t c summary opinion united_states tax_court edward reiss petitioner v commissioner of internal revenue respondent docket no 9318-01s filed date edward reiss pro_se marie eb small for respondent powell special_trial_judge this case was heard pursuant to the provisions of sec_7463' of the internal_revenue_code in effect at the time the petition was filed the decision to be entered is not reviewable by any other court and this opinion should not be cited as authority respondent determined a deficiency of dollar_figure in petitioner’s federal_income_tax the issues are whether petitioner is ' unless otherwise indicated subsequent section references are to the internal_revenue_code in effect for the year in issue - - entitled to claim a dependency_exemption deduction for his daughter for the taxable_year and whether he is entitled to use head_of_household filing_status petitioner resided in westport connecticut at the time the petition was filed background the facts are not in dispute and may be summarized as follows pursuant to a decree of dissolution of marriage hereinafter referred to as the decree entered by the superior court of the state of arizona county of yavapai petitioner and his former wife susan lynne reiss were divorced on date petitioner and his former wife had one minor child the decree provided inter alia the custody of the minor child ilana michelle reiss is hereby awarded to the former wife subject_to visitation by petitioner a petitioner shall pay to the former wife through the child_support clerk of this court the sum of dollar_figure each month as and for child_support c so long as petitioner is current on all child_support as of december of each year petitioner shall be entitled to declare ilana michelle reiss as a dependant and exemption for all federal and state_income_tax purposes that the former wife shall sign whatever documents are reasonably necessary to facilitate petitioner’s declaration of ilana michelle reiss as a dependent and exemption the facts are not in dispute and the issue is primarily one of law sec_7491 concerning burden_of_proof has no bearing on this case during petitioner’s daughter did not live with him for more than half of the taxable_year and petitioner’s former wife had custody of the child petitioner made all child_support payments as ordered by the decree on his federal_income_tax return petitioner claimed a dependency_exemption deduction for his daughter and head_of_household filing_status notwithstanding the provisions of the decree petitioner’s former wife refused to sign form_8332 release of claim to exemption for child of divorced or separated parents discussion dependency_exemption sec_151 provides that in computing taxable_income an individual is entitled to deduct an exemption for qualified dependents as that term is defined in sec_152 sec_152 defines a dependent as a son daughter sibling parent or an individual who has as a principal_place_of_abode the home of the taxpayer and is a member of the taxpayer’s household sec_152 provides that in the case of divorced parents sec_152 support_test in case of child of divorced parents etc -- custodial_parent gets exemption ---except as otherwise provided in this subsection if-- a a child receives over half of his support during the calendar_year from his parents--- - - who are divorced or legally_separated under a decree of divorce or separate_maintenance who are separated under a written_separation_agreement or who live apart at all times during the last months of the calendar_year and b such child is in the custody of one or both of his parents for more than one-half of the calendar_year such child shall be treated for purposes of subsection a as receiving over half of his support during the calendar_year from the parent having custody for a greater portion of the calendar_year hereinafter in this subsection referred to as the custodial_parent exception where custodial_parent releases claim to exemption for the year --a child of parents described in paragraph shall be treated as having received over half of his support during a calendar_year from the noncustodial_parent if-- a the custodial_parent signs a written declaration in such manner and form as the secretary may by regulations prescribe that such custodial_parent will not claim such child as a dependent for any taxable_year beginning in such calendar_year and b the noncustodial_parent attaches such written declaration to the noncustodial parent’s return for the taxable_year beginning during such calendar_year the regulations provide that a noncustodial_parent may claim an exemption for a dependent_child only if the noncustodial_parent attaches to his her income_tax return for the year of the exemption a written declaration from the custodial_parent stating that he she will not claim the child as a dependent sec_1_152-4t a q a-3 temporary income_tax regs fed reg date the declaration required must be made on a form provided by the internal_revenue_service form or on a statement that conforms to the substance of such form id in 114_tc_184 we recognized that an alternative to form_8332 may be used by the noncustodial_parent to substantiate his right to claim a dependency_exemption for his child any alternative must contain substantially the same information required by form_8332 in particular the document must satisfy the signature reguirement of sec_152 the signature of the custodial_parent is critical to the successful implementation of congress’ plan to eliminate support-based disputes regarding dependency_exemptions and to simplify the rules regarding when a noncustodial_parent may claim the dependency_exemptions for his or her children id pincite- we rejected the argument in miller that a court decree even if executed by the former spouse satisfied the requirements of sec_152 in this case petitioner is the noncustodial_parent the decree required petitioner’s former wife to execute the statement required she however refused to do so while we are sympathetic to petitioner’s plight we note that petitioner’s remedy lies with the arizona divorce court it is not within this court to enforce that decree we recognize that as petitioner points out enforcing the decree may involve an expenditure of funds but that is a decision that petitioner must make petitioner has not chosen that route and he is not -- - entitled to claim a dependency_exemption deduction for his daughter on his federal_income_tax return filing_status sec_2 provides in general --for purposes of this subtitle an individual shall be considered a head of a household if and only if such individual is not married at the close of his taxable_year 1s not a surviving_spouse as defined in subsection a and either-- a maintains as his home a household which constitutes for more than one-half of such taxable_year the principal_place_of_abode as a member of such household of-- a daughter since his daughter did not live with petitioner for more than half of the taxable_year petitioner is not entitled to head_of_household filing_status for the taxable_year reviewed and adopted as the report of the small_tax_case division decision will be entered for respondent


department of the treasury employer_identification_number contact person - id number contact telephone number uil internal_revenue_service p o box cincinnati oh release number release date date date legend x scholarship name y school name z city state x dollar amount y dollar amount z number dear you asked for advance approval of your scholarship grant procedures under internal_revenue_code sec_4945 this approval is required because you are a private_foundation that is exempt from federal_income_tax you requested approval of your scholarship program to fund the education of certain qualifying students our determination we approved your procedures for awarding scholarships based on the information you submitted and assuming you will conduct your program as proposed we determined that your procedures for awarding scholarships meet the requirements of code sec_4945 as a result expenditures you make under these procedures will not be taxable also awards made under these procedures are scholarship or fellowship grants and are not taxable to the recipients if they use them for qualified_tuition_and_related_expenses subject_to the limitations provide in code sec_117 description of your request your letter indicates you will operate a scholarship program called x x will enhance access to higher education by providing two four-year scholarships annually to graduates of y in the z school district in order to be considered for the scholarship the student must be a graduating senior at y and complete an application each year in late september or early october you will letter catalog number 58263t distribute applications to all y seniors in their english classes you will also distribute the application in the career center and via email to those y students attending courses at any of the local community colleges there are approximately z students in the senior class at y a scholarship committee made up of department representatives at y will review the applications and rate the applications according to academic achievement and financial need your application form will contain and your committee will consider the following when reviewing and rating the applicants e e e e e e colleges where the student plans to apply along with the students top-choice and career choice list of senior year coursework cumulative grade-point-average and sat act scores activities both in and out of school which the student has participated that show his her ability to work with others in-school and out-of -school honors and awards part-time and full-time jobs the recipient has held since entering high school any other achievements in early december the applications are collected and each student who filled one out is required to be interviewed by your scholarship committee each student is asked a standard set of questions designed to provide the committee with insight that cannot be determined from the application itself after these preliminary measures are complete the committee will meet once each week and work through the nomination and selection process for each of the scholarships that will be awarded until the field of applicants is reduced to several outstanding candidates according to the criteria provided with each scholarship at this point the committee will vote for the final selection and will work through this process for each of the awards you grant until the process is complete your scholarship committee will rank the applicants first using the student’s grade-point-average gpa and then scores on college entrance examinations in reading and math the students will then be ranked by financial need after being ranked for academic achievement the committee will then notify you of the students selected to receive your scholarships your scholarships are for four years as long as the student remains in school and in good standing the scholarship award will range from x dollars to y dollars annually you will pay the scholarship proceeds directly to the university or college of the recipient’s choosing you will also provide a letter to the recipient's educational_institution specifying that the institution agrees to notify the trustee and refund any unused portion of the scholarship if the student fails to meet any term or condition of your scholarship if the recipient's educational_institution will not agree to the terms as stated above you will obtain the needed reports and grade transcripts from the recipient letter catalog number 58263t to avoid any conflict of interest your selection committee does not allow any staff member with qualifying children or other family members who are being considered for a scholarship to serve on the committee that year department representatives who serve on the scholarship committee rotate annually if any conflict situation should arise the committee member is required to inform the chair of the conflict and abstain from the discussion and selection with regards to the conflict situation basis for our determination the law imposes certain excise_taxes on the taxable_expenditures of private_foundations code sec_4945 a taxable_expenditure is any amount a private_foundation pays as a grant to an individual for travel study or other similar purposes however a grant that meets all of the following requirements of code sec_4945 is not a taxable_expenditure e e the foundation awards the grant on an objective and nondiscriminatory basis the irs approves in advance the procedure for awarding the grant the grant is a scholarship or fellowship subject_to the provisions of code sec_117 the grant is to be used for study at an educational_organization described in code sec_170 a ii other conditions that apply to this determination e e e e e e this determination only covers the grant program described above this approval will apply to succeeding grant programs only if their standards and procedures don't differ significantly from those described in your original request this determination applies only to you it may not be cited as a precedent you cannot rely on the conclusions in this letter if the facts you provided have changed substantially you must report any significant changes to your program to the cincinnati office of exempt_organizations at internal_revenue_service exempt_organizations determinations p o box cincinnati oh you cannot award grants to your creators officers directors trustees foundation managers or members of selection committees or their relatives all funds distributed to individuals must be made on a charitable basis and further the purposes of your organization you cannot award grants for a purpose that is inconsistent with code sec_170 b you should keep adequate_records and case histories so that you can substantiate your grant distributions with the irs if necessary letter catalog number 58263t please keep a copy of this letter in your records if you have questions please contact the person listed at the top of this letter sincerely director exempt_organizations letter catalog number 58263t


t c no united_states tax_court lakewood associates robert g moore tax_matters_partner petitioner v commissioner of internal revenue respondent docket no filed date l a partnership purchased land on which it intended to build single-family residences at the time of purchase the land was zoned for agricultural use and one-third of the land was wetlands under federal wetland regulations in l applied for rezoning of the land to residential and in l's rezoning application was denied also in new federal wetland regulations were issued that resulted in about percent of the land’s being classified as wetlands l is required to obtain a permit under the clean water act of publaw_95_217 commonly called a sec_404 permit 91_stat_1566 u s c sec before beginning the residential project on the wetland portion of the land l did not apply for a permit in and l did not sell or abandon the property the land remains zoned for agricultural use l claimed a loss deduction under sec_165 i r c in for the decrease in property value of the land based on its inability to use the land for residential development because of the federal wetland regulations held there has not been a realization event that fixes the decrease in property value in a closed and completed transaction and l is not entitled to a loss deduction under sec_165 i r c douglas e kahle for petitioner john c mcdougal for respondent gerber judge respondent issued a notice of final partnership administrative adjustments to lakewood associates for taxable_year the issue for our consideration is whether lakewood associates is entitled to a loss deduction under section in for a decrease in the value of real_property alleged to have been caused by restrictions imposed on its ability to develop the property by federal wetland regulations that were issued in that year findings of fact3 lakewood associates lakewood is a virginia general_partnership with its principal_place_of_business in virginia 1all 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 unless otherwise indicated 2in an earlier opinion respondent’s motion for summary_judgment was denied see lakewood associates v commissioner tcmemo_1995_552 3the parties’ stipulation of facts and the attached exhibits are incorporated by this reference beach virginia at the time the petition was filed in lakewood purchased approximately acres of unimproved_real_estate located on elbow road in chesapeake virginia to construct single-family homes in a residential development to be called elbow lake estates elbow lake property lakewood purchased the property from r g moore building corp moore corp for a purchase_price of dollar_figure and granted moore corp a 55-percent general_partnership interest in the lakewood partnership lakewood intended to develop the property in conjunction with an adjacent 7-acre property the boy scout tract owned by lakewood's tax_matters_partner robert g moore mr moore has been a real_estate developer and contractor for over years at the time lakewood acquired the property it was zoned for agricultural use on date lakewood applied for rezoning of the elbow lake property from an agricultural district to a single-family residential district following a public hearing a staff report to the chesapeake planning commission recommended that the commission deny lakewood's proposed rezoning because the proposed residential development would create traffic and education demands that could not be met by lakewood's or the city's budget in addition the staff report cited problems with the planned sewer system on the property which did not meet city requirements and the local government's inability to serve the residents of the proposed development based on the staff's recommendation in date the planning commission recommended to the chesapeake city council city council that lakewood's rezoning application be denied in date however the city council approved lakewood's rezoning application contingent on certain proffers residents of chesapeake virginia mounted a petition drive against the rezoning and after obtaining the required percent of voters’ signatures requested that the city council repeal the approved rezoning of lakewood's elbow lake property the city council voted not to repeal the rezoning on date a voter referendum was held on whether or not to rezone the elbow lake property as mandated by the chesapeake city charter the proposed rezoning was defeated by the voter referendum with over 95-percent voting against rezoning the property for residential use the referendum was subsequently upheld by the virginia supreme court in an opinion filed date in which the court found that the referendum provisions of the city charter apply to zoning ordinances r g moore bldg corp v committee va s e 2d lakewood did not make any subsequent attempts to rezone the elbow lake property from the time of the voter referendum defeating the residential zoning to the time of trial the elbow lake property is bordered by a swamp and contains wetlands that are protected from development by federal_law protected wetlands are subject_to the jurisdiction of the environmental protection agency epa and the u s army corps of engineers corps to develop protected wetlands a real_estate developer must obtain a permit from the local division of the corps under the clean water act of publaw_95_217 commonly called a sec_404 permit 91_stat_1566 u s c sec before commencing any construction that causes discharge of dredge or fill material on wetlands see u s c sec in the corps published a manual defining protected wetlands federal manual for identifying and delineating jurisdictional wetlands manual the norfolk division of the corps which has local oversight of the chesapeake virginia area followed the manual to identify wetlands and to process sec_404 permit applications use of the manual by a local division of the corps was not mandatory in late through lakewood employed douglas s davis a wetlands scientist and consultant to determine the 4people associated with environmental wetlands issues popularly refer to the required permit as a sec_404 permit sec_404 refers to the section of the federal water pollution control act amendments of publaw_92_500 86_stat_816 that previously provided for the permit requirement and was replaced by sec_67 of the clean water act of publaw_95_217 91_stat_1566 portion of the elbow lake property that constituted protected wetlands under the manual in a preliminary report prepared in date mr davis identified approximately one-third of the property as wetlands the corps performed an on-site investigation of the property in early spring of and advised mr davis that it was necessary to measure the level of ground water to determine whether additional wetlands exist on the interior of the property after completing the ground water monitoring mr davis prepared an addendum to the preliminary report which found that the water levels on the property met the parameters of protected wetlands in date the corps adopted a new wetlands manual manual effective as of date that superseded the manual the manual amended the definition of protected wetlands substantially increasing the area of land considered to be protected wetlands and over which the corps asserted jurisdiction use of the manual by a local division of the corps was mandatory in date lakewood engaged the engineering firm of langley and mcdonald to determine the amount of wetlands on the elbow lake property under the manual langley and mcdonald determined that wetlands covered approximately percent of the property pursuant to the manual in date the corps also entered into a memorandum of agreement moa with the epa that establishes the procedures to be used by the corps staff in reviewing sec_67 sec_404 cwa permit applications specifically the moa articulated the policy and procedure necessary to satisfy sec_404 so that the local field offices of the corps would be using consistent standards in processing permit applications the moa provided a three-step process for obtaining a sec_404 permit avoidance minimization and compensatory mitigation in the first stage avoidance the applicant must avoid any impact on protected wetlands for example by developing around the wetland area or using an alternative site for development whether or not owned by the applicant in the minimization stage the applicant must minimize the impact on wetlands from the proposed development and must justify the extent that the development will impact wetlands third in the compensation stage the applicant is required to offset the impacted wetlands for example by creating wetlands to replace those being impacted by the development project the moa did not change the substantive regulatory requirements for obtaining a sec_404 permit as the three above requirements had been a part of the regulatory scheme since at least however the moa provided that the requirements must be met in the above sequence the effect of the moa was to reduce the corps' flexibility in processing sec_404 permit applications and to make it more difficult and costly for real_estate developers to obtain permits the moa was originally to take effect on date but the effective date was postponed to date an application_for a sec_404 permit that was filed in would not have been subject_to the moa lakewood first filed an application_for a sec_404 permit for the elbow lake property on date pursuant to the terms of the manual the permit application proposed a residential subdivision consisting of lots of which lots were to be situated on wetlands as defined in the manual lakewood's application did not contain the required information for the corps to process the application such as a map of the precise boundaries on the wetlands on the property the corps was unable to process the application and requested additional information from lakewood in two letters on april and date in a date letter the corps notified lakewood of its intent to withdraw administratively lakewood's application in days if lakewood did not respond to the corps' previous requests for information thereafter on date the corps administratively withdrew lakewood's permit application lakewood decided not to pursue the application because it had been advised by wetland experts that it would be unable to obtain a permit for development of the elbow lake property under the manual requirements as a consequence lakewood did not want to incur the expense of completing the permit application in the corps ceased use of the manual per statutory requirements in the energy and water development appropriations act of publaw_102_104 105_stat_510 as of date the corps reverted to using the manual which became mandatory for local divisions of the corps all permit applicants with applications pending at that time and subject_to the manual were given the option to resubmit their applications under the manual lakewood met with representatives of the corps in and regarding delineation of wetlands on the elbow lake property under the manual lakewood's adjusted_basis in the elbow lake property was dollar_figure on its income_tax return lakewood treated the issuance of the manual as a regulatory taking or condemnation of the elbow lake property and claimed an ordinary_loss deduction under sec_165 and sec_1231 with respect to the property in the amount of dollar_figure the amount of the claimed loss deduction represents approximately percent of lakewood's adjusted_basis in the property which is the portion of the elbow lake property determined to be protected wetlands under the manual lakewood's tax_matters_partner robert g moore who owned the boy scout tract adjacent to the elbow lake property also claimed a sec_165 loss deduction in with regard to the boy scout tract due to the issuance of manual opinion the issue for our consideration is whether lakewood is entitled to a loss deduction in because of the issuance of the wetlands manual and moa petitioner argues that lakewood is entitled to a deduction in the amount of the decrease in value of the elbow lake property as a result of being prevented from developing the property for residential use under the federal wetland regulations petitioner contends that lakewood's inability to use its property for the purpose lakewood intended when it purchased the property constitutes an involuntary_conversion of property accordingly petitioner contends that lakewood is entitled to a loss deduction under sec_165 on its tax_return lakewood characterized the loss as a governmental taking of property upon the issuance of the manual and the execution of the moa on brief however petitioner contends that a constitutional taking of the property is not required in this case to establish a deductible loss under sec_165 sec_165 permits a deduction for any loss sustained during the taxable_year and not_compensated_for_by_insurance_or_otherwise sec_1231 governs the characterization of gains and losses from sales exchanges and involuntary_conversions of real and depreciable_property used in a trade_or_business and permits a taxpayer in certain circumstances to characterize recognized losses_incurred from such transactions or occurrences as an ordinary_loss rather than a capital_loss subject_to the limitations on deductibility under sec_165 for purposes of sec_165 a loss must be evidenced by a closed and completed transaction and fixed by an identifiable_event sec_1_165-1 income_tax regs the mere diminution in value of property is not sufficient to establish a loss for purposes of sec_165 274_us_398 to deduct a decrease in value of property there must be some event that fixes the fact of the loss and the amount thereof petitioner contends that an involuntary_conversion of property is an identifiable_event that gives rise to a sec_165 loss deduction petitioner contends that an involuntary_conversion of property occurs when a taxpayer's property through some outside force or agency beyond his control is no longer useful or available to him for his purposes quoting c g willis inc v 41_tc_468 affd 342_f2d_996 3d cir which involved nonrecognition of gain upon an involuntary_conversion under sec_1033 petitioner also quotes a similar definition of an involuntary_conversion in 381_f2d_389 which provides that an involuntary_conversion of property occurs for purposes of the sec_1231 gain and loss characterization rules when property is rendered useless for the purpose s for which it was intended regardless of whether the property is in fact physically destroyed petitioner argues that an involuntary_conversion occurred upon the issuance of the manual and the execution of the moa for purposes of sec_165 because lakewood could no longer use the elbow lake property for residential development as it had intended respondent does not dispute that under the manual the amount of protected wetlands on the elbow lake property increased or that the manual and moa made it more difficult to obtain a sec_404 permit respondent argues that the advent of the manual and moa are not identifiable events that establish a closed and completed transaction for loss recognition purposes under sec_165 respondent presents a series of independent arguments against lakewood's claimed loss deduction for the decrease in value alleged in this case respondent's principal position is that the agricultural zoning of the elbow lake property prevented lakewood's intended residential use of the property accordingly respondent maintains that lakewood would not have been able to build single-family residences on the elbow lake property even in the absence of the stricter federal wetlands regulations contained in the manual and moa we agree with respondent's first argument to the extent that in substantial part it was the zoning limitation that restricted the intended use of the property in that regard the manual and the moa would have had a relatively small effect if any on the property when used for agricultural purposes in any event petitioner has not advanced an alternative theory or provided us with a factual predicate for a finding that the manual and the moa caused a reduction in value for agricultural purposes lakewood faced two obstacles to its residential development project local zoning law and federal wetland regulations the elbow lakes property was zoned as an agricultural district at the time lakewood acquired it in lakewood applied for rezoning of the property from agricultural to residential after the city council initially approved the rezoning the rezoning was overwhelmingly defeated in a voter referendum in the year that lakewood claimed the loss deduction on the property lakewood has not applied for rezoning of the property to residential since this unsuccessful attempt and the elbow lake property had retained its agricultural zoning up to the time of trial petitioner presented the expert testimony of a real_estate appraiser bruce hatfield to the effect that the value of the property decreased in from about dollar_figure million to dollar_figure million as a result of the manual and moa mr hatfield's valuation is based on his conclusion that the highest_and_best_use of the elbow lake property is residential development and that the property could be rezoned from agricultural to residential the fair_market_value of property is a question of fact for which the burden_of_proof is on petitioner 87_tc_892 the fair_market_value of property is based on the highest_and_best_use for the property on the date of valuation regardless of whether the property is actually being used for that purpose or the land owner intended to put the property to that use 98_tc_554 87_tc_389 rather the realistic objective potential uses of the property control stanley works v commissioner supra pincite the highest_and_best_use is a reasonable and probable use of the property in the near future frazee v commissioner supra restrictions on a land owner's right to use the property are relevant in determining whether the identified highest_and_best_use of the property is reasonable stanley works v commissioner supra pincite accordingly petitioner must prove that it was reasonable and probable that the elbow lake property could be rezoned for residential development within reasonable proximity to the year in issue mr hatfield examined the growth patterns and population shifts in the chesapeake virginia area and determined that the elbow lake property could be part of the ongoing residential development in that area he believed that the property could be rezoned for residential purposes because property located in close vicinity to the elbow lake property had been rezoned from agricultural to residential shortly after lakewood's application_for rezoning was defeated petitioner's expert attributed the ability of the chesapeake virginia citizens to defeat the residential rezoning of the elbow lake property to luck testifying that opponents of the rezoning were able to obtain the required percent of voters’ signatures for the petition because they collected the signatures of voters at polling sites during a general election the expert did not assert any special expertise in zoning issues and merely concluded that since other_property had been rezoned the chances for rezoning the elbow lake property were good mr hatfield did not discount the value of the property prior to the manual and moa for the possibility that the property could not be rezoned for residential use despite the expert's opinion we cannot ignore the agricultural zoning of the elbow lake property and lakewood's failed attempt to rezone the property for residential purposes during the year in issue the planning commission and staff opposed residential zoning of the property recommending to the city council to deny the rezoning request in lakewood's proposed rezoning of the elbow lake property was overwhelmingly defeated by percent of the voters in the referendum petitioner has not presented a persuasive reason to believe that the city council would ignore this near-unanimous clear public objection to residential zoning of the elbow lake property and approve a subsequent rezoning application_for the property moreover at the time of trial the elbow lake property was still zoned for agricultural use we conclude that a change in the zoning of the elbow lake property was not probable at the time of the claimed deduction or within a reasonable period of time thereafter lakewood's proposed development of the elbow lake property was prohibited in because of the local zoning ordinance which predates the manual regardless of the manual and moa accordingly the manual and moa did not cause the dollar_figure million reduction in the value of the elbow lake property claimed by lakewood we find that the continued agricultural zoning of the elbow property resulted in a dollar_figure million value of the property in in that regard we must determine whether lakewood is entitled to deduct either the difference between the basis and dollar_figure million or any reduction in value caused by government land use regulations the mere diminution in value of property does not create a deductible loss an economic loss in value of property must be determined by the permanent closing of a transaction with respect to the property a decrease in value must be accompanied by some affirmative step that fixes the amount of the loss such as an abandonment sale_or_exchange the barrier to lakewood's intended use for the property because of zoning regulations is the lack of a closed and completed transaction for purposes of sec_165 when lakewood purchased the elbow lake property it acquired certain rights with respect to the property lakewood's right to use the property was limited because the elbow lake property was then zoned for agricultural use after the zoning application was defeated lakewood had not been denied a right that it previously possessed lakewood paid an amount for the elbow lake property in excess of the dollar_figure million agricultural use value under the belief that the property could be rezoned for residential development such an assumption whether reasonable or not is not grounds for a loss deduction under sec_165 when the assumption is proved to be in error land use regulations are akin to market conditions that are constantly subject_to change if we treated an adverse zoning decision or land use regulation as a loss realization event it would then be necessary to treat increases from these sources as a taxable gain to the property owner rather we hold that until the elbow lake property is sold abandoned or otherwise_disposed_of in a completed transaction lakewood is not entitled to a loss deduction until such a time it is impossible to determine accurately whether in fact lakewood suffered a loss on the property or the amount of the loss because lakewood continued to own the property there was not a closed and completed transaction with regard to the elbow lake property in that triggered loss recognition for the dollar_figure million decline in value moreover allowing lakewood to deduct the diminution in value caused by land use regulations would be inconsistent with the other grounds for a loss deduction that exist under sec_165 ie abandonment and obsolescence sec_165 provides for a loss deduction for obsolescence of nondepreciable_property used in a trade_or_business where the property is permanently discarded from use by the taxpayer sec_1_165-2 income_tax regs in addition a deduction is permitted for an abandonment_loss where the taxpayer intends to abandon the property and has taken an affirmative act of abandonment 97_tc_200 lakewood has not permanently discarded or abandoned the elbow lake property rather lakewood filed a permit application in date after the year in issue in lakewood renewed discussions with the corps regarding the determination of wetlands on its property in lakewood provided a delineation of wetlands to the corps as required for the permit and the corps confirmed the delineation these actions show that lakewood has not abandoned the property the property has continued to be held by lakewood for future use or sale we hold that there was not a loss realization event with respect to the zoning laws to characterize the loss as ordinary under sec_1231 petitioner at very least would have to show that land use regulations constitute an involuntary_conversion sec_1_1231-1 income_tax regs defines involuntary_conversion of property as follows the conversion of property into money or other_property as a result of complete or partial destruction theft or seizure or an exercise of the power of requisition or condemnation or the threat or imminence thereof losses upon the complete or partial destruction theft seizure requisition or condemnation of property are treated as losses upon an involuntary_conversion whether or not there is a conversion of the property into other_property or money government land use regulations such as local zoning law or federal wetland regulations rarely constitute a condemnation of property under eminent_domain powers see 505_us_1003 474_us_121 447_us_255 condemnation requires property to be taken against the taxpayer's will by a public or quasi- public entity exercising the power of eminent_domain 86_tc_999 affd 841_f2d_1126 6th cir a condemnation or involuntary_conversion of property as defined under sec_1231 has not occurred in this case considering the question of the effect of the manual and the moa it was possible that they adversely affected the value of the elbow lake property for agricultural use causing a reduction in value of the property below the dollar_figure million determined by petitioner's expert petitioner however only argues that the newly issued federal wetland regulations prevented lakewood's use of the elbow lake property for residential development and contends that the value of the land is dollar_figure million based on agriculture as the highest_and_best_use of the property at trial petitioner presented four wetlands experts who provided credible and convincing testimony that it was highly unlikely that lakewood would be granted a sec_404 permit by the corps to develop single-family residences on the elbow lake property one expert bernard goode who was employed as an engineer by the corps for years believed that there was a very low likelihood that under the manual the corps would grant a sec_404 permit to lakewood for the proposed residential development or that lakewood's residential project could have been developed in an economically feasible manner mr goode's testimony was corroborated by the other expert witnesses who testified that it would be virtually impossible to obtain a sec_404 permit or to develop the elbow lake property after the manual conversely petitioner's experts also believed that lakewood could have obtained a sec_404 permit under the terms of the manual and could have developed the elbow lake property for residential purposes in an economically feasible manner petitioner has not argued that lakewood could not use the elbow lake property for agricultural use because of the terms of the manual and the moa or that the federal regulations affected lakewood's use in any way other than preventing real_estate development petitioner has chosen not to argue that there was a partial regulatory taking of the elbow lake property that would constitute a realization event for the loss in value of the property moreover petitioner's own expert witness testified that the property was not worthless as agricultural property after accordingly we find that lakewood is not entitled to the loss deduction claimed on date after the briefs were filed in this case respondent filed a motion to reopen the record to permit the although we are not factually compelled to address the question of whether the federal wetland regulations cause a tax recognizable event it appears that the result would be no different from that of a zoning limitation introduction of a certified copy of a petition filed by lakewood associates on date in the u s court of federal claims the petition seeks compensation in the amount of dollar_figure million under the fifth_amendment takings clause for the regulatory taking of the elbow lake property as a result of the issuance of the manual on brief petitioner had maintained that lakewood had abandoned any claim for reimbursement under the fifth_amendment for the loss in value of the elbow lake property caused by a regulatory taking the petition that respondent seeks to enter into evidence relates to the issue of whether lakewood would have a reasonable prospect to recovery for any loss that it sustained due to the manual and the moa due to our holding in this case we need not address the merits of respondent's motion to reopen the record and deny it as moot to reflect the foregoing decision will be entered for respondent


o f f i c e o f t h e c h i e f c o u n s e l department of the treasury i n t e r n a l r e v e n u e s e r v i c e w a s h i n g t o n d c date cc corp b03 genin-119084-14 number release date uil ------------------------ ------ --------------------------- ---------------------- ------------------------ -------------------------------------- dear --------------- we respond to your request dated date for an information_letter regarding the general federal_income_tax consequences of a state law conversion of a corporation that is taxable under subchapter_c of the internal_revenue_code_of_1986 as amended the code for federal tax purposes specifically you ask about the federal_income_tax consequences to a for-profit corporation under state law taxpayer that seeks to convert into a non-profit corporation under state law you posit that the conversion may be accomplished under applicable state law by the taxpayer’s filing of amended articles of incorporation you also ask if the consequences are affected by the fact that the subchapter_c_corporation is a wholly owned subsidiary of an organization that is exempt from federal taxation under sec_501 of the code in general state non-profit corporations are exempt from state and local income and real_property taxation laws under various states provide that in certain circumstances a taxable business corporation may convert into a non-profit corporation in order to be exempt from state and local taxation in some states this conversion can be effected by amending the corporation’s certificate of incorporation and its bylaws to qualify as a non-profit corporation under state law and filing the required certificates with the state in accordance with the applicable sections of that state’s corporation law for federal tax purposes if a taxpayer has a plan or intention to liquidate into its parent_corporation that is exempt from federal taxation or itself requests recognition of exemption from federal_income_tax under sec_501 or any other provision of the code that would cause it to become a tax exempt entity within the meaning of sec_1_337_d_-4 of the income_tax regulations such change will affect its federal_income_tax consequences genin-119084-14 generally under the code a corporation must recognize gain_or_loss on a liquidating sale or distribution of its assets sec_336 under sec_337 there is an exception to this general_rule for a corporation that distributes property to an percent corporate_distributee in a complete_liquidation to which sec_332 applies sec_332 provides that no gain_or_loss shall be recognized by a corporation that receives property distributed in the complete_liquidation of its subsidiary however the exception under sec_337 is not applicable when the percent distributee is an organization that is exempt from federal taxation sec_337 alternatively if there is not a liquidation but a change in status for federal tax purposes the regulations under sec_337 would treat a taxable corporation’s change in status to a tax-exempt_entity as an asset transfer - as if the corporation transferred all of its assets to the tax-exempt_entity immediately before the change in status became effective - and require the taxable corporation to recognize gain_or_loss immediately before the deemed transfer as if the assets transferred were sold at their fair market values sec_1_337_d_-4 and sec_1_337_d_-4 the tax-exempt entities to which the regulations apply are defined in sec_1_337_d_-4 however a corporation that remains taxable under the code for federal_income_tax purposes despite a change in tax status under state law is not included in the definition of a tax-exempt_entity to which sec_1_337_d_-4 applies sec_1_337_d_-4 i - viii accordingly the conversion of a subchapter_c_corporation from a for-profit corporation to a non-profit corporation for state law purposes but that remains taxable for federal tax law purposes will not recognize gain_or_loss under sec_336 and sec_337 we intend for this letter to be for informational purposes only to call your attention to certain general principles of the federal tax law and not to constitute a ruling see revproc_2014_1 sec_2 2014_1_irb_7 date if you have any additional questions please contact our office at -------------------- sincerely filiz a serbes chief branch office of associate chief_counsel corporate


significant index no department of the treasury internal_revenue_service washington d c government entities division jan re dear associated businesses company customer retail division real_estate_holding_company this letter constitutes notice that a waiver of the minimum_funding_standard for the above-named plan for the plan_year ending november has been granted subject_to the following conditions the company meets the minimum_funding_standard for the plan for the plan years ending date through date without applying for a waiver of the minimum_funding_standard the company makes all required quarterly contributions under sec_430 of the internal_revenue_code to the plan for the plan years ending date through date in a timely manner the company’s chief financial officer agreed to these conditions in a letter dated date if these conditions are not satisfied the waiver is retroactively null and void this conditional waiver has been granted in accordance with sec_412 of the internal_revenue_code and sec_303 of the employee_retirement_income_security_act_of_1974 erisa the amount for which this conditional waiver has been granted is the contribution that would otherwise be required to reduce the balance in the funding_standard_account to zero as of date the company manufactures cutlery products and the customer provides all of the sales marketing and distribution functions the retail division operates two stores and the real_estate_holding_company owns the property where the company and associated businesses operate in the customer began to expand its product lines with outside vendors and purchased and or invested substantial capital to grow the business in the customer relocated to a separate location with a plan to expand this facility to eventually accommodate the manufacturing functions this location was under a lease to buy agreement and in the building was purchased with a mortgage taken out to finance the building shortly thereafter sales and profits began to decline and the expense of carrying two facilities began to hinder cash_flow this property is currently listed for sale with the intent of relocating office and distribution functions to the current manufacturing location the proceeds of the sale will first go to pay off the mortgage on the property and then to correct a default overdraft position with the operating line of credit in date a physical inventory was performed and a large six-figure inventory discrepancy shortfall was discovered amended financial results were prepared and tax refunds were received by the company and the president these funds were applied toward the minimum_funding requirements of the plan for the plan_year that ended date employees with all of the associated business have been laid-off to reduce wage costs product lines have been reviewed for profitability and two product lines purchased from outside vendors that were not profitable have been discontinued slow moving inventory on hand has been reduced through discounted bulk purchase programs to generate cash and inventory levels in general have been reduced to conserve cash supplier costs have been reviewed and as a result less expensive sources that will improve margins have been identified extended payment terms have been implemented with several key vendors the company has worked closely with its bank and since the bank has extended additional funds to the company's credit facility this additional credit has been used to support the rebuilding of the company in and will need to be repaid in it is obvious from the financial information provided by the company that it has experienced and continues to experience a substantial business hardship plan benefit accruals ceased in the third quarter of and future funding requirements that became effective date under sec_430 of the code which will first apply to the plan_year that begins date will not include any contributions attributable to additional future_benefits because the plan will only be required to fund the amounts of the waived_funding_deficiency for the plan_year ended november sec_430 of the code as of date and subsequent valuation dates the funding shortfall if the plan can make the future contributions it should be well funded within years hence the funding waiver for the plan_year ending november has been granted subject_to the conditions set forth above and the shortfall between assets and liabilities calculated under your attention is called to sec_412 of the code and sec_304 of erisa which describe the consequences that would result in the event the plan is amended to increase benefits change the rate in the accrual_of_benefits or to change the rate of vesting while any portion of the waived_funding_deficiency remains unamortized please note that any amendment to a profit sharing plan or any other retirement plans covering employees covered by this plan maintained by the company to increase the liabilities of those plans would be considered an amendment for purposes of sec_412 of the code and sec_304 of erisa similarly the establishment of a new profit sharing plan or any other retirement_plan by the company covering employees covered by this plan would be considered an amendment for purposes of sec_412 of the code and sec_304 of erisa this ruling is directed only to the taxpayer that requested it sec_6110 of the code provides that it may not be used or cited by others as precedent when filing form_5500 for the plan_year ending november the date of this letter should be entered on schedule b actuarial information for this reason we suggest that you furnish a copy of this letter to the enrolled_actuary who is responsible for the completion of the schedule b we have sent a copy of this letter to the if you require further assistance in this matter please contact sincerely yours david m ziegler manager employee_plans actuarial group


significant index no department of the treasury internal_revenue_service washington d c tax_exempt_and_government_entities_division oct 3n05 ae es or fet bh ee ae se tep rat ao in re company this letter constitutes notice that with respect to the above-named defined benefit pension_plan_year ending iil has been denied your request for a waiver of the minimum_funding_standard for the plan during a telephone conference with the pension_benefit_guaranty_corporation pbgc on date representatives of the company stated that the company was filing for bankruptcy and was in the process of selling off all of the company's assets and that interested buyers in the company’s assets have stated that liabilities would not be acquired including plan liabilities the representatives of the company also indicated that the company does not have the cash_flow to make the required minimum contribution for the mllillpian year and that it is expected that the plan will be terminated regardless of whether a waiver of the minimum_funding_standard is approved for the i plan_year because it is unreasonable to assume that the plan will continue only if a funding waiver is granted a tentative denial was issued you were informed of our tentative denial and were offered a conference of right by letter dated date you were given days to have a conference concerning our proposed denial the 21-day period stated in our letter has passed and you have not communicated with us to arrange a conference therefore our tentative denial is now final you should note that excise_taxes under sec_4971 of the internal_revenue_code are currently orci and pay due on the accumulated_funding_deficiency in the plan for the plan_year you should file a form_5330 as soon as possible to report the taxes this ruling is directed only to the taxpayer that requested it sec_6110 of the code provides that it may not be used or cited by others as precedent we have sent a copy of this letter to the manager ep classification in _ to the manager ep compliance unit in and to your authorized representative pursuant to a power_of_attorney on file in this office if you have any questions concerning this matter please contact sincerely fours y y carol d gold v director employee_plans


t c memo united_states tax_court stuart j hoffenberg petitioner v commissioner of internal revenue respondent docket no 12103-06l filed date stuart j hoffenberg pro_se john r bampfield for respondent memorandum opinion gale judge this case is before the court on respondent’s motion for summary_judgment on the issue of whether respondent may proceed by levy to collect unpaid income taxes with respect to petitioner’s and taxable years petitioner was afforded an opportunity to respond and did so as discussed more fully below we conclude that there are no genuine issues of material fact in this case and respondent is entitled to judgment as a matter of law background1 at the time the petition was filed petitioner resided in tennessee respondent received form sec_1040 u s individual_income_tax_return for taxable years and from petitioner on date and date respectively which reported that petitioner had no tax_liability for these years respondent did not accept these returns for filing instead imposing frivolous_return penalties and preparing substitutes for return for both years on date respondent sent petitioner notices of deficiency with respect to and determining deficiencies as well as additions to tax under sec_6651 for failure_to_file and sec_6654 for failure to pay estimated_tax petitioner admits receiving both notices of deficiency petitioner did not petition this court with respect to the notices consequently respondent assessed the deficiencies on the following findings are established in the record and or are undisputed unless otherwise noted all section references are to the internal_revenue_code_of_1986 as amended and all rule references are to the tax_court rules_of_practice and procedure date in addition to the additions to tax under sec_6651 and sec_6654 covered by the notices respondent also assessed additions to tax under sec_6651 for failure to pay for and also on date respondent sent petitioner a notice cp 22e examination adjustment notice with respect to both years which petitioner admits receiving on date respondent sent petitioner a final notice-notice of intent to levy and notice of your right to a hearing with respect to the unpaid income_tax liabilities for and petitioner timely submitted a request for a hearing subsequently petitioner advised the appeals officer conducting his hearing that he did not wish to proceed with a telephone conference that he had raised all issues of concern in an date letter to respondent and that this letter contained all information he wanted considered on date respondent’s appeals_office issued petitioner a notice_of_determination concerning collections action s under sec_6320 and or notice_of_determination sustaining the proposed levy petitioner timely petitioned the court in response to the notice_of_determination on date respondent filed a motion for summary_judgment and a hearing was held thereon finding that respondent’s levy covered sec_6651 additions that had been assessed notwithstanding their omission from the notices the court concluded that the sec_6651 assessments were unfounded and denied respondent’s motion on that basis thereafter respondent abated the sec_6651 assessments for and as well as interest thereon on date respondent filed the pending motion for summary_judgment to which petitioner filed a timely response discussion summary_judgment is intended to expedite litigation and avoid unnecessary and expensive trials fla peach corp v commissioner 90_tc_678 summary_judgment may be granted where there is no genuine issue of material fact and a decision may be rendered as a matter of law rule a and b the moving party bears the burden of proving that there is no genuine issue of material fact and factual inferences are viewed in a light most favorable to the nonmoving party 119_tc_252 85_tc_812 79_tc_340 the party opposing summary_judgment must set forth specific facts which show that a genuine question of material fact exists and may not rely merely on allegations or denials in the pleadings 91_tc_322 87_tc_214 sec_6331 authorizes the secretary to levy upon property and property rights of a taxpayer liable for taxes who fails to pay those taxes within days after notice_and_demand for payment is made sec_6330 requires the secretary to send a written notice to the taxpayer of the amount of the unpaid tax and of the taxpayer's right to a sec_6330 hearing at least days before any levy is begun if a sec_6330 hearing is requested the hearing is to be conducted by the commissioner’s office of appeals and at the hearing the appeals officer_or_employee conducting it must verify that the requirements of any applicable law or administrative procedure have been met sec_6330 c the taxpayer may raise at the hearing any relevant issue relating to the unpaid tax or the proposed levy sec_6330 the taxpayer may also raise challenges to the existence or amount of the underlying tax_liability if the taxpayer did not receive any statutory_notice_of_deficiency with respect thereto or did not otherwise have an opportunity to dispute the liability sec_6330 at the conclusion of the hearing the appeals officer must determine whether and how to proceed with collection and shall take into account i the verification that the requirements of any applicable law or administrative procedure have been met ii the relevant issues raised by the taxpayer iii challenges to the underlying tax_liability by the taxpayer where permitted and iv whether any proposed collection action balances the need for the efficient collection_of_taxes with the legitimate concern of the taxpayer that the collection action be no more intrusive than necessary sec_6330 we have jurisdiction to review the appeals officer's determination where we have jurisdiction over the type of tax involved in the case sec_6330 see 122_tc_287 respondent contends that he is entitled to summary_judgment because the only issues petitioner raised in connection with his hearing were challenges to the underlying tax_liabilities for and and an argument that he did not receive notice_and_demand for payment as required by sec_6303 with respect to any of the assessments in either year with respect to the underlying tax_liabilities respondent contends that petitioner was precluded from challenging them because he received notices of deficiency covering them with respect to the issue petitioner raised pertaining to notice_and_demand respondent sec_6330 has been amended to give this court jurisdiction over all collection matters effective for determinations made days after date the determination in this case was issued on date contends that a notice cp 22e mailed to petitioner on or about date which petitioner admits receiving satisfied sec_6303 petitioner contends in his response to the pending motion that the levy may not proceed because the determination under review in this court was a determination to proceed with a levy for definite amounts in each year and respondent has now conceded that portions of each amount were erroneously assessed in petitioner’s view the entire levy must now fail alternatively petitioner argues that he should be permitted to challenge the underlying tax_liabilities for and because the liabilities were modified after the issuance of the notice_of_levy that is when respondent conceded in connection with the proceedings in this case that the assessments for the sec_6651 additions for and were erroneous and abated them in petitioner’s view the underlying liability for each year is a single unitary whole consisting of the deficiency and the additions and since respondent has made an adjustment to that single underlying liability petitioner should be permitted to challenge it as well we disagree on both counts the underlying tax_liability for purposes of sec_6330 may consist of any number of discrete assessments for a given tax period--for example an assessment under sec_6201 based on amounts reported as due on a return but unpaid an assessment that occurs after a taxpayer is issued a notice_of_deficiency pursuant to sec_6213 and fails to petition the tax_court within the prescribed period or an assessment made pursuant to the so-called math error procedures of sec_6213 see 125_tc_14 122_tc_1 the validity of each such discrete assessment turns upon whether there was compliance with statutorily prescribed procedures and more to the point a taxpayer’s ability to challenge any given component assessment of the underlying tax_liability in a sec_6330 proceeding depends upon whether he received a notice_of_deficiency or otherwise had a previous opportunity to dispute it if so the taxpayer is precluded from challenging that component of the underlying liability sec_6330 the commissioner’s concession of one of the assessments making up the underlying tax_liability for a tax period generally has no impact on whether the other component assessments are valid or subject_to challenge see also kelby v commissioner t c ___ sapp v commissioner tcmemo_2006_104 here petitioner admits receiving notices of deficiency that covered the deficiencies and the sec_6651 and sec_6654 additions that were assessed for and respondent’s appeals officer confirmed that petitioner received them petitioner failed to file petitions with respect to the notices consequently petitioner may not challenge in this proceeding the underlying tax_liabilities comprising the foregoing assessments sec_6330 114_tc_176 this conclusion is unaffected by respondent’s concession that a portion of the underlying tax_liability in each year was attributable to an invalid assessment and may not be collected because the underlying liabilities are not at issue the determination to proceed with the levy is reviewed for abuse_of_discretion goza v commissioner supra pincite see also 114_tc_604 petitioner’s challenge to the underlying tax_liability for included both a claim that the amount of the deficiency was incorrect and a claim that the assessments for had been made beyond the expiration of the period of limitations on assessments a claim that the period of limitations expired before assessment is a challenge to the underlying tax_liability within the meaning of sec_6330 see 117_tc_127 see also 119_tc_140 macelvain v commissioner tcmemo_2000_320 whether construed as a claim that the assessment_period expired before the mailing of the deficiency_notice which would be precluded by sec_6330 or as a claim that the period expired during the interim between the lapse of the suspension of the period of limitations under sec_6503 and the making of the assessments cf golden v commissioner tcmemo_2005_170 n petitioner’s position is meritless even if it were assumed that the form_1040 for received by respondent from petitioner on date was a valid_return notwithstanding respondent’s determination to the contrary the period of limitation on assessment remained open when the assessments at issue for were made on date see sec_6501 see also sec_6501 therefore the appeals officer’s rejection of the statute_of_limitations claim was proper the remaining issue petitioner raised in connection with his hearing was that he did not receive notice_and_demand for payment as required by sec_6303 with respect to any of the assessments for and sec_6303 provides that the secretary shall within days after the making of an assessment of a tax pursuant to sec_6203 give notice_and_demand for payment to the person liable for the tax a notice of balance due constitutes a notice_and_demand for payment under sec_6303 craig v commissioner t c pincite there is no genuine issue of material fact as to whether respondent’s appeals officer abused his discretion in rejecting petitioner’s claim on this point petitioner admits receiving a notice cp 22e with respect to and such notice meets the requirements of sec_6303 see eg 953_f2d_531 9th cir schaper v commissioner tcmemo_2002_203 in light of petitioner’s admission which the appeals officer confirmed in his review of petitioner’s transcripts of account we are satisfied that the appeals officer obtained sufficient verification that the requirements of sec_6303 had been met finally as recorded in the notice_of_determination the appeals officer verified that the requirements of applicable law and administrative procedure had been met and took into account whether any proposed collection action balanced the need for the efficient collection_of_taxes with the legitimate concern of petitioner that the collection action be no more intrusive than necessary see sec_6330 petitioner has identified no specific infirmity in the foregoing not heretofore addressed conclusion we conclude that no genuine issues of material of fact remain in this case and hold that respondent is entitled to judgment as a matter of law that he may proceed with the proposed levy to collect petitioner’s income_tax liabilities for and except to the extent attributable to additions to tax under sec_6651 accordingly we shall grant respondent’s motion for summary_judgment to reflect the foregoing an appropriate order and decision will be entered


internal_revenue_service number release date index number ----------------------- ------------------- ----------------------------------------- department of the treasury washington dc third party communication date of communication month dd yyyy person to contact ----------------- id no ---------------- telephone number -------------------- refer reply to cc tege eb qp3 plr-137976-15 date date taxpayer a ----------------------- decedent b ----------------------- trust c -------------------------------- custodian d ------------------------------- ------------------------------ ira e ------------------------------ ira f --------------------- date date --------------------------- ---------------------------- date ------------------- date ------------------------- date state g ------------ dear --------------- this letter responds to your request dated date as supplemented by correspondence dated date submitted on your behalf by your authorized representative in which you request a series of rulings under sec_408 of the internal_revenue_code code the following facts and representations were submitted under penalty of perjury on your behalf decedent b and taxpayer a husband and wife established trust c on date under the laws of state g trust c was subsequently amended and restated in its entirety on date decedent b died on date all assets held by trust c consisted entirely of taxpayer a’s and decedent b’s community_property plr-137976-15 upon decedent b’s death taxpayer a became the sole trustee of trust c decedent b owned ira e and ira f at the time of his death it is represented that each of the iras was a valid ira under sec_408 decedent b was born on date and had reached his required_beginning_date with respect to both iras on date at the time of decedent b’s death decedent b was receiving minimum distributions from the iras at the time of decedent b’s death both iras were held by custodian d upon decedent b’s death in accordance with the beneficiary designation for each ira both iras passed to trust c upon decedent b’s death in accordance with the terms of trust c trust c split into two sub-trusts the survivor’s trust and the exemption trust taxpayer a as sole trustee of trust c under both the terms of trust c and under state g law had sole authority to determine which trust c assets were to be allocated to the survivor’s trust and to the exemption trust accordingly taxpayer a allocated ira e and ira f to the survivor’s trust and allocated other assets to the exemption trust in addition taxpayer a as sole trustee of trust c combined ira e and ira f into a single ira as combined decedent b’s ira under the terms of the survivor’s trust taxpayer a as sole beneficiary is entitled to receive all of the income and principal of the survivor’s trust to which decedent b’s ira was allocated as taxpayer a has the right to direct the trustee in writing to pay to taxpayer a or apply for taxpayer a’s benefit such amounts from or portions of the principal of the survivor’s trust up to the entire amount of the trust as taxpayer a may designate under the terms of the exemption trust taxpayer a may receive the income of the exemption trust in the trustee’s discretion ie taxpayer a’s discretion and the principal of the exemption trust in the trustee’s discretion for taxpayer a’s proper health support and maintenance in accordance with the standard of living that taxpayer a enjoyed on the date of decedent b’s death taxpayer a as sole trustee and sole beneficiary of the survivor’s trust intends to set up and maintain an ira in her name to take distribution of the entirety of decedent b’s ira and to roll over the distribution other than those amounts required to have been distributed or to be distributed from decedent b’s ira during the period beginning with the calendar_year and ending with the calendar_year of the roll over to the custodian of taxpayer a’s ira pursuant to sec_408 the spousal_rollover transaction the assets distributed and rolled over during the spousal_rollover transaction are referred to as the spousal_rollover balance based on the preceding facts taxpayer a requests the following rulings plr-137976-15 that decedent b’s ira is not an inherited ira for purposes of sec_408 with respect to taxpayer a that taxpayer a will be treated as the payee or distributee of decedent b’s ira with respect to the spousal_rollover balance following the spousal_rollover transaction that taxpayer a will be eligible to roll over the spousal_rollover balance into an ira established and maintained in taxpayer a’s name following the spousal_rollover transaction pursuant to sec_408 that taxpayer a will not be required to include the spousal_rollover balance in her gross_income for federal_income_tax purposes for the year in which the spousal_rollover balance is distributed to the custodian of taxpayer a’s ira and rolled over into taxpayer a’s ira following the spousal_rollover transaction pursuant to sec_408 that beginning with the year following the year in which the spousal_rollover transaction occurs minimum required distributions from taxpayer a’s ira will be calculated in accordance with sec_401 with taxpayer a as the ira owner with respect to your ruling requests sec_408 provides that except as otherwise provided in sec_408 any amount_paid or distributed out of an ira shall be included in gross_income by the payee or distribute as the case may be in the manner provided under sec_72 sec_408 provides that sec_408 does not apply to a rollover_contribution if such contribution satisfies the requirements of sec_408 and d b sec_408 provides that sec_408 does not apply to any amount_paid or distributed out of an ira to the individual for whose benefit the account is maintained if i the entire amount received including money and any other_property is paid into an ira for the benefit of such individual not later than the 60th day after the day on which he receives the payment or distribution or ii the entire amount received including money and any other_property is paid into an eligible_retirement_plan for the benefit of such individual not later than the 60th day after the date on which the payment or distribution is received except that the maximum amount which may be paid into such plan may not exceed the portion of the amount received which is includible in gross_income determined without regard to sec_408 sec_408 provides that sec_408 does not apply to any amount described in sec_408 received by an individual from an ira if at the time plr-137976-15 during the one-year period ending on the day of such receipt such individual received any other amount described in sec_408 from an ira which was not includible in his gross_income because of the application of sec_408 sec_408 provides in pertinent part that in the case of an inherited ira sec_408 shall not apply to any amount received by an individual from such account and no amount transferred from such account to another ira shall be excluded from gross_income by reason of such transfer and such inherited account shall not be treated as an ira for purposes of determining whether any other amount is a rollover_contribution sec_408 provides that an ira shall be treated as inherited if the individual for whose benefit the account is maintained acquired such account by reason of the death of another individual and such individual was not the surviving_spouse of such other individual sec_1_408-8 of the income_tax regulations question and answer provides that a surviving_spouse of an ira owner may elect to treat the spouse’s entire_interest as a beneficiary in an individual’s ira as the spouse’s own ira in order to make this election the spouse must be the sole beneficiary of the ira and have an unlimited right to withdraw amounts from the ira if a_trust is named as beneficiary of the ira this requirement is not satisfied even if the spouse is the sole beneficiary of the trust the preamble to the regulations provides in relevant part that a surviving_spouse who actually receives a distribution from a deceased spouse’s ira is permitted to roll that distribution over into his or her own ira even if the spouse is not the sole beneficiary of the deceased’s ira as long as the rollover is accomplished within the requisite 60-day period generally if the proceeds of a decedent’s ira pass through a third party eg a_trust or an estate and then are distributed to the decedent’s surviving_spouse the surviving_spouse shall be treated as having received the ira proceeds from the third party and not from the decedent thus generally a surviving_spouse shall not be eligible to roll over the distributed ira proceeds into his or her own ira however the general_rule will not apply in a case where the ira has not yet been distributed and the surviving_spouse as trustee of the trust has sole authority and discretion to pay the ira proceeds to him or her in such a case when the surviving_spouse actually receives the ira proceeds the surviving_spouse may roll over the amounts into an ira set up and maintained in his or her name within days in the present case decedent b’s ira e and ira f passed to trust c taxpayer a as sole trustee of trust c under both the terms of trust c and under state g law had sole authority to determine which trust c assets were to be allocated to each of the sub-trusts the survivor’s trust and the exemption trust accordingly taxpayer a plr-137976-15 allocated ira e and ira f to the survivor’s trust and allocated other assets to the exemption trust in addition taxpayer a as sole trustee of trust c combined ira e and ira f into a single ira as combined decedent b’s ira under the terms of the survivor’s trust taxpayer a as sole beneficiary is entitled to receive all of the income and principal of the survivor’s trust to which decedent b’s ira was allocated as taxpayer a has the right to direct the trustee in writing to pay to taxpayer a or apply for taxpayer a’s benefit such amounts from or portions of the principal of the survivor’s trust up to the entire amount of the trust as taxpayer a may designate under this set of circumstances no third party can prevent taxpayer a from receiving a distribution of the proceeds of decedent b’s ira and from rolling over the amount other than those required_minimum_distribution amounts required to have been distributed or to be distributed in accordance with sec_401 from decedent b’s ira during the period beginning with the calendar_year of date and ending with the calendar_year of the roll over into another ira set up and maintained in the name of taxpayer a in addition beginning with the year following the year in which the spousal_rollover transaction occurs the required minimum distributions from taxpayer a’s ira will be calculated in accordance with sec_401 with taxpayer a as the ira owner therefore with respect to your ruling requests we conclude that decedent b’s ira is not an inherited ira for purposes of sec_408 with respect to taxpayer a that taxpayer a will be treated as the payee or distributee of decedent b’s ira with respect to the spousal_rollover balance following the spousal_rollover transaction that taxpayer a will be eligible to roll over the spousal_rollover balance into an ira established and maintained in taxpayer a’s name following the spousal_rollover transaction pursuant to sec_408 that taxpayer a will not be required to include the spousal_rollover balance in her gross_income for federal_income_tax purposes for the year in which the spousal_rollover balance is distributed to the custodian of taxpayer a’s ira and rolled over into taxpayer a’s ira following the spousal_rollover transaction pursuant to sec_408 that beginning with the year following the year in which the spousal_rollover transaction occurs minimum required distributions from taxpayer a’s ira will be calculated in accordance with sec_401 with taxpayer a as the ira owner plr-137976-15 except as specifically set forth above no opinion is expressed or implied concerning the federal tax consequences of any aspect of any transaction or item discussed or referenced in this letter 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 letter is being sent to your authorized representative the rulings contained in this letter are based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in support of the request for rulings it is subject_to verification on examination sincerely john t ricotta chief qualified_plans branch tax exempt government entities cc


internal_revenue_service department of the treasury index number number release date washington dc person to contact telephone number refer reply to cc intl plr date date legend taxpayer deferral years individual a dear this replies to a letter dated date in which taxpayer requests an extension of time under sec_301_9100-3 to elect the provisions of revproc_89_45 1989_2_cb_596 for the deferral years the information submitted for consideration is substantially as set forth below the ruling contained in this letter is predicated upon facts and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party this office has not verified any of the material submitted in support of the request for a ruling verification of the factual information representations and other data may be required as a part of the audit process prior to becoming a u s resident taxpayer established and contributed to canadian registered retirement savings plans rrsps no contributions have been made to these plans since taxpayer became a u s resident in addition no distributions have been made by these plans all u s tax returns have been timely filed but without an election under revproc_89_45 to defer u s income_tax on current earnings_of the rrsps after taxpayer became aware of revproc_89_45 taxpayer engaged the services of individual a an attorney and certified_public_accountant who advised taxpayer on how to proceed with a request to extend the time for filing the elections for the deferral years taxpayer’s failure to make the election under revproc_89_45 was not discovered by the irs prior to this request for a ruling in re plr sec_301_9100-1 provides that the commissioner may grant a taxpayer a reasonable extension of time to make a regulatory election under all subtitles of the internal_revenue_code except subtitles e g h and i under the standards set forth in sec_301_9100-3 sec_301 -1 b defines a regulatory election as an election whose due_date is prescribed by a regulation a revenue_ruling revenue_procedure notice or announcement sec_301_9100-3 provides standards for extensions of time for making regulatory elections sec_301_9100-3 provides that requests for relief subject_to this section will be granted when the taxpayer provides the evidence including affidavits described in sec_301_9100-3 to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and the grant of relief will not prejudice the interests of the government in the present situation revproc_89_45 provides the procedures that a beneficiary of a rrsp must follow to elect to defer u s tax on earnings accrued in the plan during the taxable_year therefore the commissioner has discretionary authority under sec_301_9100-1 to grant taxpayer an extension of time provided that taxpayer satisfies the standards set forth in sec_301_9100-3 based on the facts and circumstances of this case we conclude that taxpayer satisfies sec_301_9100-3 accordingly taxpayer is granted an extension of time until days from the date of this ruling letter to elect the provisions of revproc_89_45 for the deferral years no ruling has been requested and none is expressed as to the application of any other section of the code or regulations to the facts presented a copy of this ruling letter should be associated with the deferral years this ruling is directed only to the taxpayer who requested it sec_6110 provides that it may not be used or cited as precedent pursuant to a power_of_attorney on file in this office a copy of this letter is being sent to your authorized representative sincerely allen goldstein reviewer office of the associate chief_counsel international


_ significant index no department of the treasury internal_revenue_service washington d c dec tax_exempt_and_government_entities_division in re this letter constitutes notice that a conditional waiver of the minimum_funding_standard has been granted for the above-named pension_plan for the plan_year ending this conditional waiver has been granted in accordance with sec_412 of the internal_revenue_code code and sec_303 of the employee_retirement_income_security_act_of_1974 erisa the amount for which the conditional waiver has been granted is the contribution that would otherwise be required to reduce the balance in the funding_standard_account of the plan to zero as of the end of the plan_year for which the waiver has been granted company is a with its principal offices located in ’ business is manufacturing and selling consumer products the company has experienced temporary substantial business through hardship as evidenced by yearly declines in revenues for fiscal years the company’s primary to manufacturers of - with losses in income in l ' and the company has taken several steps to increase revenues and reduce costs in the company closed its - which reduced overhead annually the company has also reduced costs at the ‘location by working with local utility companies to identify ways to reduce costs by approximately costs by way of process improvements and they have installed a lean manufacturing program to optimize productivity and eliminate waste further the company anticipates new product opportunities to develop as the overall economy improves and a dramatic reduction in raw material_costs resulting from the elimination of as of date the actuarial value of assets was was resulting in a funded_current_liability_percentage of and the current_liability this waiver has been granted subject_to the following conditions within 120-days from the date of this letter the company shall provide security to the plan to secure the repayment of the waived amount that is satisfactory to the pension_benefit_guaranty_corporation the company will make contributions necessary to satisfy the minimum_funding requirement including the waiver amortization payment for the plan_year ended for the plan for the plan_year ending by january the company will make the required quarterly contributions under sec_412 of the code for the plan_year ending by law by the dates required in a letter dated date your authorized representatives agreed to these conditions if the above conditions are not satisfied this waiver is retroactively null and void your attention is called to sec_412 of the code and sec_304 of erisa which describes the consequences which result in the event the plan is amended to increase benefits to change the rate in the accrual_of_benefits or to change the rate of vesting while any portion of the waived amount remains unamortized please note that any amendment to other retirement plans maintained by the company to increase the liabilities of those plans or the establishment of new plans would be considered an amendment for purposes of sec_412 of the code and sec_304 of erisa this ruling is directed only to the organization that requested it sec_6110 of the code provides that it may not be used or cited as others as precedent when filing form_5500 for the plan_year ending should be entered on schedule b actuarial information we have sent a copy of this letter to the ep classification manager in the date of this letter and to office pursuant to a power_of_attorney form on file with this if you have any questions concerning this matter please contact incerely carol d gold director employ e plans


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 b02 plr-102481-08 date date x y a ----------------------------------------------------------------------------------------------------- ----------------------- ------------------------------------------------------------ ----------------------- ---------------------- --------- ----------- ---------------- d1 d2 d3 d4 year ------- trust trust trust trust trust ------------------------ ------------------------ ------------------------ ------------------------ ----------------------- ----------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------- dear ---------------------- this responds to a letter dated date submitted on behalf of x by its authorized representative requesting a ruling under sec_1362 of the internal_revenue_code the information submitted states that x made an election to be treated as an s_corporation effective d1 a an individual owned x stock indirectly through y a’s plr-102481-08 wholly-owned limited_liability_company which was a disregarded_entity for federal tax purposes on d2 of year a transferred interests in y to each of trust trust trust trust and trust collectively the trusts which are represented as having been wholly-owned grantor trusts under sec_671 with respect to a a died on d3 of year and y became a partnership for federal tax purposes a partnership is not an eligible s_corporation shareholder and therefore x’s s_corporation_election terminated on d3 of year on d4 of year y liquidated and distributed its x stock among the trusts x represents that the circumstances resulting in the termination of its s_corporation_election were inadvertent and were not motivated by tax_avoidance or retroactive tax planning x and its shareholders have agreed to make any adjustments that the commissioner may require consistent with the treatment of x as an s_corporation sec_1361 of the code provides that the term s_corporation means with respect to any taxable_year a small_business_corporation for which an election under sec_1362 is in effect for such year sec_1361 provides that the term small_business_corporation means a domestic_corporation which is not an ineligible_corporation and which 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 a_trust which was described in sec_1361 immediately before the death of the deemed owner and which continues in existence after such death may be a shareholder but only for the 2-year period beginning on the day of the deemed owner’s death sec_1362 provides that a in general an election under sec_1362 shall be terminated whenever at any time on or after the first day of the first taxable_year for which the corporation is an s_corporation such corporation ceases to be a small_business_corporation and b any termination under sec_1362 shall be effective on and after the date of cessation sec_1362 provides that if an election under sec_1362 by any corporation a was not effective for the taxable_year for which made determined without regard to sec_1362 by reason of a failure to meet the requirements of sec_1361 or to obtain shareholder consents or b was terminated under sec_1362 or the secretary determines that the circumstances resulting in the ineffectiveness or termination were inadvertent no later than a reasonable period of time after discovery of the circumstances resulting in the ineffectiveness or termination plr-102481-08 steps were taken a so that the corporation is a small_business_corporation or b to acquire the shareholder consents and the corporation and each person who was a shareholder of the corporation at any time during the period specified pursuant to sec_1362 agrees to make such adjustments consistent with the treatment of the corporation as an s_corporation as may be required by the secretary with respect to such period then notwithstanding the circumstances resulting in the ineffectiveness or termination the corporation will be treated as an s_corporation during the period specified by the secretary based solely on the facts submitted and the representations made we conclude that x’s s_corporation_election terminated on d3 of year and that the termination was inadvertent within the meaning of sec_1362 we further hold that pursuant to the provisions of sec_1362 x will be treated as continuing to be an s_corporation from d3 to d4 of year and thereafter provided x’s s_corporation_election was valid and provided that the election was not otherwise terminated under sec_1361 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 as provided in sec_1367 and take into account any distributions made by x as provided in sec_1368 if x or its shareholders fail to treat themselves as described above this ruling is null and void this ruling is conditioned upon x the trusts the beneficiaries of the trusts and any other affected_shareholders of x filing all returns necessary to conform to this letter specifically the trusts must file returns or amended returns for the year taxable_year consistent with the treatment of the trusts as the owners of their respective shares of x stock effective d3 of year as trusts described in sec_1361 the trusts will continue to be eligible shareholders for the two-year period beginning d3 of year any amended returns must be filed within days following the date of this letter and a copy of this letter should be attached to any such returns except as specifically ruled above we express no opinion concerning the federal tax consequences of the transactions described above under any other provisions of the code in particular we express no opinion on whether trusts were wholly-owned grantor trusts during the life of a or whether the trusts are eligible to be electing small_business trusts esbts within the meaning of sec_1361 this ruling is directed only to the taxpayer that requested it sec_6110 provides that it may not be used or cited as precedent plr-102481-08 pursuant to a power_of_attorney on file a copy of this letter is being sent to x’s authorized representative sincerely j thomas hines chief branch office of the associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes