internal_revenue_service number release date index number ---------------- -------------------------------------- ------------------------------------------- -------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ---------------------- id no ------------- telephone number --------------------- refer reply to cc psi b03 plr-112144-08 date september x a b c legend ----------------- ----------------------- ---------------------------------------------- ----------------------- ------------------------- ------------------------------ ---------------------- country ---------------------- country --------- d1 d2 --------------------- --------------------- dear ------------ this letter responds to a letter dated date and subsequent correspondence written on behalf of x requesting a ruling under sec_301_9100-3 of the procedure and administration regulations facts plr-112144-08 x was formed under the laws of country x represents that it is a foreign_entity eligible to elect to be classified as a disregarded_entity for federal tax purposes x was a wholly-owned subsidiary of a a country corporation b a country corporation acquired a through a subsidiary entity c on d1 upon b’s acquisition of a it was intended that x would be treated as a disregarded_entity effective d2 however due to inadvertence a form_8832 entity classification election to treat x as a disregarded_entity effective d2 was not timely filed law and analysis sec_301_7701-3 provides in part that a business_entity that is not classified as a corporation under sec_301_7701-2 or an eligible_entity can elect its classification for federal tax purposes as provided in sec_301_7701-3 an eligible_entity with at least two members can elect to be classified as either an association and thus a corporation under sec_301_7701-2 or a partnership and an eligible_entity with a single owner can elect to be classified as an entity separate from its owner sec_301_7701-3 provides in part that except as provided in sec_301_7701-3 unless the entity elects otherwise a foreign eligible_entity is a a partnership if it has two or more members and at least one member does not have limited_liability b an association if all members have limited_liability or c disregarded as an entity separate from its owner if it has a single owner that does not have limited_liability sec_301_7701-3 provides in part that an eligible_entity may elect to be classified other than as provided under sec_301_7701-3 or to change its classification by filing form_8832 entity classification election with the service_center designated on form_8832 sec_301_7701-3 provides that an election under sec_301_7701-3 will be effective on the date specified by the entity on form_8832 or on the date filed if no such date is specified on the election form the effective date specified on form_8832 can not be more than days prior to the date on which the election is filed and can not be more than months after the date on which the election is filed if an election specifies an effective date more than days prior to the date on which the election is filed it will be effective days prior to the date it was filed sec_301_9100-1 provides that the commissioner may grant a reasonable extension of time under the rules set forth in sec_301_9100-2 and sec_301_9100-3 to make a regulatory election or a statutory election but not 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 plr-112144-08 sec_301_9100-2 provides the standards the commissioner will use to determine whether to grant an automatic_extension of time for making certain elections sec_301_9100-3 provides the guidelines for granting extensions of time for making elections that do not meet the requirements of sec_301_9100-2 sec_301 a provides that requests for relief subject_to sec_301_9100-3 will be granted when the taxpayer provides evidence including affidavits described in sec_301_9100-3 to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and the grant of relief will not prejudice the interests of the government conclusion based solely on the facts submitted and the representations made we conclude that x has satisfied the requirements of sec_301 and sec_301_9100-3 as a result x is granted an extension of sixty days from the date of this letter to file a properly executed form_8832 with the appropriate service_center to elect to be classified as a disregarded_entity effective d2 a copy of this letter should be attached to the form_8832 except as specifically set forth above we express no opinion concerning the federal tax consequences of the above described facts under any other provision of the internal_revenue_code in accordance with a power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative this ruling is directed only to the taxpayer who requested it sec_6110 provides that it may not be used or cited as precedent sincerely s william p o’shea associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes cc


t c memo united_states tax_court frances j ryan petitioner v commissioner of internal revenue respondent w gregory and patricia l ryan petitioners v commissioner of internal revenue respondent docket nos filed date ross f stancati for petitioner in docket no daniel p mcglinn russell a kreis and matthew s deperno for petitioners in docket no alexandra e nicholaides for respondent memorandum findings_of_fact and opinion dean special_trial_judge these cases were heard pursuant to sec_7443a and rule sec_180 sec_181 and sec_182 these 1unless otherwise indicated section references are to the internal_revenue_code in effect for the years at issue and rule continued cases were consolidated on date for purposes of trial briefing and opinion respondent determined deficiencies in frances j ryan's federal income taxes for and in the amounts of dollar_figure dollar_figure and dollar_figure respectively respondent determined a deficiency in gregory ryan's federal_income_tax for in the amount of dollar_figure respondent determined deficiencies in gregory and patricia ryan's federal income taxes for and in the amounts of dollar_figure and dollar_figure respectively the issue for decision is whether the dollar_figure paid_by gregory ryan to his former wife frances ryan during each of the taxable years in issue is alimony some of the facts have been stipulated and are so found the stipulation of facts and the attached exhibits are incorporated herein by reference frances ryan resided in charlotte north carolina at the time her petition was filed gregory ryan and his wife patricia ryan resided in schofield wisconsin at the time their petition was filed findings_of_fact on date after a trial gregory and frances ryan were granted a divorce by the circuit_court for the county of kalamazoo michigan trial_court the judgment of divorce continued references are to the tax_court rules_of_practice and procedure issued by the trial_court provided for permanent alimony payable to frances ryan as follows it is further ordered and adjudged that the plaintiff w gregory ryan shall pay to the defendant frances ryan for her support and maintenance the sum of seven hundred dollar_figure dollars per month in advance commencing date for january february march and april of and commencing date the sum of two hundred fifty dollar_figure dollars per week and continuing thereafter until the death or substantial change_in_circumstances or until further order of this court having competent jurisdiction this alimony shall be paid through the friend of the court consistent with the provisions hereinafter found dealing with payment of support in gregory ryan appealed the judgment of divorce to the michigan court_of_appeals court_of_appeals on the grounds that the alimony granted by the trial_court was in excess of the alimony requested by frances ryan in the divorce proceedings frances ryan had asked for alimony for a term of years yet the judgment of divorce provided alimony until frances ryan's death or a substantial change_in_circumstances the court_of_appeals rendered a per curiam opinion dated date finding that the trial court's alimony award was improper and remanded the matter to the trial_court for modification of the divorce judgment to reflect an alimony award of dollar_figure a week for eight years at trial and in the stipulation of facts gregory and patricia ryan objected to the admission into evidence of the court_of_appeals opinion on the grounds of hearsay relevance and the best evidence rule the best evidence objection was made because the document submitted was a photocopy not a certified copy of the opinion rule of the federal rules of evidence provides to prove the content of a writing recording or photograph the original writing recording or photograph is required except as otherwise provided in these rules or by act of congress rule of the federal rules of evidence further provides the contents of an official record or of a document authorized to be recorded or filed and actually recorded or filed including data compilations in any form if otherwise admissible may be proved by copy certified as correct in accordance with rule or testified to be correct by a witness who has compared it with the original if a copy which complies with the foregoing cannot be obtained by the exercise of reasonable diligence then other evidence of the contents may be given see fed r evid respondent subsequently substituted for the photocopy of the court_of_appeals opinion a certified copy of the opinion as required by rules and of the federal rules of evidence we therefore overrule gregory and patricia ryan's objection based on the best evidence rule we also overrule their hearsay and relevance objections on the basis of rule b of the federal rules of evidence we find that the opinion may be admitted under the doctrine_of judicial_notice a court may take notice of another court's order for the limited purpose of recognizing the judicial act that the order represents or the subject matter of the litigation 29_f3d_1549 11th cir see 991_f2d_328 6th cir the law of any state of the union whether depending upon statutes or upon judicial opinions is a matter of which the courts of the united_states are bound to take judicial_notice without plea or proof 114_us_218 see 829_f2d_622 7th cir in the present cases we take judicial_notice of the court_of_appeals opinion not for the truth of the facts contained therein but for establishing that the court_of_appeals did in fact render such an opinion on the issue of frances and gregory ryan's alimony provisions it is clearly relevant for that purpose the court_of_appeals opinion is therefore admitted into evidence gregory ryan subsequently filed a motion for clarification with the court_of_appeals which was dismissed because it was not timely filed the trial_court did not amend the judgment of divorce pursuant to the court_of_appeals opinion frances ryan did not include payments from gregory ryan in and as income although she did not testify at trial the record reflects that she treated the court_of_appeals opinion as having specifically removed the termination upon death provision contained in the original judgment of divorce gregory ryan on the other hand treated the payments as though a termination upon death provision was still in effect and the payments were alimony for a term of years opinion petitioners complain that respondent has taken inconsistent positions in issuing separate statutory notices of deficiency to both gregory and patricia ryan and to frances ryan it is immaterial whether the alternative claims were contained in a single notice_of_deficiency or in separate notices 66_tc_101 separate determinations against each of the former spouses for the same tax_liability intended to protect the revenue in a whipsaw situation do not negate the presumption of correctness as to either notice smith v commissioner tcmemo_1996_292 ini inc v commissioner tcmemo_1995_112 affd without published opinion 107_f3d_27 11th cir gross_income includes amounts received as alimony sec_71 sec_61 if alimony is includable in the payee spouse's gross_income under sec_71 the payor spouse is allowed to deduct the amount of the alimony paid sec_215 and b for purposes of being included in gross_income alimony is defined by sec_71 as any cash payment meeting the following four criteria a such payment is received by or on behalf of a spouse under_a_divorce_or_separation_instrument b the divorce_or_separation_instrument does not designate such payment as a payment which is not includible in gross_income under this section and not allowable as a deduction under sec_215 c in the case of an individual legally_separated from his spouse under a decree of divorce or of separate_maintenance the payee spouse and the payor spouse are not members of the same household at the time such payment is made and d there is no liability to make any such payment for any period after the death of the payee spouse and there is no liability to make any payment in cash or property as a substitute for such payments after the death of the payee spouse sec_71 a - d accordingly if any portion of the payments made by gregory ryan fails to meet any of the four enumerated criteria that portion is not alimony and is not deductible frances ryan first argues that gregory ryan's payments do not satisfy the requirement of sec_71 which provides that payments must be received under_a_divorce_or_separation_instrument she contends that the court_of_appeals opinion effectively revoked all language in the judgment of divorce as to how long and the conditions under which gregory ryan's payments were to be made she argues that no order for payment of alimony existed at all after date michigan court rule d provides that an opinion or order is notice of the entry of judgment of the court_of_appeals the opinion becomes final after the time for appealing to the michigan supreme court has expired mich ct r e the original divorce decree as modified by opinion rendered by the court_of_appeals limiting alimony to a term of years is an order sufficient to satisfy the requirement of sec_71 the court_of_appeals remanded the matter to the trial_court for a specific modification of the divorce judgment it was not a revocation of the divorce judgment we find therefore that an order for payment was in existence during the taxable years in issue and meets the requirements of sec_71 frances ryan also argues that gregory ryan's payments fail the fourth requirement of sec_71 which provides that the alimony obligation must terminate upon the payee's death sec_71 however does not require that the termination upon death provision be in writing in the divorce instrument alimony may terminate as a matter of state law upon death of the payee spouse see cunningham v commissioner tcmemo_1994_474 under michigan state law in the absence of a written provision in the judgment of divorce to the contrary alimony terminates upon the death of the payee spouse couzens v couzens n w 2d mich ct app thus by reason of the express language in the divorce decree and as a matter of state law it is clear that payments ordered in the judgment of divorce were alimony before the court_of_appeals rendered its opinion in it is less clear however whether the payments are alimony after the court_of_appeals remanded the case to the trial_court if the effect of the court_of_appeals opinion was to specifically remove the termination upon death language in the judgment of divorce the payments made by gregory ryan to frances ryan may not be alimony under michigan state law if however the court_of_appeals opinion modified the judgment of divorce yet left the termination upon death provision intact the payments clearly are alimony the court_of_appeals opinion states in pertinent part the trial_court ordered that defendant be paid alimony until death or changed circumstances we note that defendant requested only an eight-year alimony award in light of defendant's testimony that she would require alimony for eight years we find the trial court's order of permanent alimony improper accordingly we remand for modification of the divorce judgment to reflect an alimony award of dollar_figure a week for eight years in light of the language contained in the court_of_appeals opinion we find that the termination upon death provision contained in the judgment of divorce was not modified by the higher court's opinion the issue raised in the appeal was the length of the alimony payments not whether the payments were in fact alimony we conclude that the original nature of the payments was not changed instead the payments were merely limited to no more than years rather than continued indefinitely until death or a change_in_circumstances this is consistent with the court of appeals' use of the terms permanent alimony and alimony for eight years furthermore the court_of_appeals refers to the years of payments as alimony in several places throughout the opinion we presume the court_of_appeals uses words of appropriate legal meaning we do not believe the court_of_appeals would use the word alimony when referring to the payments made from gregory ryan to frances ryan if it did not intend for the termination upon death language to remain part of the final judgment of divorce alimony is defined under michigan state law as payments which qualify as alimony or separate_maintenance pursuant to sec_71 and terminate upon the death of the payee spouse see couzens v couzens supra by using the word alimony in its opinion we believe the court_of_appeals intended for the payments to satisfy the requirements for alimony under michigan state law to read anything else into the court_of_appeals opinion would be presumptuous and inconsistent with the plain language of the opinion gregory and patricia ryan in their reply brief requested that the court order that respondent pay them dollar_figure toward their costs and attorney's_fees rule provides that any claim for reasonable litigation or administrative costs must be made by motion fulfilling specific requirements and filed within days after service of a written opinion resolving the issues in the case we therefore decline to address their request unless or until such a motion is filed to reflect the foregoing decisions will be entered for petitioners in docket no and for respondent in docket no


internal_revenue_service index no number release date department of the treasury p o box ben franklin station washington dc person to contact telephone number refer reply to cc dom p si - plr-108928-00 date date re legend decedent date spouse child child child child trust property dear this is in response to your submission of date in which you requested a ruling under sec_2652 of the internal_revenue_code and sec_301_9100-1 of the procedure and administration regulations on date decedent and spouse executed a revocable_trust agreement establishing trust and contributed certain assets held as community_property to trust decedent died on date survived by spouse child child child and child and several grandchildren including the children of child one of the assets transferred to trust was property an asset held by decedent and spouse as community_property under the terms of the trust agreement on the death of the first trustor to die that portion of trust comprising the assets contributed by the deceased trustor to trust becomes irrevocable the surviving trustor retains the power to alter amend or revoke the portion of trust comprised of the assets the survivor contributed to the trust the deceased trustor’s assets are divided into two shares trust a intended to qualify for the federal estate_tax_marital_deduction and trust b plr-108928-00 trust a is to be funded with assets contributed by decedent to the trust in the pecuniary amount necessary to reduce to zero the federal estate_tax due on the return of the deceased spouse after taking into account all credits allowable on the return as well as property passing to the surviving_spouse outside trust trust b is to be funded with the balance of the decedent’s and spouse’s assets held in trust under the terms of trust a and trust b the spouse is to receive all of the net_income at least quarterly as well as any amount of principal the trustee deems necessary for the spouse’s health education support or maintenance from both trust a and trust b however principal should be paid first from trust a upon the death of the spouse the remainder of trust a will be distributed to trust b to be held and distributed as a part of that trust under the terms of trust b upon the death of the spouse property is to be retained in trust for the benefit of the children of child regarding the remaining trust assets specific real_estate properties are to be distributed to child child and child as designated any remaining assets are to be distributed in equal shares to child child and child if any of decedent’s children die before becoming entitled to a distribution the deceased child’s share is to be held in trust for the benefit of the deceased child’s children until the youngest attains age article thirteen provides if the trust estate is ever divided into separate shares or trusts and to make any distribution called for by the trust trustee may apportion and allocate the assets of the trust estate in cash or in_kind or partly in cash and partly in_kind or in undivided interests in whatever manner trustee in his sole and absolute discretion considers advisable trustee may sell whatever property he considers advisable to make any of those divisions or distributions on schedule m of form_706 which was timely filed by the estate the executor made an election under sec_2056 with respect to the entire value of trust a a deduction under sec_2056 was claimed for the amount passing to trust a the executor failed to indicate that trust a would be severed failed to make to make an election under sec_2652 with respect to trust a and failed to file a schedule r and to allocate decedent’s gst_exemption plr-108928-00 trust a was funded with decedent’s one-half interest in property contributed to trust as well as with other assets the estate proposes to sever trust a into two trusts trust a-1 an exempt trust for generation-skipping_transfer_tax gstt purposes and trust a-2 a nonexempt trust for gstt purposes trust a-1 will contain decedent’s one-half interest in property trust a-2 will contain the balance of the assets in trust a the terms of trust a-1 and trust a-2 will be identical to the provisions of trust a in this regard any discretionary distribution of principal must be made pro_rata from each trust upon spouse’s death the remainder of trust a-1 and of trust a-2 will be disposed of under the terms of trust b thus at spouse’s death the remainder of trust a-1 will be held in further trust for the children of child the remainder of trust a-2 will be divided and distributed outright to child child and child or if they predecease spouse held in trust for their respective children the estate also proposes to make a reverse_qtip_election under sec_2652 with respect to trust a-1 decedent’s estate requests an extension of time under sec_301_9100-1 to sever trust a into trust a-1 and trust a-2 and to make the reverse_qtip_election under sec_2652 with respect to trust a-1 in addition the estate requests a ruling that under the automatic allocation rules contained in sec_2632 a portion of decedent’s gst_exemption under sec_2631 is allocated to trust a-1 in accordance with sec_2632 sec_2001 imposes a tax on the transfer of the taxable_estate of every decedent who is a citizen or resident_of_the_united_states sec_2056 provides that for purposes of the tax imposed by sec_2001 the value of the taxable_estate is to be determined by deducting from the value of the gross_estate an amount equal to the value of any interest in property that passes or has passed_from_the_decedent to the surviving_spouse sec_2056 provides the general_rule that no deduction shall be allowed for an interest passing to the surviving_spouse if on the lapse of time on the occurrence of an event or contingency or on the failure of an event or contingency to occur the interest will terminate or fail sec_2056 provides that in the case of qualified_terminable_interest_property the entire property shall be treated as passing to the surviving_spouse for purposes of plr-108928-00 sec_2056 and no part of the property shall be treated as passing to any person other than the surviving_spouse in a form described in sec_2056 sec_2056 defines qualified_terminable_interest_property qtip as property which passes from the decedent in which the surviving_spouse has a qualifying_income_interest_for_life and to which an election under sec_2056 applies sec_2601 imposes a tax on every generation-skipping_transfer with regard to the generation-skipping_transfer_tax gstt each individual is allowed an exemption of dollar_figure adjusted as provided in sec_2031 which may be allocated by such individual or by his or her executor to any property with respect to which such individual is the transferor under sec_2632 the allocation may be made at any time on or before the date prescribed for filing the individual's estate_tax_return including extensions under sec_2632 and sec_26_2632-1 of the generation-skipping_transfer_tax regulations any portion of an individual’s gst_exemption not allocated within the time prescribed in sec_2632 is allocated pro_rata on the basis of the value of the property as finally determined for federal estate_tax purposes first to direct skips treated as occurring at the transferor's death any balance is allocated pro_rata on the basis of the value of the property as finally determined for federal estate_tax purposes to trusts with respect to which a taxable_termination may occur or from which a taxable_distribution may be made the automatic allocation is irrevocable no automatic allocation of gst_exemption is made to a_trust that will have a new transferor with respect to the entire trust prior to the occurrence of any generation-skipping_transfer with respect to the trust sec_2652 provides that in the case of any trust with respect to which a deduction is allowed to the decedent's_estate under sec_2056 the estate of the decedent may elect to treat all of the property in the trust for purposes of the gstt as if the election to be treated as qualified_terminable_interest_property had not been made this election is referred to as the reverse_qtip_election the consequence of a reverse_qtip_election is that the decedent remains for gstt purposes the transferor of the qtip_trust for which the election is made as a result the decedent's gst_exemption may be allocated to the qtip_trust sec_26_2654-1 provides rules pursuant to which the severance of a_trust that is included in the transferor's gross_estate into two or more trusts is recognized for purposes of chapter if the governing instrument does not require plr-108928-00 severance the trust must be severed pursuant to discretionary authority granted either under the governing instrument or under local law the severance must occur or a reformation proceeding be commenced prior to the date prescribed for filing the federal estate_tax_return for the estate of the transferor the trusts must either be severed on a fractional basis or a pecuniary basis if so required by the governing instrument if severed on a fractional basis the separate trusts need not be funded with a pro_rata portion of each asset held by the undivided trust sec_26_2654-1 example considers a situation where under the terms of a testamentary_trust income is to be paid to testator’s spouse for life on spouse’s death one-half of the corpus is to be paid to testator’s child c or c’s estate and one-half of the corpus is to be paid to testator’s grandchild gc the example concludes that if the requirements of sec_26_2654-1 are otherwise satisfied the severance of the trust into two equal trusts one providing income to spouse for life with remainder to c and one providing income to spouse for life with remainder to gc will be recognized for gst tax purposes under sec_301_9100-1 the commissioner may grant a reasonable extension of time to make a regulatory election or a statutory election but no more than 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 if the taxpayer demonstrates to the satisfaction of the commissioner that the taxpayer has acted reasonably and in good_faith and granting relief will not prejudice the interests of the government sec_301_9100-1 through provide the standards the commissioner will use to determine whether to grant an extension of time to make an election sec_301_9100-1 sec_301_9100-2 provides automatic extensions of time for making certain elections sec_301_9100-3 provides extensions of time for making elections that do not meet the requirements of sec_301_9100-2 requests for relief under sec_301_9100-3 will be granted when the taxpayer provides the evidence to establish that the taxpayer acted reasonably and in good_faith and granting relief will not prejudice the interests of the government sec_301_9100-3 in this case based on the facts submitted and the representations made we conclude that the standards of sec_301_9100-1 and sec_301_9100-3 have been satisfied consequently an extension of time is granted until days from the date of this letter for commencing the court_proceeding to sever trust a into trust a-1 and trust a-2 under sec_26_2654-1 and plr-108928-00 making a reverse_qtip_election under sec_2652 with respect to trust a-1 the election under sec_26_2654-1 must be made by attaching a statement to copies of the federal estate_tax_return and the amended schedule r filed by the estate the statement must indicate that a proceeding has been commenced to sever trust a and describe the manner in which the trust is proposed to be severed a copy of the petition or other instrument used to commence the proceeding must also be attached we also rule that as a result of the severance and reverse_qtip_election under the automatic allocation rules contained in sec_2632 a portion of decedent's gst_exemption under sec_2631 is automatically allocated to trust a-1 in accordance with the rules contained in sec_2632 except as specifically ruled herein we express no opinion on the federal tax consequences of the transaction under the cited provisions or under any other provisions of the code specifically we express no opinion regarding the valuation of the property included in the decedent’s gross_estate this ruling is directed only to the taxpayer who requested it sec_6110 provides that it may not be used or cited as precedent sincerely yours paul f kugler assistant chief_counsel passthroughs and special industries enclosure copy for sec_6110 purposes


internal_revenue_service number release date index number --------------------- --------------------------------------- -------------------- -------------------------------------- -------------------- -------------------------- - - department of the treasury washington dc person to contact -------------------- id no ------------- telephone number --------------------- refer reply to cc tege eoeg eo1 plr-132647-10 date december entity a --------------------- ----------------------------------------------------------- entity b ---------------------------------------------- ----------------------------------------------------------- entity c ---------------------------------------------------- ----------------------------------------------------------- plan state date date date statute --------------------------------------------------------------------------------- ------ ----------------------- ------------------- ---------------------------------------- ------------------------------------------------------- dear --------------------- this letter responds to a letter from your authorized representative dated date as well as subsequent correspondence submitted on behalf of entity a requesting a ruling that entity a’s income from certain activities is excludable from gross_income under sec_115 of the internal_revenue_code plr-132647-10 cc tege eoeg eo1 facts entity a is a state nonprofit corporation formed on date by and as one of three successor organizations to the plan the plan was an unincorporated association formed on date pursuant to statute it served as a joint self-insurance pool for its political_subdivision members the service issued a favorable sec_115 private_letter_ruling to the plan on date the plan subdivided its functions into three parts to avoid cross-liability between its joint self-insurance lines entities a b and c entity a is an umbrella organization that oversees the other two organizations it has no members entity b is a joint property casualty self-insurance pool and entity c is a joint healthcare self-insurance pool the members of entities b and c are political subdivisions or entities the income of which is excludable under sec_115 entity a is governed by a board_of trustees and is subject_to regulations and bylaws governing documents which may be amended or repealed by a majority vote of the board entity a’s board_of trustees consists of the combined boards of directors of entities b and c the members of which are elected representatives or employees of the members of entity b or entity c day-to-day management of entity a is provided by an administrator who is subject_to termination by the board with or without cause the board shall approve the appointment of the administrators of entities b and c upon entity a’s termination any assets remaining after payment of all liabilities shall be distributed to the members of entities b and c as determined by their boards of directors law and analysis sec_115 provides that gross_income does not include income derived from any public_utility or the exercise of an essential_governmental_function and accruing to a state or a political_subdivision of a state in revrul_77_261 1977_2_cb_45 income from an investment fund established under a written declaration of trust by a state for the temporary investment of cash balances of the state and its participating political subdivisions was excludable from gross_income for federal_income_tax purposes under sec_115 the ruling indicated plr-132647-10 cc tege eoeg eo1 that the statutory exclusion was intended to extend not to the income of a state or municipality resulting from its own participation in activities but rather to the income of a corporation or other entity engaged in the operation of a public_utility or the performance of some governmental function that accrued to either a state or municipality the ruling stated that it may be assumed that congress did not desire in any way to restrict a state’s participation in enterprises that might be useful in carrying out projects that are desirable from the standpoint of a state government and which are within the ambit of a sovereign properly to conduct in revrul_90_74 1990_2_cb_34 the income of an organization formed funded and operated by political subdivisions to pool various risks arising from their obligations regarding public liability workers’ compensation or employees’ health is excludable from gross_income under sec_115 in this ruling private interests did not materially participate in the organization nor did they benefit more than incidentally from the organization entity a oversees the management of entities b and c which operate joint self- insurance programs for their members these programs allow the members of entities b and c to pool resources to obtain insurance coverage at a level no single member could afford to provide on its own overseeing and managing the provision of pooled insurance services to political subdivisions and sec_115 entities constitutes the performance of an essential_governmental_function within the meaning of sec_115 see revrul_90_74 and revrul_77_261 no private interests materially participate in the operation of or otherwise benefit more than incidentally from entity a upon dissolution entity a’s remaining assets after satisfaction of all debts will be distributed to the members of entities b and c all of which are political subdivisions or sec_115 entities see revrul_90_74 based solely on the facts and representations submitted by entity a we conclude that the income of entity a is derived from the exercise of an essential_governmental_function and will accrue to a state or a political_subdivision thereof for purposes of sec_115 consequently we hold that entity a’s income is excludable from gross_income under sec_115 except for the specific rulings above we express or imply no opinion concerning the federal tax consequences of the facts of this case under any other provision of the code under a power_of_attorney on file with this office we are sending a copy of this letter to your authorized representative plr-132647-10 cc tege eoeg eo1 this ruling is directed only to the taxpayer who requested it according to sec_6110 this ruling may not be used or cited as precedent sincerely sylvia hunt assistant chief exempt_organizations branch office of division counsel associate chief_counsel tax exempt government entities enclosure copy for sec_6110 purposes


tcmemo_2012_213 united_states tax_court mark william murray petitioner v commissioner of internal revenue respondent docket no filed date mark william murray pro_se carrie l kleinjan and kirsten e brimer for respondent memorandum findings_of_fact and opinion ruwe judge respondent determined a deficiency and additions to tax with respect to petitioner’s federal_income_tax additions to tax_year deficiency sec_6651 sec_6651 sec_6654 dollar_figure dollar_figure 1dollar_figure dollar_figure 1the amount of any addition_to_tax pursuant to sec_6651 shall be determined pursuant to sec_6651 b and c the statutory ceiling on the amount of the addition_to_tax was reached after the notice_of_deficiency was mailed to petitioner on date on brief respondent asserts the final amount of the addition_to_tax under sec_6651 is dollar_figure the issues for decision are whether a distribution of dollar_figure from an individual_retirement_account ira is includable in petitioner’s gross_income whether petitioner is entitled to a theft_loss deduction whether petitioner received interest_income of dollar_figure and whether petitioner is liable for additions to tax under sec_6651 and and findings_of_fact at trial respondent lodged a stipulation of facts because petitioner refused to sign the stipulation by order dated date we deemed the matters contained in respondent’s proposed stipulation to be established for purposes of this case and the attached exhibits were received into evidence pursuant to rule f 1unless otherwise indicated all section references are to the internal_revenue_code in effect for the year in issue and all rule references are to the tax_court rules_of_practice and procedure at the time the petition was filed petitioner resided in new jersey petitioner’s mother catherine a murray had an ira with morgan stanley smith barney morgan stanley petitioner’s mother died in on date morgan stanley distributed the remaining balance of dollar_figure from catherine murray’s ira to petitioner the check from morgan stanley was made payable to petitioner on date morgan stanley issued to petitioner a form 1099-r distributions from pensions annuities retirement or profit-sharing_plans iras insurance contracts etc for reporting a taxable_distribution of dollar_figure petitioner failed to file a federal_income_tax return for in respondent prepared a substitute for return sfr for on the basis of information returns filed by third-party payors with the internal_revenue_service determining the same tax as shown on the notice_of_deficiency on date respondent issued to petitioner a notice_of_deficiency for petitioner timely filed a petition disputing the determinations in the notice_of_deficiency opinion the commissioner’s determinations in a notice_of_deficiency are presumed correct and the taxpayer bears the burden of proving that the determinations are in error see rule a 290_us_111 issue distribution from ira petitioner argues that the distribution from his mother’s ira is an inheritance and should not be taxable respondent contends that the distribution from catherine murray’s ira was properly included in petitioner’s gross_income generally any amount_paid or distributed out of an individual_retirement_plan is includable in the payee’s or distributee’s gross_income as provided in sec_72 sec_408 111_tc_250 however sec_408 provides that a distribution is not includable in gross_income if the entire amount of the distribution received by an individual is paid into an ira or other eligible_retirement_plan within days of the distribution see 110_tc_1 this recontribution is known as a rollover_contribution sec_408 2in some cases the burden_of_proof with respect to relevant factual issues may shift to the commissioner under sec_7491 however petitioner has not argued that the burden_of_proof should shift to respondent nor has he produced credible_evidence as required by sec_7491 therefore we hold that the burden_of_proof does not shift to respondent rollover treatment is not available in the case of an inherited ira sec_408 an ira is treated as inherited for purposes of sec_408 if the individual for whose benefit the account is maintained acquired that account by reason of the death of another individual who was not his spouse sec_408 see jankelovits v commissioner tcmemo_2008_285 tax ct memo lexis at the ira petitioner inherited from his mother qualifies as an inherited ira under sec_408 revrul_78_406 1978_2_cb_157 provides that the direct transfer of funds from one ira trustee to a new ira trustee which involves no payment or distribution of funds to the ira participant is not a rollover_contribution because the funds are not within the direct control or use of the participant thus revrul_78_ supra indicates that a trustee-to-trustee transfer which otherwise meets the requirements of the revenue_ruling is not a taxable transaction because no amount is treated as distributed out of an ira crow v commissioner tcmemo_2002_ tax ct memo lexi sec_183 at see jankelovits v commissioner tax ct memo lexis at 3we note that although entitled to consideration revenue rulings are not precedent 381_us_68 the proceeds of his mother’s ira were distributed directly to petitioner petitioner did not transfer the funds into another ira or other eligible_retirement_plan as a result the distribution from the ira is included in petitioner’s gross_income under sec_408 petitioner argues that he received the ira as an inheritance and therefore it is nontaxable sec_102 provides that gross_income does not include the value of property acquired by inter alia inheritance while an inheritance is generally acquired tax free under sec_102 distributions from inherited iras to beneficiaries are included in the gross_income of beneficiaries see 125_tc_227 citing sec_408 and sec_691 jankelovits v commissioner tax ct memo lexis at therefore the distribution petitioner received from his mother’s ira is not excludable from gross_income under sec_102 issue theft_loss petitioner claims he is entitled to a theft_loss deduction of dollar_figure petitioner alleges that police from the state of oklahoma stole dollar_figure from him respondent contends that even if the alleged theft_loss occurred petitioner is not entitled to a theft_loss deduction because he did not file a federal_income_tax return for sec_165 allows an itemized_deduction to an individual for losses of property that arise from theft sec_63 provides that unless a taxpayer makes an election for the taxable_year no itemized_deductions shall be allowed for the taxable_year sec_63 requires that the election to itemize deductions be made on the taxpayer’s return we have held that taxpayers must file a return in order to elect to itemize deductions see jahn v commissioner tcmemo_2008_141 tax ct memo lexi sec_141 at aff’d 392_fedappx_949 3d cir brunner v commissioner tcmemo_2004_187 tax ct memo lexi sec_193 at aff’d 142_fedappx_53 3d cir if a taxpayer does not file a tax_return and as a result the commissioner prepares an sfr then the taxpayer may not claim itemized_deductions see jahn v commissioner tax ct memo lexi sec_141 at 80_fsupp2d_1352 n d ga petitioner did not file a federal_income_tax return for accordingly respondent prepared an sfr on behalf of petitioner as a result of not filing his federal_income_tax return petitioner is not allowed to claim an itemized_deduction for theft_loss issue interest_income respondent determined that petitioner had dollar_figure of interest_income for gross_income includes amounts received as interest payments sec_61 as petitioner presented no evidence on this issue we sustain respondent’s determination issue additions to tax burden_of_proof respondent determined that petitioner is liable for additions to tax pursuant to sec_6651 and and respondent has the burden of production with respect to these additions to tax see sec_7491 to meet this burden respondent must produce evidence showing that the additions to tax are appropriate see id 116_tc_438 once respondent satisfies this burden petitioner has the burden_of_proof with respect to exculpatory factors such as reasonable_cause see higbee v commissioner t c pincite- sec_6651 sec_6651 imposes an addition_to_tax when a taxpayer fails to file a timely return unless the taxpayer establishes that the failure was due to reasonable_cause and not willful neglect the addition_to_tax is equal to of the amount_required_to_be_shown_as_tax on the delinquent_return for each month or fraction thereof during which the return remains delinquent up to a maximum addition of for returns more than four months delinquent id petitioner did not file a federal_income_tax return for thus we find that respondent has met his burden of production petitioner has not provided any evidence indicating that his failure_to_file a return was due to reasonable_cause accordingly we hold that petitioner is liable for the addition_to_tax under sec_6651 and sustain respondent’s determination as set forth in the notice_of_deficiency sec_6651 sec_6651 imposes an addition_to_tax for failure to timely pay the amount of tax shown on a return unless the taxpayer establishes that the failure was due to reasonable_cause and not willful neglect the addition is calculated as of the amount shown as tax on the return but not paid with an additional for each month or fraction thereof during which the failure to pay continues up to a maximum of sec_6651 4the amount of the addition_to_tax under sec_6651 reduces the amount of the addition_to_tax under sec_6651 for any month for which an addition_to_tax applies under both paragraphs sec_6651 under sec_6020 when a taxpayer fails to file a return required_by_law the commissioner acting for the secretary_of_the_treasury may make a return from such information as it can obtain under sec_6651 any return so made is treated as the taxpayer’s return for purposes of determining the amount of the addition under sec_6651 petitioner failed to file a federal_income_tax return for pursuant to sec_6651 the sfr made by respondent is treated as petitioner’s tax_return petitioner failed to pay the amount of tax shown on his sfr for therefore respondent has met his burden of production petitioner has not provided any evidence indicating that his failure to pay was due to reasonable_cause accordingly we find that petitioner is liable for the addition_to_tax under sec_6651 and sustain respondent’s determination sec_6654 sec_6654 imposes an addition_to_tax when a taxpayer fails to pay a required_installment of estimated income_tax each required_installment is equal to of the required_annual_payment sec_6654 the required_annual_payment is equal to the lesser_of of the tax_shown_on_the_return for the taxable_year or if no return is filed of the tax for that year or of the tax_shown_on_the_return if any for the preceding_taxable_year sec_6654 petitioner did not file federal_income_tax returns for the taxable years and therefore petitioner’s required_annual_payment for wa sec_90 of the tax for that year see id missall v commissioner tcmemo_2008_ tax ct memo lexis at respondent has met his burden of production for the sec_6654 addition_to_tax the sec_6654 addition_to_tax is mandatory unless the taxpayer establishes that one of the exceptions in sec_6654 applies verduzco v commissioner tcmemo_2010_278 tax ct memo lexi sec_318 at citing 91_tc_874 petitioner has not shown that any of the statutory exceptions under sec_6654 applies accordingly we find that petitioner is liable for the addition_to_tax under sec_6654 and sustain respondent’s determination as set forth in the notice_of_deficiency in reaching our decision we have considered all arguments made by the parties and to the extent not mentioned or addressed they are irrelevant or without merit to reflect the foregoing decision will be entered under rule


t c summary opinion united_states tax_court gerald barlow petitioner v commissioner of internal revenue respondent docket no 5956-04s filed date gerald barlow pro_se lauren b epstein for respondent panuthos chief special_trial_judge this case was heard pursuant to the provisions of sec_7463 of the internal_revenue_code in effect when the petition was filed the decision to be entered is not reviewable by any other court and this opinion should not be cited as authority unless otherwise indicated all subsequent section references are to the internal_revenue_code in effect at relevant times respondent determined a deficiency of dollar_figure in petitioner’s federal_income_tax for the sole issue for decision is whether payments of dollar_figure petitioner made to his former spouse during the year in issue were properly deductible as alimony background some of the facts have been stipulated and they are so found the stipulation of facts and the attached exhibits are incorporated by this reference at the time of filing the petition petitioner resided in lakeland florida petitioner and his former wife divorced on date after years of marriage their divorce proceedings were adjudicated by the circuit_court of polk county florida florida circuit_court in a final judgment of dissolution of marriage divorce decree dated date the florida circuit_court ordered an equitable distribution of marital assets and awarded alimony to petitioner’s former wife as relevant to this discussion the equitable distribution of marital assets included a provision addressing the division of petitioner’s retirement_plan all amounts have been rounded to the nearest dollar benefits specifically the divorce decree provided equitable distribution of marital assets shall be as follows d the wife is further awarded the following one-half of husband’s retirement_plan with city of lakeland and one-half of husband’s retirement pension_plan with state of florida in regard to alimony the florida circuit_court in a separate provision of the divorce decree ordered the husband shall pay to the wife the alimony awarded to her in this court’s temporary order dated date the above-referenced temporary order dated date was entered by the florida circuit_court following a hearing on petitioner’s former wife’s motion for temporary alimony the court ordered the husband shall pay to the wife temporary alimony in the amount of dollar_figure per month same shall be payable weekly in the amount of dollar_figure to begin on date until further notice on date petitioner and the city of lakeland entered into an assignment agreement with respect to petitioner’s employee_pension_plan and police officer’s supplemental retirement_plan supplemental plan pursuant to the terms of the assignment petitioner’s former wife was assigned a one-half interest in petitioner’s net monthly retirement benefits from both the employee_pension_plan and the supplemental plan in taxable_year petitioner’s former wife received total payments of dollar_figure from petitioner’s retirement plans with the city of lakeland consisting of dollar_figure from petitioner’s employee_pension_plan and dollar_figure from petitioner’s supplemental plan there is no evidence that petitioner made any other_payments to his former wife in on his federal_income_tax return petitioner claimed a deduction of dollar_figure for alimony payments in a notice_of_deficiency dated date respondent disallowed the deduction on the ground that the payments did not constitute alimony although the divorce decree referred to petitioner’s retirement plans with the city of lakeland and the state of florida the record in this case does not involve any retirement_plan with the state of florida there is no evidence in the record that petitioner made any payments in in accordance with his obligation to pay alimony of dollar_figure per month petitioner’s obligation to provide spousal support may have terminated regardless it is clear from the record that petitioner relied solely upon the assignments from his city of lakeland retirement plans as the basis for claiming an alimony paid deduction on his return discussion the federal tax consequences to both the paying spouse and receiving spouse of a payment made incident_to_divorce depend upon the characterization of such payment property_settlements or equitable divisions of marital property are generally neither deductible from the income of the paying spouse nor includable in the income of the receiving spouse sec_1041 on the other hand payments made or received as alimony are generally deductible by the paying spouse under sec_215 and includable in gross_income by the receiving spouse under sec_61 and sec_71 sec_215 provides that the paying spouse may deduct a payment as alimony if the payment is includible in the gross_income of the recipient under sec_71 sec_71 defines an alimony payment as any cash payment meeting each of the following four criteria a such payment is received by or on behalf of a spouse under_a_divorce_or_separation_instrument b the divorce_or_separation_instrument does not designate such payment as a payment which is not includible in gross_income under this section and not allowable as a deduction under sec_215 c in the case of an individual legally_separated from his spouse under a decree of divorce or of separate_maintenance the payee spouse and the payor spouse are not members of the same household at the time such payment is made and d there is no liability to make any such payment for any period after the death of the payee spouse and there is no liability to make any payment in cash or property as a substitute for such payments after the death of the payee spouse respondent contends that the dollar_figure paid from petitioner’s city of lakeland retirement plans is not alimony because petitioner does not satisfy either subparagraph b or d of sec_71 we first address the requirement at sec_71 which provides that a payment will not be alimony if the governing divorce_or_separation_instrument designates the payment as not includable in gross_income under sec_71 and not allowable as an alimony deduction under sec_215 a divorce_or_separation_instrument contains a nonalimony designation if the substance of such a designation is reflected in the instrument 112_tc_317 affd sub nom schutter v commissioner 242_f3d_390 10th cir generally the divorce or separation agreement must provide a clear explicit and express direction that the payments are not to be treated as alimony but the designation need not mimic the statutory language of sec_71 and sec_215 125_f3d_551 7th cir affg tcmemo_1995_554 estate of goldman v commissioner supra pincite in this case the language of the divorce decree unambiguously designates the payments from petitioner’s retirement_plan benefits as nonalimony petitioner’s former wife was awarded a one-half interest in petitioner’s retirement_plan benefits pursuant to paragraph of the divorce decree which began equitable distribution of marital assets shall be as follows among the items of marital assets subject_to equitable distribution were petitioner’s retirement_plan benefits as specifically addressed in paragraph d of the divorce decree while the florida circuit_court also specifically granted alimony to petitioner’s former wife this award was made pursuant to paragraph of the divorce decree and was not part of the florida circuit court’s equitable distribution of marital assets we conclude that the divorce decree clearly explicitly and expressly designated the payments from petitioner’s retirement plans as nonalimony payments since petitioner does not satisfy subparagraph b of sec_71 it is unnecessary to consider subparagraph d of the same section respondent’s determination that petitioner is not entitled to an alimony deduction in is sustained moreover the florida circuit_court in a postdivorce hearing convened on date to address petitioner’s request to modify the divorce decree’s distribution of his retirement_plan benefits concluded that the distribution was a property plan distribution the court made and that the decision was not modifiable because it’s not alimony reviewed and adopted as the report of the small_tax_case division 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-103219-03 date date x a b_trust d1 year year year dear this responds to a letter dated date and subsequent correspondence requesting that the service grant relief under sec_1362 of the internal_revenue_code for inadvertent termination of an s_corporation_election and an extension of time pursuant to sec_301_9100-3 of the procedure and administration regulations to make an election under sec_1361 the information submitted states that x elected to be an s_corporation effective beginning with its year taxable_year a a shareholder of x died on d1 of year pursuant to x’s will x’s shares were transferred to trust the trustee of trust represents that trust is qualified to be treated as a qualified_subchapter_s_trust qsst described in sec_1361 except that b the beneficiary of trust failed to make the election under sec_1361 therefore x’s s_corporation_election terminated on d1 of year plr-103219-03 since d1 of year x and its shareholders have filed income_tax returns consistent with the treatment of x as an s_corporation and trust as a qsst described in sec_1361 x represents that the circumstances resulting in the termination of x’s s_corporation_election were inadvertent and were not motivated by tax_avoidance or retroactive tax planning x and its shareholders agree to make any adjustments consistent with the treatment of x as an s_corporation that the secretary may require sec_1362 provides that except as provided in sec_1362 a small_business_corporation may elect in accordance with the provisions of sec_1362 to be an s_corporation sec_1361 defines an s_corporation as a small_business_corporation for which an election under sec_1362 is in effect for the taxable_year sec_1361 provides that a small_business_corporation means a domestic_corporation that is not an ineligible_corporation and that does not have as a shareholder a person other than an estate a_trust described in sec_1361 or an organization described in sec_1361 who is not an individual sec_1361 provides that for purposes of sec_1361 a_trust all of which is treated under subpart e of part i of subchapter_j of chapter as owned by an individual who is a citizen or resident_of_the_united_states may be a shareholder sec_1361 provides that for purposes of sec_1361 in the case of a_trust described in sec_1361 the deemed owner shall be treated as the shareholder sec_1361 provides that a_trust with respect to stock transferred to it pursuant to the terms of a will but only for the two-year period beginning on the day on which such stock is transferred to it may be a shareholder in an s_corporation sec_1361 provides that a qsst whose beneficiary makes an election under sec_1362 will be treated as a_trust described in sec_1361 and for purposes of sec_678 the beneficiary of such qsst will be treated as the owner of that portion of the qsst which consists of stock in an s_corporation with respect to which the election under sec_1361 is made under sec_1361 a beneficiary of a qsst may elect to have sec_1361 apply under sec_1361 this election will be effective up to days and two months before the date of the election sec_1361 defines a qsst as a_trust a the terms of which require that i during the life of the current income_beneficiary there shall be only one income_beneficiary of the trust ii any corpus distributed during the life of the current income_beneficiary may be distributed only to such beneficiary iii the income_interest of the current beneficiary in the trust shall terminate on the earlier of the beneficiary’s death or the termination of the trust and iv upon the termination of the trust during the life of the current income_beneficiary the trust shall distribute all of its assets to that beneficiary and b all of the income within the meaning of sec_643 of which is distributed or plr-103219-03 required to be distributed currently to one individual who is a citizen or resident_of_the_united_states sec_1362 provides that if an election under sec_1362 by any corporation was not effective for the taxable_year for which made determined without regard to sec_1362 by reason of failure to meet the requirements of sec_1361 or to obtain shareholder consents or was terminated under sec_1362 or the secretary determines that the circumstances resulting in such ineffectiveness or termination were inadvertent no later than a reasonable period of time after discovery of the circumstances resulting in the ineffectiveness or termination steps were taken so that the corporation is a small_business_corporation and the corporation and each person who was a shareholder of the corporation at any time during the period specified under sec_1362 agrees to make the adjustments consistent with the treatment of the corporation as an s_corporation as may be required by the secretary for that period then notwithstanding the circumstances resulting in such termination the corporation shall be treated as an s_corporation during the period specified by the secretary under sec_301_9100-1 the commissioner may grant a reasonable extension of time to make a regulatory election or a statutory election but no more than six months except in the case of a taxpayer who is abroad under all subtitles of the code except e g h and i requests for relief under sec_301_9100-3 will be granted when the taxpayer provides evidence to establish that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government sec_301 a sec_301_9100-1 defines a regulatory election to include an election whose due_date is prescribed by a regulation published in the federal_register or a revenue_ruling revenue_procedure notice or announcement published in the internal_revenue_bulletin sec_301_9100-1 through provide the standards the commissioner will use to determine whether to grant an extension of time to make an election sec_301_9100-1 sec_301_9100-2 provides automatic extensions of time for making certain elections sec_301_9100-3 provides extensions of time for making elections that do not meet the requirements of sec_301_9100-2 based solely on the facts and representations submitted we conclude that x's s election terminated on d1 of year because of the ownership of x stock by the trust which ceased to be an eligible s_corporation shareholder at the end of the two-year period described in sec_1361 we also conclude that the termination of x’s s election was inadvertent within the meaning of sec_1362 we further conclude that under the provisions of sec_1362 x will be treated as being an s_corporation from d1 of year and afterwards provided x's s_corporation_election was otherwise valid and was not otherwise terminated plr-103219-03 we also conclude that the requirements of sec_301_9100-3 have been satisfied as a result b is granted an extension of time for days from the date of this letter to file a qsst election for trust effective d1 of year a copy of this letter should be attached to the qsst election a copy is provided for that purpose this ruling is contingent on x and all its shareholders treating x as having been an s_corporation for the period beginning on d1 of year and thereafter the shareholders of x must include their pro_rata share of the separately_stated and nonseparately computed items of x as provided in sec_1366 make any adjustments to basis provided in sec_1367 and take into account any distributions made by x as provided in sec_1368 if x or its shareholders fail to treat x as described above this ruling will be null and void except as specifically set forth above no opinion is expressed concerning the federal tax consequences of the facts described above under any other provision of the code including whether x was or is a small_business_corporation under sec_1361 and whether trust is a qsst 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 in accordance with the power_of_attorney on file with this office a copy of this sincerely heather c maloy associate chief_counsel passthroughs and special industries letter is being sent to x enclosures copy of this letter copy for sec_6110 purposes


department of the treasury internal_revenue_service washington d c ti ep qa ta may coven eanties division u i l vanes thie legend taxpayer a taxpayer b bank m plan x amount d amount e amount f ira y company b account g dear eees shee tees teres eee eehe tiene - rhe eee tee this is in response to your letter dated date as supplemented by correspondence dated date date and date submitted on your behalf by your authorized representative in which you request a waiver of the 60-day rollover requirement contained in sec_402 of the internal_revenue_code code the following facts and representations have been submitted under penalties of perjury in support of the ruling requested kekkeeererererer taxpayer a states that he maintained plan x which he describes as a code sec_403 plan with bank m taxpayer a further states that upon his retirement on date he requested a rollover of all retirement_funds held on his behalf taxpayer a’s retirement_funds consist of cash and shares of bank m stock documentation submitted by taxpayer a shows that on date he completed bank m’s direct disbursement rollover request form to direct distribution of his retirement_funds the instructions for the direct disbursement rollover request form asks the participant at section ii to check the box which indicates how the participant would like to have the distribution processed under section ii of the form taxpayer a checked the box indicating that he requested bank m to make a direct_rollover of his entire distribution into an ira qualified_plan sec_403 plan or governmental plan as detailed in section ill’ the instruction for the disbursement form instructs the participant at section ill to complete the information requested for distribution checks that will be sent directly to a qualified_plan trustee custodian or ira section ill entitled instructions to direct_rollover into an ira or qualified_plan was completed by taxpayer a wherein he directed that his distribution be transferred to an individual_retirement_arrangement ira y at bank m the cash portion of taxpayer a’s retirement_funds amount f was transferred in a direct_rollover to ira y at bank m the instructions for the disbursement form instructs the participant at section iv to complete this section if shares of bank m stock are to be electronically transferred to the participant’s brokerage account section iv of bank m's distribution form applies to company stock if applicable and states that such shares which the participant has requested to receive in-kind may be - electronically transferred to the participant's brokerage account the instructions further ask the participant to name the brokerage institution provide the account name and the account number into which such shares should be transferred taxpayer a completed section iv and instructed bank m to transfer his shares of stock to account g a joint brokerage account taxpayer a maintains along with taxpayer b at company b documentation submitted by taxpayer a shows that bank m stock valued at amount e was transferred to account g on date taxpayer a received a form 1099-r for tax_year received a total_distribution in the amount of amount d the sum of amount e and amount f from plan x the form 1099-r describes taxpayer a’s entire distribution from plan x as g which pursuant to the form instructions means direct_rollover that shows that he taxpayer a states that he discovered that a portion of his retirement_funds specifically amount e the shares of bank m stock was not in an ira in january krrerrrrerererek taxpayer a asks the service to waive the 60-day rollover requirement so that he can roll amount e into an ira based on the facts and representations you request that the service waive the day rollover requirement with respect to the distribution of amount e from plan x sec_402 of the code provides that except as otherwise provided in this section any amount actually distributed to any distributee by any employees’ trust described in sec_401 of the code which is exempt from tax under sec_501 shall be taxable to the distributee in the taxable_year of the distributee in which distributed in the manner provided under sec_72 relating to annuities sec_402 of the code provides rules governing rollovers of amounts from exempt trusts to eligible retirement plans including iras code sec_402 provides generally that if any portion of an eligible_rollover_distribution from a qualified employees trust is paid to the employee in an eligible_rollover_distribution and the employee transfers any portion of the property received in such distribution to an eligible_retirement_plan and in the case of a distribution_of_property other than money the amount so transferred consists of the property distributed such distribution to the extent so transferred shall not be includible in gross_income for the taxable_year in which paid sec_402 of the code provides that the maximum amount of an eligible_rollover_distribution to which paragraph applies shall not exceed the portion of such distribution which is includible in gross_income determined without regard to paragraph sec_402 of the code defines eligible_rollover_distribution as any distribution to an employee of all or a portion of the balance_to_the_credit of an employee in a qualified_trust except that such term shall not include a any distribution which is one of a series of substantially_equal_periodic_payments not less frequently than annually made-- i ii for the life or life expectancy of the employee or the joint lives or joint life expectancies of the employee and the employee's designated_beneficiary or for a specified period of years or more b any distribution to the extent the distribution is required under sec_401 and c any distribution which is made upon hardship of the employee krrekererekerkekk code sec_402 defines eligible_retirement_plan as i an individual_retirement_account described in sec_408 ii an individual_retirement_annuity described in sec_408 other than endowment_contract iii a qualified_trust iv an annuity plan described in sec_403 v an eligible_deferred_compensation_plan described in sec_457 maintained by an eligible_employer as described in sec_457 and vi an annuity_contract described in sec_403 code sec_402 provides generally that sec_402 shall not apply to any transfer of a distribution made after the 60th day following the day on which the distributee received the property distributed code sec_402 provides that the secretary may waive the 60-day requirement under subparagraph a where the failure to waive such requirement would be against equity or good conscience including casualty disaster or other events beyond the reasonable control of the individual subject_to such requirement only distributions that occur after date are eligible for the waiver under sec_402 revproc_2003_16 r b provides that in determining whether to grant a waiver of the 60-day rollover requirement pursuant to sec_402 of the code the service will consider all relevant facts and circumstances including errors committed by a financial_institution inability to complete a rollover due to death disability hospitalization incarceration restrictions imposed by a foreign_country or postal error the use of the amount distributed for example in the case of payment by check whether the check was cashed and the time elapsed since the distribution occurred in this case documentation submitted by taxpayer a indicates that he directed to have a portion of his retirement_funds amount f transferred in a direct_rollover from plan x to ira y documentation submitted by taxpayer a also shows that he directed to have his shares of employer m amount e stock electronically transferred to account g his brokerage account at company b account g is not an ira from the documentation submitted by taxpayer a it appears that he made a mistake when he completed bank m’s disbursement form that resulted in his shares of bank m stock being transferred to a non-ira account the service has the ability to waive the 60-day rollover period for a distribution from a qualified_plan where the employee failed to complete a rollover to another eligible_retirement_plan within the 60-day rollover period but was prevented from doing so because of one of the factors enumerated in revproc_2003_16 for example postal error errors committed by a financial_institution hospitalization disability and events beyond the reasonable control of the senassanne individual although there appears to have been a misunderstanding as to how to complete the disbursement form the ability to deposit amount e into an ira within the 60-day rollover period was within the reasonable control of taxpayer a therefore with respect to your ruling_request we conclude that pursuant to code sec_402 the service declines to waive the 60-day rollover period with respect to the distribution of amount e from plan x and thus amount e will not be considered a valid rollover_distribution under sec_402 because the 60-day rollover requirement was not satisfied no opinion is expressed as to the tax treatment of the transactions described herein under the provisions of any other section of either the code of regulations which may be applicable thereto this ruling is directed only to the taxpayer who requested it code sec_6110 provides that it may not be used or cited by others as precedent a copy of this letter is being sent to your authorized representative pursuant to a valid power_of_attorney on file in this office if you have any questions regarding this letter please contact rhrrkrerrrerrerrereer ere eer ss e t ep ra t sincerely yours signed joyor b floyd joyce e floyd manager employee_plans technical group enclosures deleted copy of ruling letter notice of intention to disclose


internal_revenue_service number release date index number --------------------------------- ------------------------------ ------------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ------------------- id no ----------------- telephone number --------------------- refer reply to cc ita plr-140320-09 date february in re ------------------------------------------------------ legend act ----------------------------------------------------------------------------------------- agency --------------------------------------------------- agreement --------------------------------------------- b ------------------------- court ---------------------------------------------------------------------------------- department --------------------------------------------------------------------------------- entity1 ------------------------------------------------------------ entity2 --------------------------------- entity2 claimants ------------------ incident ------------------------------------------------------------------------------------------------------- ------- t ------------------------------------------- z ----------------------------------------------------- plr-140320-09 c --------- date -------------------- date ---------------------- year ------- year ------- year ------- f ----------------------- dollar_figureq dollar_figure--------------- dollar_figurer dollar_figure-------------------- dollar_figuret dollar_figure------------------------ dollar_figurev dollar_figure------------------- w ----- dollar_figurey dollar_figure--------------- dear --------------------- this is in reply to your request for a ruling that any payment you receive from department for the wrongful death of b your c is excludable from your gross_income under sec_104 of the internal_revenue_code facts your c was one of w individuals killed in incident in year the estates of those killed and their survivors including you entered into a joint prosecution agreement jpa to pursue claims for damages against entity1 and its officials who were responsible for incident the jpa sets forth how the plaintiffs will divide any amounts they recover in litigation or settlement of their claims initial litigation the estates of those killed and their survivors initially sued entity1 in court in year the causes of action included claims for survivorship wrongful death and intentional infliction of emotional distress you sought recovery for intentional plr-140320-09 infliction of emotional distress caused by the death of your c in year court granted summary_judgment for plaintiffs on the issue of liability in year court awarded the plaintiffs an aggregate recovery_of dollar_figurev for compensatory_damages prejudgment_interest and punitive_damages you were awarded an aggregate of dollar_figurey dollar_figurer against t and dollar_figureq against z legislative settlement subsequently on date entity2 passed the act to provide fair compensation to all entity2 claimants who have f claims for wrongful death and physical injury including claims for emotional distress against entity1 through a comprehensive settlement of those claims upon entity1’s payment to entity2 the act voided all prior court proceedings and judgments for f claims by entity2 claimants against entity1 or its officials and permanently precluded entity2 claimants from asserting f claims against entity1 or its officials on date entity1 and entity2 entered into the agreement to resolve all f claims against entity1 entity1 then transferred dollar_figuret to entity2 which will be paid to claimants covered by the agreement thus pursuant to the act court award of damages to the plaintiffs was voided and has been vacated agency has established procedures to compensate victims pursuant to the agreement as a survivor of an individual killed in incident you must file a claim with department to recover damages for claims of wrongful death based on the death of your c you represent that department’s payment will not include interest or punitive_damages law and analysis sec_104 provides that except in the case of amounts attributable to and not in excess of deductions allowed under sec_213 relating to medical etc expenses for any prior taxable_year gross_income does not include the amount of any damages received whether by suit or agreement on account of personal physical injuries or physical sickness sec_1_104-1 of the income_tax regulations provides that the term damages received whether by suit or agreement means an amount received through prosecution of a legal suit or action based upon tort or tort type rights or through a settlement agreement entered into in lieu of such prosecution section of the small_business job protection act of limits the exclusion_from_gross_income provided by sec_104 to amounts received on account of personal physical injuries or physical sickness subject_to one exception in h_r conf_rep no pincite congress expressed its intent concerning the treatment of wrongful death damages and emotional distress damages attributable to a physical injury d amages other than punitive_damages received on account of a claim of wrongful death continue to be excludable from taxable_income as under present plr-140320-09 law because all damages received on account of physical injury or physical sickness are excludable from gross_income the exclusion_from_gross_income applies to any damages received based on a claim of emotional distress that is attributable to physical injury or physical sickness the action you brought in court and the claim you file with department each seek recovery_of damages for emotional distress attributable to a personal physical injury these claims are based in tort under sec_1_104-1 under the act any recovery_of compensatory_damages that department awards you is for the wrongful death of your c this wrongful death recovery as adjusted by the jpa is received on account of a personal physical injury under sec_104 conclusion based strictly on the information submitted and the representations made we conclude that the amount you receive from department as adjusted by the jpa for the wrongful death of your c is excludable from your gross_income under sec_104 except for any amounts attributable to medical_expenses that you in fact deducted on a prior year s ’ federal_income_tax return we do not express or imply an opinion on the federal tax consequences of any aspect of these transactions other than those expressed in the conclusion above this ruling is directed only to the taxpayer requesting it sec_6110 provides that it may not be used or cited as precedent the rulings contained in this letter are based upon information and representations that you submitted under penalties of perjury 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 you must attach to any income_tax return to which it is relevant a copy of this letter or if you file your returns electronically a statement providing the date and control number of this letter_ruling plr-140320-09 in accordance with the power_of_attorney on file with this office we are sending a copy of this letter to your authorized representative sincerely michael j montemurro branch chief office of associate chief_counsel income_tax accounting


t c summary opinion united_states tax_court philip edward sams petitioner v commissioner of internal revenue respondent docket no 1802-09s filed date philip edward sams pro_se daniel n price for respondent dawson judge this case was heard pursuant to the provisions of sec_7463 of the internal_revenue_code in effect at the time the petition was filed pursuant to sec_7463 the decision to be entered is not reviewable by any 1unless otherwise indicated section references are to the internal_revenue_code as amended and rule references are to the tax_court rules_of_practice and procedure other court and this opinion shall not be treated as precedent for any other case this proceeding was commenced in response to a notice_of_determination concerning collection action s under sec_6320 and or with respect to petitioner’s federal_income_tax liabilities for and the issue presented for decision is whether the internal_revenue_service irs appeals_office abused its discretion regarding its determination that petitioner is not entitled to a claimed overpayment credit of dollar_figure from to be applied against his income_tax_liability background the parties did not submit a stipulation of facts with exhibits instead respondent filed on date pursuant to rule f a motion to show cause why proposed facts and evidence should not be accepted as established for the purposes of this case on date the court granted respondent’s motion and issued an order for petitioner to show cause on date petitioner filed a detailed response to respondent’s motion and to the court’s order to show cause by agreeing or accepting paragraph sec_1 through of respondent’s exhibit a as well as attached exhibits 1-j through 26-j but petitioner objected to exhibit 18-j and moved to strike it as irrelevant and invasive of his privacy at trial the court denied petitioner’s motion to strike exhibit 18-j accordingly the facts documents and evidence in respondent’s proposed stipulation of facts as well as exhibits 1-j through 26-j were deemed established admitted and made a part of the record in addition the court admitted petitioner’s exhibit 30-p petitioner resided in texas when he filed his petition he is an engineer who experienced some interruptions in his employment with different corporations at various times he did not file timely federal_income_tax returns for through he filed his returns for each of those years with irs appeals new orleans office on date respondent generated substitutes for returns pursuant to sec_6020 for and and issued separate notices of deficiency for each year determining that petitioner was liable for the following income_tax deficiency and additions to tax_year deficiency dollar_figure big_number big_number additions to tax sec sec_6651 a dollar_figure dollar_figure dollar_figure dollar_figure dollar_figure dollar_figure sec_6654 --- dollar_figure --- petitioner received the notices of deficiency but did not petition this court for redeterminations therefore the taxes due were assessed the irs then proceeded to collect by levy the balances due for through on date the irs sent petitioner a final notice-notice of intent to levy and notice of your right to a hearing petitioner timely requested a collection_due_process_hearing and petitioner was granted a collection_due_process telephone hearing on date petitioner had requested in the late-filed returns including those for and that overpayments resulting from excess wage withholding and estimated_tax payments from each preceding year be credited to each succeeding year the pertinent information relating to petitioner’s claimed overpayments is as follows tax_year date return filed claimed overpayment from prior year dollar_figure big_number big_number on date the irs sent petitioner a notice_of_determination regarding the proposed levy action it stated that the proposed levy action would not be taken and that collection action would be temporarily suspended pending an improvement in petitioner’s financial situation the attachment to the notice_of_determination prepared by settlement officer richard j wempe shows that there is no current balance of tax due for and it also contains the following analysis of petitioner’s claimed overpayment credit issues raised by the taxpayer challenges to the existence or amount of the liability prior to the cdp hearing the taxpayer filed amended tax returns with the service_center those returns led to adjustments to the sfr assessments that were previously made taxpayer now contests the service’s failure to post credits see other issues below other issues taxpayer contends that overpayments from other periods years and are sufficient to pay the outstanding balance my analysis taxpayer argues for the offset of overpayments from years to the remaining unpaid liability the law sec_6511 provides for a period of three years from the due_date of a tax_return during which a taxpayer can file a return claiming return of an overpayment_of_tax beyond that timeframe the overpayment is no longer refundable or available for offset to other liabilities taxpayer filed tax returns for years in july those returns showed overpayments in the amount of dollar_figure dollar_figure respectively offset of those overpayments was correctly disallowed those returns were not filed by the taxpayer until well after the statutory time for claiming refund of the overpayments in those years discussion at trial petitioner conceded that settlement officer wempe did not abuse his discretion in determining that the proposed levy action should not be taken and that the collection action should be temporarily suspended pending an improvement in petitioner’s financial condition petitioner stated but my contention is that on that point the decision whether to proceed on levy there is no disagreement between the irs and myself on that point mr wempe and i were in agreement with his conclusions he felt that i had provided the information that he required i met his statutory requirements to do that we agree and sustain respondent’s determination that the levy upon petitioner’s assets should not be made petitioner claims he is entitled to an overpayment credit of dollar_figure from to be applied against his income_tax_liability respondent contends that the credit is not allowable because as settlement officer wempe determined it is time barred neither party has addressed this court’s jurisdiction in this proceeding to decide the credit issue during the collection hearing a taxpayer has the right to challenge the existence and amount of the underlying tax_liability only if he or she did not receive a notice_of_deficiency or did not otherwise have an opportunity to dispute the tax_liability sec_6330 however if the taxpayer received a notice_of_deficiency or otherwise had an opportunity to dispute the tax_liability the appeals officer has discretion to consider a claim as to the existence or amount of the underlying tax_liability sec_301_6330-1 q a-e11 proced admin regs however if the taxpayer received a sec_301_6330-1 q a-e11 proced admin regs provides the following illustrative question and answer q-e11 if an appeals officer considers the merits of a taxpayer’s liability in a cdp collection_due_process_hearing when the taxpayer had previously received a statutory_notice_of_deficiency or otherwise had an continued notice_of_deficiency or otherwise had an opportunity to dispute the underlying tax_liability the court does not have jurisdiction to decide the amount of the underlying tax_liability even if the appeals officer exercised his her discretion to do so see 118_tc_572 petitioner received a notice_of_deficiency and his claim of entitlement to credit for overpayment of prior years’ taxes could have been raised in a deficiency proceeding his entitlement to the credits is determinative of the amount of the underlying liability the court does not have jurisdiction in this collection proceeding to decide the amount of the underlying tax continued opportunity to dispute the liability prior to the issuance of a notice of intention to levy will the appeals officer’s determination regarding those liability issues be considered part of the notice_of_determination a-e11 no an appeals officer may consider the existence and amount of the underlying tax_liability as a part of the cdp hearing only if the taxpayer did not receive a statutory_notice_of_deficiency for the tax_liability in question or otherwise have a prior opportunity to dispute the tax_liability in the appeals officer’s sole discretion however the appeals officer may consider the existence or amount of the underlying tax_liability at the same time as the cdp hearing any determination however made by the appeals officer with respect to such a precluded issue shall not be treated as part of the notice_of_determination issued by the appeals officer and will not be subject_to any judicial review even if a decision concerning such precluded issues is referred to in the notice_of_determination it is not reviewable by the tax_court because the precluded issue is not properly part of the cdp hearing liability even though settlement officer wempe exercised his discretion to do so at trial petitioner stated there really is no other issue of difference between the irs office of appeals position and my position other than the disallowance of these credits there was no disagreement with regard to levy or other issues that might have been looked at by appeals consequently because there are no tax_liabilities remaining for and those years will be dismissed as moot see 126_tc_1 and decision will be entered sustaining respondent’s determination that the levy upon petitioner’s property to collect his unpaid tax_liability for should not proceed because of his current financial situation 3although we do not have jurisdiction over petitioner’s claimed credits we observe that the amount of an overpayment for a tax_year that is recoverable and may be credited to a later year is limited to the amount_paid within years before the filing of the claim sec_6511 petitioner’s withheld and estimated_taxes were deemed paid on the date his income_tax returns were due without regard to any extensions he claimed the overpayments on returns filed more than years after the date the returns were due thus since the withheld and estimated_taxes were deemed paid more than years before he filed the returns he is not entitled to a credit for any overpayment of those taxes to reflect the foregoing an appropriate order of dismissal and decision will be entered