trust agreement the trustee shall distribute the net_income of each separate trust among its beneficiaries in such proportion equal or unequal as the trustee shall determine article xv paragraph b of the trust agreement provides that the trustee may in its sole discretion invade the principal of each trust for the support education and emergency needs of any beneficiary of such trust article xv paragraph c of the trust agreement provides that trust will terminate by the exhaustion of all the principal or one day before the twenty-first anniversary of the date of death of the last survivor of grantor sec_1 and and all descendants of grantor living at the time of execution of this amendment but not later than such earlier termination_date as is required to prevent violation of the rule_against_perpetuities or any applicable rule against remoteness upon termination the entire balance of the principal and any accumulated income of each separate trust share shall be distributed outright free of trust per stirpes among the beneficiaries of such trust share then living article xvii paragraph b subparagraph of the trust agreement provides that upon the death of grantor or during any period of his incapacity the trustee shall appoint as proxies of all corporation stock grantor child and child upon the death resignation or incapacity of any of these proxies the named spouse of child shall be appointed proxy when all of the previously named proxies are no longer able or willing to serve as proxies then the trustee shall appoint child to serve as proxy if child is able and willing to serve plr-157966-02 article xviii of the trust agreement provides that in the event of the resignation or disqualification of the trustee then the trustor or after the trustor’s death any two of the trustor’s three children may appoint a successor if no two children of the trustor’s are then living or if living but are unable to agree upon a successor trustee then a successor trustee shall be chosen by the court of the state for the county in the manner provided for in the state trust act any successor trustee shall be a national bank or trust company authorized to do trust business in the state and having an unimpaired capital stock of at least dollar_figure as noted above grantor died in year and grantor died in year child died in year and child and child are currently living there are also grandchildren grandchildren through currently living the d1 trusts and trust are funded with common_stock of corporation a state corporation pursuant to article iiia of the d1 trusts child holds a proxy to vote any corporation stock held by the d1 trusts in addition pursuant to article xviib of the trust agreement child holds a proxy to vote the corporation stock held by trust on d3 the trust company a state nonprofit corporation was formed by the filing of the articles of incorporation and bylaws of the trust company with the secretary of state of state one of the purposes of the trust company as stated in article iii of the articles of incorporation is to serve as the successor trustee of the d1 trusts and trust article iv of the articles of incorporation provides that trust company has three members of a single class each member is a lineal descendant of the grantors the relative rights and responsibilities of each member are identical to those of every other member the three initial members were child child and child each a founding member should a founding member be unwilling or unable to serve or after the death of a founding member a successor member successor must be selected by and from among the adult lineal_descendants the family of that founding member lineal_descendants include adopted children each family determines for itself the term of any successor from that family and the procedure by which the successor will be selected and must designate the successor to the secretary of the corporation article x of the articles of incorporation provides in part that trust company has seven directors and no founding member may be a director each member is entitled to appoint two directors each of whom must be from the family of that appointing member all members are entitled to vote for the election of a seventh director who may or may not be a member of any family the number of directors constituting the board_of directors may be increased or decreased only by an amendment to the articles of incorporation any director may be removed with or plr-157966-02 without cause by the vote of two-thirds of the board_of directors provided however in the case of a director from the family of a founding member at least one vote for removal must be made by a director from the same family as the director to be removed the initial directors of trust company are grandchildren through article iv paragraph of the bylaws provides in part that the management of all the affairs property and interests of trust company is vested in a board_of directors consisting of seven persons appointed and elected as provided in the articles directors need not be members no founding member may be a director subject_to the limitations and requirements of article xii with respect to discretionary distributions from the d1 trusts and trust the board_of directors as a whole has the authority to make any and all decisions regarding trust company’s actions as trustee of the d1 trusts and trust the affirmative vote or written consent of not less than five directors is required to sell assets of the d1 trusts and trust on d4 the members of trust company consented to amendment to the bylaws adding new article xii under new article xii a special discretionary distribution committee will make all decisions regarding discretionary distributions to any beneficiary under the d1 trusts and trust and will have no other purpose or function the discretionary distribution committee is subject in part to the following requirements and limitations the committee will consist solely of not less than one and not more than three member s the board_of directors will appoint each member of the committee for a term of two years subject_to removal only for malfeasance or bad faith conduct no member of the committee may be a grantor or have any beneficial_interest in the d1 trusts or trust no member of the committee may be an employee of the trust company or corporation or any subsidiary or affiliate of either entity and no member of the committee may be a_related_or_subordinate_party within the meaning of sec_672 as to any grantor of any of the d1 trusts or trust or any beneficiary of the d1 trusts or trust bank has filed a petition in the appropriate court of state and county stating that it no longer desires to serve as trustee and asking the court for directions regarding the appointment of a successor trustee after the filing of bank’s petition bank trust company current and remainder adult beneficiaries and the special representative appointed by the court to represent all minor and unborn remainder beneficiaries of the d1 trusts and trust entered into a settlement agreement the settlement agreement will be effective upon the confirmation by the court and the issuance of a favorable private_letter_ruling by the internal_revenue_service plr-157966-02 paragraph of settlement agreement provides in part that the parties intend that trust company replace bank as trustee of the d1 trusts and trust all parties waive certain requirements of trust that the trustee be a corporate trustee with capitalization of dollar_figure million or more the settlement agreement has been signed by all parties and confirmed by order of the court the d1 trusts and trust were irrevocable prior to date and no additions to the d1 trusts and trust have been made since that date ruling sec_671 of the internal_revenue_code provides that where it is specified in subpart e of part i of subchapter_j that the grantor or another person shall be treated as the owner of any portion of a_trust there shall then be included in computing the taxable_income and credits of the grantor or the other person those items of income deductions and credits against tax of the trust which are attributable to that portion of the trust to the extent that such items would be taken into account under chapter in computing taxable_income or credits against the tax of an individual sec_678 provides in general that a person other than the grantor shall be treated as the owner of any portion of a_trust with respect to which such person has a power exercisable solely by himself to vest the corpus or the income therefrom in himself or such person has previously partially released or otherwise modified such a power and after the release or modification retains such control as would within the principles of sec_671 to inclusive subject a grantor of a_trust to treatment as the owner thereof based on the facts and representations submitted none of grandchildren through will have the power to vest the corpus or income from the d1 trusts or trust in themselves therefore we conclude that grandchildren through will not be treated as the owners of any portion of the d1 trusts or trust under sec_671 and sec_678 ruling sec_2041 provides that the value of the gross_estate shall include the value of all property to the extent of any property with respect to which the decedent has at the time of death a general_power_of_appointment created after date or with respect to which the decedent has at any time exercised or released such a power_of_appointment by a disposition that is of such nature that if it were a transfer of property owned by the decedent such property would be includible in the decedent's gross_estate under sec_2035 to inclusive plr-157966-02 sec_2041 provides that a general_power_of_appointment is a power that is exercisable in favor of the decedent the decedent's_estate the decedent's creditors or the creditors of the decedent's_estate however a power to consume invade or appropriate property for the benefit of the decedent that is limited by an ascertainable_standard relating to the health education support or maintenance of the decedent shall not be deemed a general_power_of_appointment sec_20_2041-1 of the estate_tax regulations provides that a power in a donee to remove or discharge a trustee and appoint himself may be a power_of_appointment for example if under the terms of a_trust instrument the trustee or his successor has the power to appoint the principal of the trust for the benefit of individuals including himself and the decedent has the unrestricted power to remove or discharge the trustee at any time and appoint any other person including himself the decedent is considered as having a power_of_appointment sec_2514 and the regulations promulgated under that section provide similar rules regarding the application of the gift_tax in the case of the release exercise or lapse of a general_power_of_appointment revrul_95_58 1995_2_cb_191 revoking revrul_79_353 1979_2_cb_325 holds that a decedent-settlor's reservation of an unqualified power to remove a trustee and appoint an individual or corporate successor trustee that is not related or subordinate to the decedent within the meaning of sec_672 is not considered a reservation of the trustee's discretionary powers of distribution over the property transferred by the decedent-settlor to the trust for purposes of sec_2036 and sec_2038 sec_672 defines the term related_or_subordinate_party to mean any nonadverse_party who is the grantor's spouse if living with the grantor or any one of the following the grantor's father mother issue brother or sister an employee of the grantor a corporation or any employee of a corporation in which the stock holdings of the grantor and the trust are significant from the viewpoint of voting control a subordinate employee of a corporation in which the grantor is an executive for purposes of sec_672 sec_674 and sec_675 a_related_or_subordinate_party shall be presumed to be subservient to the grantor in respect of the exercise or nonexercise of the powers conferred on him unless such party is shown not to be subservient by a preponderance_of_the_evidence in this case under article xii of the bylaws no beneficiary under the d1 trusts or trust can participate directly or indirectly in any decisions regarding discretionary distributions to any beneficiary under the trusts furthermore any decisions regarding discretionary distributions are made by the distributions committee which must consist of individual s who are not related or subordinate within the meaning of sec_672 to any grantor or to any beneficiary the distributions committee cannot include any employee of trust company corporation or any affiliate accordingly based on the plr-157966-02 facts presented the directors of trust company will not be deemed to possess a general_power_of_appointment under sec_2041 and sec_2514 with respect to the d1 trusts or trust ruling sec_2601 imposes a tax on each generation-skipping_transfer made by a transferor to a skip_person under sec_2611 and sec_26_2611-1 of the generation-skipping_transfer_tax regulations a generation-skipping_transfer is an event that is either a direct_skip a taxable_distribution or a taxable_termination the determination as to whether an event is a generation-skipping_transfer is made by reference to the most recent transfer subject_to the estate or gift_tax under a of the tax_reform_act_of_1986 the generation-skipping_transfer_tax is generally applicable to generation-skipping transfers made after date however under b a of the tax reform act and sec_26_2601-1 of the regulations the tax does not apply to a transfer from a_trust if the trust was irrevocable on date and no addition actual or constructive was made to the trust after that date sec_26_2601-1 provides rules for determining when a modification judicial construction settlement agreement or trustee action with respect to a_trust that is exempt from the generation-skipping_transfer_tax will not cause the trust to lose its exempt status sec_26_2601-1 provides that a modification will not cause an exempt trust to be subject_to the provisions of chapter if the modification does not shift a beneficial_interest in the trust to any beneficiary who occupies a lower generation as defined in sec_2651 than the person or persons who held the beneficial_interest prior to the modification and the modification does not extend the time for vesting of any beneficial_interest in the trust beyond the period provided for in the original trust a modification that does not result in an increase in the amount of a gst transfer or the creation of a new gst transfer will not cause the trust to lose its exempt status under the facts presented the replacement of bank as trustee with trust company will not shift a beneficial_interest in the d1 trusts or trust to any beneficiary who occupies a lower generation as defined in sec_2651 than the persons who held the beneficial_interest prior to the modification and the modification does not extend the time for vesting of any beneficial_interest in the trusts beyond the period provided for in the original trusts plr-157966-02 accordingly we conclude that the replacement of bank as trustee with trust company will not cause the d1 trusts or trust to lose exempt status for generation- skipping transfer_tax purposes under sec_2601 this ruling is directed only to the taxpayer requesting it sec_6110 of the code provides that it may not be used or cited as precedent pursuant to a power_of_attorney on file with this office a copy of this letter is being forwarded to grandchild 7's authorized representative sincerely j thomas hines chief branch office of the associate chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes


internal_revenue_service department of the treasury number info release date index no washington dc person to contact elliot m rogers id no telephone number refer reply to cc it a - cor-117945-00 date date dear commissioner rossotti has asked me to respond to your letter dated date you urge the commissioner to increase the business standard mileage rate to reflect rising gasoline prices you also ask that he call on the general services administration to increase the reimbursement rate for federal employees who use their personal automobiles for official duties you note that the increased cost has particularly burdened federal employees who are also subject_to rising costs for health care housing and child care gasoline prices we realize increased gasoline prices are an economic burden however the cost of gasoline is only one part of the business standard mileage rate which includes fixed and operating automobile costs these costs include depreciation or lease payments maintenance and repairs insurance and license and registration fees in addition to gasoline and oil less than one-third of the cents per mile rate comes from the cost of gasoline and oil thus an immediate adjustment in the rate taking into account the recent increase in gasoline prices might not be significant setting the business standard mileage rate the rate is a national average amount determined by an annual study performed by an independent_contractor who is an expert in the cost analysis of business use of automobiles the contractor uses recent data from each state on the component costs of operating the most popular automobiles the contractor then combines this data to achieve a national composite cents-per-mile rate reimbursement rate for federal employees the general services administration uses the business standard mileage rate to pay reimbursements for automobile expenses to federal employees if the mileage rate paid_by the federal government is less than the employee’s actual expenses of using an automobile on government business the employee generally may claim the difference as a miscellaneous itemized_deduction on the employee’s federal_income_tax return of course an employee who uses actual expenses must be able to prove those expenses to the irs although rising gasoline prices can be a disadvantage for federal employees who are reimbursed at the standard mileage rate falling prices can work to their advantage for example cor-117945-00 although gasoline prices fell in for all of and through date reimbursement was at the rate that reflected the earlier higher prices we know that increased gasoline prices can be burdensome but commissioner rossotti does not have the legal authority to compel gsa to increase the reimbursement rate for federal employees although it is not administratively feasible to revise the business standard mileage rate more frequently than annually you may be sure that increased costs will be taken into account in the next adjustment i apologize for the delay in responding and hope this information is helpful to you please call elliot rogers identification_number at if you have any questions sincerely associate chief_counsel income_tax accounting by robert a berkovsky 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 -------------------- id no ------------- telephone number --------------------- refer reply to cc psi plr-132314-05 date november ---------------------- --------------------- ----------------------------- ------------------------------------------------------------------------------------------------ legend wife husband daughter trust ----------------------------------------------------------------------------------------------------------------- trustee date date dollar_figurex dollar_figurey date date year year year year year year year year year year dear ------------ and wife settlors requesting an extension of time under sec_301_9100-3 of the ------------------------------ --------------------------- ------------------- ----------- ------------- --------------------------- ----------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- this is in response to your submission dated date on behalf of husband plr-132314-05 procedure and administration regulations and g of the internal_revenue_code to allocate husband’s and wife’s gst_exemption to trust the facts and representations submitted are summarized as follows trust was created on date by husband and wife as settlors for the benefit of daughter and daughter’s descendants trustee is currently serving as trustee in each of year year year year year year year and year in year husband transferred dollar_figurey to trust it is represented that a united_states husband and wife each transferred dollar_figurex to trust it is represented that these transfers qualified for the gift_tax annual exclusion under sec_2503 and therefore federal gift_tax returns were not filed reporting the transfers thus no gst_exemption was allocated with respect to these transfers gift and generation-skipping_transfer_tax return form_709 was filed for husband reporting husband’s year transfer to trust the return was timely filed in year husband and wife did not elect to treat the transfer as made one-half by each under sec_2513 it is represented that cpa did not attach a notice of allocation of gst_exemption to the return it is represented that to date husband and wife have made no allocations of their available gst_exemption for any of the year through year lifetime transfers made to trust further it is represented that no distributions from trust have been made to any beneficiary of trust daughter died in year after the death of daughter no beneficiary of trust was a non-skip_person accordingly upon daughter’s death a taxable_termination under sec_2612 occurred you have requested the following rulings that an extension of time under sec_301_9100-3 of the procedure and administration regulations and sec_2642 be granted to husband and wife to allocate their gst exemptions in connection with the their transfers to trust in years1-9 that the allocations of exemptions be effective as of the date of each transfer to trust that such allocations be based on the value of the property at the date of each transfer to trust that the allocations may be made for a period of days following the approval and issuance a favorable ruling sec_2601 imposes a tax on every generation-skipping_transfer gst a gst is defined under sec_2611 as a taxable_distribution a taxable_termination and a direct_skip made by a transferor under sec_2612 a taxable_termination means the termination by plr-132314-05 death lapse of time release of power or otherwise of an interest in property held in a_trust unless a immediately after such termination a non-skip_person has an interest in such property or b at no time after such termination may a distribution including distributions on termination be made from such trust to a skip_person sec_2602 provides that the amount of the gst tax is determined by multiplying the taxable_amount by the applicable_rate sec_2641 provides that the term applicable_rate means with respect to any gst transfer the product of the maximum_federal_estate_tax_rate and the inclusion_ratio with respect to the transfer under sec_2642 the inclusion_ratio with respect to any property transferred in a generation-skipping_transfer is generally defined as the excess of 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 under sec_2631 allocated to the trust or to property transferred in a direct_skip and the denominator is the value of the property transferred to the trust or involved in the direct_skip under sec_2631 as in effect for the years at issue here for purposes of determining the inclusion_ratio every individual shall be allowed a gst_exemption of dollar_figure adjusted for inflation under sec_2631 that may be allocated by the individual or his executor to any property with respect to which the individual is the transferor sec_2631 provides that any allocation under ' a once made is irrevocable 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 other than in a direct_skip is made on form_709 under sec_2652 and sec_26_2652-1 generally the transferor for purposes of the gst tax is the individual with respect to whom the property was last subject_to the federal estate or gift_tax 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 or is deemed to be made under sec_2632 or c 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 such regulations shall include procedures plr-132314-05 for requesting comparable relief with respect to transfers made before the date of the enactment of this paragraph sec_2642 provides that in determining whether to grant relief under this paragraph 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 under this paragraph the time for making the allocation or election shall be treated as if not expressly prescribed by statute 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 internal_revenue_code except subtitles e g h and i under sec_301_9100-1 the commissioner has discretion to grant a 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 notice_2001_50 c b provides that taxpayers may seek an extension of time to make an allocation described in b or b or an election described in sec_2632 or c under the provisions of sec_301_9100-3 in accordance with sec_2642 and notice_2001_50 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 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 has acted reasonably and in good_faith and the grant of 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 accordingly husband and wife are each granted an extension of time until days after the date of this letter to make allocations of their respective gst_exemption to their respective year year year year year year year and year transfers to trust in the amount of dollar_figurex in addition husband is granted an extension of time until days after the date of plr-132314-05 this letter to make an allocation of gst_exemption with respect to husband’s year transfer in the amount of dollar_figurey to trust the allocations once made will be effective as of the respective date of each transfer to trust in addition the inclusion_ratio of trust will be determined based on the value of the transferred property on the date of each transfer to trust and the amount of gst_exemption allocated with respect to each transfer the allocations for years and years should be made on form sec_709 to be filed by husband and wife respectively for each year husband’s allocation for year is to be made on a supplemental form_709 to be filed by husband return for terminations reporting the taxable_termination in year the inclusion_ratio of trust at the time of the taxable_termination will be determined in accordance with the relief granted in this letter the form sec_709 the supplemental form_709 and form 706-gs t are to be filed with the internal_revenue_service center cincinnati ohio a copy of this letter should be attached to each return additional copies are enclosed for this purpose lastly trustee should file a form 706-gs t generation-skipping_transfer_tax the ruling contained in this letter is based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in support of the request for rulings it is subject_to verification on examination except as specifically ruled herein we express or imply 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 taxpayer requesting it sec_6110 provides that it may not be used or cited as precedent sincerely heather c maloy associate chief_counsel passthroughs and special industries enclosure cc copy of letter for sec_6110 purposes copies of letter to file with supplemental gift_tax returns


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 intl b02 plr-102144-12 date date legend taxpayer ------------- x y date date date date date ---------------------- --------- ---- -------------------------- -------------------------- -------------------------- -------------------------- ---------------------- dear -------------- this is in response to your letter dated date requesting a ruling granting taxpayer permission to revoke elections made under sec_1_954-2 and former sec_1_954-2t g with respect to all of its controlled_foreign_corporations cfcs the ruling contained in this letter is based upon information and representations submitted by taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in support of this request_for_ruling such material is subject_to verification upon examination the information submitted in the request is substantially as set forth below plr-102144-12 facts taxpayer is a large_corporation headquartered in the united_states taxpayer employs approximately x people in y countries around the world taxpayer’s initial election to treat all foreign_currency gains or losses as foreign_personal_holding_company_income fphci was made on its tax_return for the year ended date at that time the election was made pursuant to former sec_1_954-2t g the election was made on behalf of all of taxpayer’s cfcs because the temporary regulations contained a conformity rule making the election effective for all related_persons as defined in sec_954 and the regulations thereunder final regulations adopted in removed this conformity rule and allowed an election under sec_1_954-2 to be made on a cfc-by-cfc basis with the exception of the taxable years ending date and date taxpayer made annual elections under sec_1_954-2 on behalf of all new cfcs up through and including its tax_return for the year ending date for the taxable_year ending date taxpayer made the election under sec_1_954-2 for all newly formed cfcs but failed to make the election for newly acquired cfcs for the taxable_year ending date taxpayer did not make the election under sec_1_954-2 for newly formed or acquired cfcs despite having omitted certain cfcs from the election for the taxable_year ending date and failing to make the election for newly formed and acquired cfcs for the taxable_year ending date taxpayer treated all of its cfcs as if the election had been made for each subsequent year taxpayer has consistently treated all of its cfcs as subject_to the election at the time of taxpayer’s initial election taxpayer did not have financial_accounting systems conducive to performing the tracing necessary to appropriately track transactions generating foreign_currency_gain_or_loss for purposes of the business needs exception under sec_954 as a result of the election net foreign_currency losses of taxpayer’s cfcs are taken into account to determine each cfc’s fphci but net foreign_currency gains are not eligible for the business needs exception under sec_954 and sec_1_954-2 and thus constitute fphci because a significant change_of circumstances has occurred since its initial election taxpayer now wants to revoke the election taxpayer implemented a financial_accounting system on a global basis and included a general ledger with a common chart of accounts the chart of accounts includes specific accounts that capture foreign_currency_gain_or_loss related to transactions entered into in the normal course of each cfc’s trade_or_business taxpayer has now progressed its systems capabilities to the point that it is able to efficiently track foreign_currency_transactions for purposes of the business needs exception taxpayer believes that its enhanced ability to identify plr-102144-12 sec_988 transactions that are directly related to the business needs of its cfcs will allow the exclusion of such transactions from the calculation of fphci rulings requested taxpayer requests consent to revoke its prior year elections under sec_1 g and former sec_1_954-2t g that it made with respect to its cfcs effective for the taxable_year beginning date law sec_951 of the code requires a united_states_shareholder of a cfc to include in gross_income its pro_rata share of the cfc's subpart_f_income for the taxable_year sec_952 defines subpart_f_income to include among other things foreign_base_company_income code sec_954 defines foreign_base_company_income to include fphci sec_954 provides that fphci includes the excess of foreign_currency gains over foreign_currency losses as defined in sec_988 attributable to any sec_988 transactions unless the transaction is directly related to the business needs of the cfc sec_988 provides generally that any foreign_currency_gain_or_loss attributable to a sec_988 transaction shall be computed separately and treated as ordinary_income or loss sec_988 defines foreign_currency_gain as any gain from a sec_988 transaction to the extent such gain does not exceed gain realized by reason of changes in exchange rates on or after the booking_date and before the payment_date sec_988 defines foreign_currency_loss as any loss from a sec_988 transaction to the extent such loss does not exceed the loss realized by reason of changes in exchange rates on or after the booking_date and before the payment_date sec_1_954-1 provides generally that a net_loss in any category of fphci may not reduce income in any other category of fphci sec_1_954-2 provides that foreign_currency_gain_or_loss directly related to the business needs of the cfc is excluded from fphci generally foreign_currency_gain_or_loss is directly related to the business needs of a cfc if it falls within one of three categories of foreign_currency_transactions certain transactions or property related to the business activities of the cfc certain gains and losses from bona_fide plr-102144-12 hedging_transactions or transactions in dealer_property foreign_currency gains or losses that fall within the general definition of fphci under sec_954 will be excluded from fphci if the business needs exception is met sec_1_954-2 provides that the controlling united_states_shareholders of a cfc can elect to include in the cfc’s computation of fphci the excess of foreign_currency gains over losses or the excess of foreign_currency losses over gains attributable to any sec_988 transaction except gains or losses treated as capital_gain or loss under sec_988 thus the general_rule of sec_1 c ii that net foreign_currency losses may not reduce income in any other category of fphci would not apply if this election has been made because the regulations specifically provide that the excess of foreign_currency losses over foreign_currency gains may reduce other categories of fphci sec_1_954-2 provides that an election under sec_1 g i is effective for the taxable_year of the cfc for which it is made and all subsequent taxable years of such cfc unless revoked by or with the consent of the commissioner former sec_1_954-2t g i and ii effective for taxable years beginning after date until final regulations were issued in provided an election to include in the computation of fphci all of a cfc’s foreign_currency gains or losses attributable to sec_988 transactions except for certain foreign_currency_gain_or_loss of a qualified_business_unit the election was effective for all related_persons as defined in sec_954 and the regulations thereunder analysis as a united_states_shareholder taxpayer must include in gross_income its pro_rata share of each of its cfcs’ subpart_f_income for the taxable_year including fphci because taxpayer made elections on behalf of its cfcs under sec_1 g and former sec_1_954-2t g its cfcs are subject_to the terms of that election for purposes of calculating their fphci therefore in the absence of consent being granted to revoke the elections made by taxpayer each cfc must include its net foreign_currency gains as fphci without application of any of the exclusions from fphci that might otherwise apply ruling based upon the facts submitted permission is granted for taxpayer to revoke its elections under sec_1_954-2 and former sec_1_954-2t g effective for the taxable_year beginning date additionally taxpayer is prohibited from making a new election under sec_1_954-2 until the sixth taxable_year following the taxable_year for which the revocation is first effective plr-102144-12 no opinion is expressed about whether the business needs exception is satisfied in this case this private_letter_ruling is directed only to the taxpayer who requested it code sec_6110 provides that it may not be used or cited as precedent a copy of this letter_ruling must be attached to any federal_income_tax return to which it is relevant sincerely jeffery g mitchell chief branch office of the associate chief_counsel international