internal_revenue_service number release date index number 54a ------------------------- ----------------------------------------------------- ---------------------------------------- ---------------------------------------------- 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 fip b05 plr-129228-15 date date legend cooperative ---------------------------------------------------- ----------------------------------------------------------- state bonds facility a facility b facility c owner a b c date date date ----------- ------------------------------------------------------------------------------------------ --------------------------------------------------------------------------------------------------- ------------------------------------------------------ --------------------------------------------------------------- ----------------------------------------------------------- ---------------------------------- -------------- ----- ---- ------------------------- ------------------------- ------------------------- plr-129228-15 dear ---------------- this is in response to your request under sec_54a of the internal_revenue_code the code for an extension of the expenditure period for the available project proceeds of new_clean_renewable_energy_bonds facts and representations cooperative is a generation and transmission cooperative that provides wholesale electric power to distribution systems organized in state cooperative is a not-for-profit corporation privately held by its member distribution cooperatives cooperative issued the bonds on date and designated the bonds as new_clean_renewable_energy_bonds within the meaning of sec_54c all available project proceeds of the bonds were to be spent on three power generating plants facility a facility b and facility c together project the original three-year expenditure period for the bonds under sec_54a will expire on date the original expenditure period at the time the bonds were issued cooperative expected that all available project proceeds of the bonds would be spent on the project not later than date however unexpected events have resulted in an unforeseen delay in the expenditure of dollar_figurea of the available project proceeds of the bonds cooperative intends the dollar_figurea of unspent proceeds to be expended for facility a however these proceeds cannot be expended until the owner of facility a the owner receives an air permit which requires state approval the permit the request for the permit was timely filed with state as of date cooperative estimated state would issue the permit within b days this estimate was based in part on its previous experience with air permit applications after c months a permit draft was provided by state to owner for comment one month later owner provided its comments on the draft permit to state as of the date of this ruling_request state has not issued the permit because a draft permit has already been provided to owner by state cooperative believes the permit will be issued with sufficient time to permit expenditure of the remaining project proceeds within months after the original expenditure period expires in order to spend the remaining available project proceeds of the bonds cooperative requests an extension of the expenditure period for the available project proceeds until date which i sec_24 months after the original expenditure period expires cooperative submitted this request for a ruling prior to date plr-129228-15 law and analysis sec_54a provides that a new clean renewable energy bond is treated as a qualified_tax_credit_bond for purposes of sec_54a sec_54a provides in part that to the extent that less than percent of the available project proceeds of the issue are expended by the close of the expenditure period for or more qualified purposes the issuer shall redeem all of the nonqualified bonds within days after the end of such period sec_54a provides that for purposes of this subpart the term expenditure period means with respect to any issue the 3-year period beginning on the date_of_issuance such term shall include any extension of such period under clause iii sec_54a provides that upon submission of a request prior to the expiration of the expenditure period determined without regard to any extension under this clause the secretary may extend such period if the issuer establishes that the failure to expend the proceeds within the original expenditure period is due to reasonable_cause and the expenditures_for qualified purposes will continue to proceed with due diligence sec_54a c ii provides that for purposes of this paragraph in the case of a new clean renewable energy bond a qualified purpose means a purpose specified in sec_54c sec_54a of the code defines available project proceeds to mean a the excess of i the proceeds from the sale of an issue over ii the issuance costs financed by the issue to the extent that such costs do not exceed percent of such proceeds and b the proceeds from any investment of the excess described in subparagraph a at the time the bonds were issued cooperative reasonably expected to spend all available project proceeds within the original expenditure period the expected failure to spend all available project proceeds of the bonds by the expiration of the original expenditure period was due to reasonable_cause the expected failure was caused by events that were not reasonably expected at the time the bonds were issued and were beyond the control of cooperative these events caused a significant delay in committing and spending the bond proceeds cooperative will continue to spend the remaining available project proceeds on the project with due diligence cooperative expects to spend all available project proceeds not later than date which i sec_24 months after the original expenditure period expires plr-129228-15 conclusion under the facts and circumstances of this case we conclude that cooperative’s failure to expend the available project proceeds of the bonds by date is due to reasonable_cause and that cooperative’s continued expenditure of the proceeds for qualified purposes will proceed with due diligence therefore cooperative is granted an extension of the original expenditure period with respect to the bonds until date except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any transaction or item discussed or referenced in this letter this ruling is directed only to the taxpayer who requested it sec_6110 provides that it may not be used or cited as precedent in accordance with a power_of_attorney on file with this office a copy of this letter is being sent to cooperative’s authorized representative the ruling contained in this letter is based upon information and representations submitted by cooperative and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the materials submitted in support of the request for a ruling it is subject_to verification upon examination sincerely associate chief_counsel financial institutions products s by _________________________ james polfer chief branch


department of the treasury_department of the treasury internal_revenue_service internal_revenue_service washington d c washington d c o f f ic e o f o f f ic e o f date c h ief c o u n sel c h ief c o u n sel number release date index number cc intl br dbergkuist cor-127333-00 re your request for general information dear mr this letter responds to your letter dated date in which you raise several points concerning the interaction between the definition of gross_income in sec_61 of the internal_revenue_code and the source_of_income rules in sec_861 through a u s citizen is subject_to tax on his or her worldwide income the computation of taxable_income begins with gross_income sec_61 of the code provides that gross_income means all income from whatever source derived the supreme court has long recognized that the definition of gross_income sweeps broadly and reflects congress’ intent to exert the full measure of its taxing power and to bring within the definition of income any accession of wealth 515_us_323 504_us_229 accordingly any receipt of funds by a taxpayer is presumed to be gross_income unless the taxpayer can demonstrate that the accession fits into one of the exclusions created by other sections of the code see commissioner v glenshaw glass co u s a ll income from whatever source derived thus includes income earned or received from any geographic source in the case of an individual sec_62 of the code defines adjusted_gross_income as gross_income minus certain listed deductions pursuant to sec_63 taxable_income generally means gross_income minus those deductions allowed by the code for individuals who do not itemize their deductions sec_63 defines taxable_income as adjusted_gross_income minus the standard_deduction and the deduction for personal exemptions sec_861 through of the code address the source of items of gross_income and deductions under these provisions taxable_income is sourced as either from within the united_states or from without ie outside of the united_states these source cor-127333-00 rules are utilized under several parts of the code in the case of a u s citizen the most notable of these parts concerns the foreign_tax_credit while the determination of a u s citizen’s foreign source and u s source taxable_income may affect the amount of his or her tax_liability by way of the foreign_tax_credit it does not affect which items are considered for purposes of the taxpayer’s overall taxable_income this determination is made under the rules of sec_61 through thus in summary the source_rules of sec_861 through of the code do not limit or exclude items from consideration for purposes of determining a u s citizen’s taxable_income under sec_61 through we hope that this general information will prove helpful to you if you have any further questions or comments please call david bergkuist employee id at sincerely irwin halpern senior technical reviewer branch office of the associate chief_counsel international


internal_revenue_service department of the treasury uil washington dc contact pareoey telanhone number cesbonser si 7--plr-108842-98 date oct re legend i e b s e t c i date date date date date dear - we received your letter dated submitted on x's behalf requesting a ruling under sec_1362 of the internal_revenue_code this letter responds to that request the represented facts are as follows xx is a corporation effective during date x established at that time x's kx and its shareholders filed returns consistent with that elected to be treated as an s_corporation under sec_1362 effective for its taxable_year beginning on date date making the s_corporation_election a plan to create new corporate subsidiary y y accountant and tax advisor who was aware of x's s_corporation_election did not advise x's officers or shareholders that an s_corporation could not be a member_of_an_affiliated_group or that x could not own percent or more of the stock of y the newly formed corporation from date until date that x's s_corporation status had terminated on date the date of 's incorporation a shareholder and officer of x learned that a provisions of the small_business job protection act of sbjpa allows an s_corporation to have wholly-owned domestic and foreign subsidiaries for tax years beginning after upon further research d confirmed that prior to the enactment of this provision x had violated the limitations imposed on s_corporations with respect to being a member_of_an_affiliated_group under sec_1504 of the internal_revenue_code x then hired a new accounting firm to take immediate steps to seek relief from the termination of x's status as an s_corporation the officers and shareholders of x were unaware y was incorporated on date on date d it has been represented that the terminating event was inadvertent and that the termination was not the result of retroactive tax planning or motivated by tax_avoidance shareholders are not knowledgeable in technical tax matters and relied solely on the accountant with regard to all tax issues including the preparation of x's tax returns shareholders a immediately after their discovery of the termination of the corporation status and e took steps to seek relief and its x's b c d xx for taxable years beginning after date a have more than shareholders b have as a shareholder sec_1361 defines a small_business_corporation as a domestic_corporation that is not an ineligible_corporation and that does not a person other than an estate a_trust described in sec_1361 is not an individual c have a nonresident_alien as shareholder and a d have more than one class of stock or an organization described in sec_1361 who - for taxable years beginning before date a provided that an ineligible_corporation means sec_1361 any corporation which is determined under sec_1504 without regard to the exceptions contained in subsection b thereof a member_of_an_affiliated_group sec_1504 provides that the term affiliated_group include sec_1 or more chains of includible corporations connected through stock ownership provided that the parent_corporation possesses at least percent of the total voting power of the stock of the subsidiary_corporation and has a value equal to at least percent of the total value of the stock of the corporation sec_1362 provides that an election under sec_1362 will be terminated whenever at any time on or after the first day of the first tax_year for which the corporation is an s_corporation the corporation ceases to be a small_business_corporation under sec_1362 will be effective on and after the date of cessation sec_1362 provides that any termination sec_1362 provides that if an election under of or was b sec_1362 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 terminated under paragraph secretary determines that the circumstances resulting in the ineffectiveness or termination were inadvertent than a reasonable period of time after discovery of the circumstances resulting in the ineffectiveness or termination steps were taken a corporation or and the corporation at any time during the period specified pursuant to treatment of the corporation as an s_corporation as may be required by the secretary with respect to the period then notwithstanding the circumstances resulting in the ineffectiveness or termination the corporation is treated as continuing to be an s_corporation during the period specified by the secretary a small_business to acquire the required shareholder consents the corporation and each person who was a shareholder of sec_1362 agrees to make the adjustments consistent with the so that the corporation is no later the b with respect to sec_1362 the committee reports accompanying the subchapter_s_revision_act_of_1982 state the following if the internal_revenue_service determines that a corporation's subchapter_s_election is inadvertently terminated the service can waive the effect of the terminating event for any period if the corporation timely oy we corrects the event and if the corporation and the shareholders agree to be treated as in effect for such period if the election had been the committee intends that the internal_revenue_service be reasonable in granting waivers so that corporations whose subchapter_s eligibility requirements have been inadvertently violated do not suffer the tax consequences of a termination if no tax_avoidance would result from the continued subchapter_s treatment taxpayers and the government will work out agreements that protect the revenue without undue_hardship to taxpayers is expected that the waiver may be made retroactive for all years or retroactive for the period in which the corporation again became eligible for subchapter_s treatment depending on the facts in granting a waiver it is hoped that it s rep no h_r rep no 97th cong 2d sess c b 97th cong 2d sess 1982_2_cb_12 based on the facts submitted and the representations made to the extent x's s_corporation_election we conclude that under sec_1362 was ineffective or terminated under sec_1362 the circumstances resulting in the ineffectiveness or termination were inadvertent within the meaning of than a reasonable period of time after discovery of the circumstances of the ineffective election or termination steps were taken so that x was once more a small_business_corporation and continued treatment of x as a subchapter corporation therefore pursuant to corporation will be recognized effective date provided that x's subchapter_s_election is not otherwise terminated under sec_1362 no tax_avoidance was intended nor will result from the sec_1362 x's election to be an ss and thereafter sec_1362 no later during the period from date through date x will be treated as the owner of of x from date through date must include in income its pro_rata share of x's separately and nonseparately computed items as provided in in provided in sec_1366 make adjustments to stock basis as provided sec_1367 and take into account any distributions made by xk as accordingly each of the shareholders sec_1368 except as specifically set forth above we express or imply no opinion concerning the federal tax consequences of the above-described facts under any other provision of the code specifically no opinion is expressed on whether the election made by x to be treated as an s_corporation was a valid election under sec_1362 x must forward a copy of this letter to the internal_revenue_service center within days of the date of this letter_ruling shall be null and void if the requirements of this paragraph are not met this this ruling is directed only to the taxpayer who requested sec_6110 provides that it may not be used or cited it as precedent sincerely yours ox ve li erman assistant to the chief branch office of the assistant chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purpose


number release date id office uilc cca_2009120417315449 ---------------------------- from --------------------------- sent friday december pm to --------------- cc subject question regarding you asked our assistance regarding disclosure of return_information to the department of justice and various service personnel you are correct that sec_6103 permits disclosure to service personnel whose official duties require inspection of return_information sec_6103 may also permit disclosure to justice here but without further information we are unable to provide a definitive answer at this time please contact me at the number below and we can discuss this matter further -------------------------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------------------------------- ----------------


internal_revenue_service number release date index number department of the treasury washington dc person to contact ------------------------------ id no ------------ --------- telephone number ---------------------- refer reply to cc psi b04 - plr-120838-16 date date ---------------------------- -------------------------------------- -------------------------------------- --------------------------- legend date grantor distribution committee -------------------- ------------------------------------------------------------- ----------------------------------------------------------------------------- ---------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------- --------------------------------------------------- son son daughter daughter daughter granddaughter granddaughter trust ------------------------------------------------------- ------------------------------------------------------- ---------------------------------------------------------- ------------------------------------------------- --------------------------------------------------- ----------------------------------------- ------------------------------------------------------------ ------------------------------------------------------------------------------ -------------------------------------------------------------------------------------- foundation state trustee permissible beneficiaries ------------------------------------------------------------------------------ -------------------------------------------------------- -------------- -------------------------------------------------------- ------------------------------------- dear ------------------ plr-120838-16 this letter responds to your authorized representative’s letter of date requesting rulings under sec_671 sec_2501 sec_2514 and sec_2041of the internal_revenue_code the facts submitted and representations made are as follows on date grantor created an irrevocable_trust trust for the benefit of himself his descendants and foundation permissible beneficiaries a corporate trustee trustee is the sole trustee trust is represented to be a domestic_trust sited in state and pursuant to the trust agreement is governed by the laws of state during grantor’s lifetime trustee must distribute such amounts of net_income and or principal of trust to grantor and the permissible beneficiaries as directed by the distribution committee and or grantor as follows trustee pursuant to the direction of a majority of the distribution committee with the written consent of grantor shall distribute to or for the benefit of the permissible beneficiaries all or any portion of the net_income and principal of trust grantor’s consent power trustee pursuant to the direction of all of the distribution committee members shall distribute to any permissible beneficiaries all or any portion of the net_income or principal of trust unanimous member power and at any time trustee shall distribute to any of the permissible beneficiaries other than grantor and foundation all or any portion of the principal of trust as the grantor directs for the health education maintenance or support of the permissible beneficiaries grantor’s sole power such distribution power shall be exercisable by the grantor in a nonfiduciary capacity the distribution committee may appoint income or principal equally or unequally and to or for the benefit of any one or more of the permissible beneficiaries of trust to the exclusion of others any net_income not distributed by trustee will be accumulated and added to principal upon the death of grantor trustee shall distribute the remaining property of trust as grantor appoints in grantor’s last will in any manner and in favor of any person other than grantor’s estate the grantor’s creditors or the creditors of grantor’s estate grantor’s testamentary power any remaining property held in trust that has not been effectively appointed by will shall be distributed to trusts for the benefit of grantor’s descendants the distribution committee is initially composed of son son daughter daughter and daughter trust provides that at all times at least two adult plr-120838-16 individuals who are permissible beneficiaries other than grantor must be members of the distribution committee if at any time there are fewer than three adult members serving on the distribution committee then the vacancy will be filled in the following order first by granddaughter and then by granddaughter grantor shall not serve as a member of the distribution committee the members of the distribution committee shall serve or act in a non-fiduciary capacity the distribution committee ceases to exist upon the earlier of the death of grantor or the date the distribution committee has less than two members other than grantor if the distribution committee ceases to exist during grantor’s life distributions to the beneficiaries may only be made to the grantor’s descendants pursuant to the grantor’s sole power the permissible beneficiaries grantor and trustee are all united_states persons within the meaning of sec_7701 trust provides that grantor also has the authority and responsibility exercisable solely in a fiduciary capacity to direct the trustee of the trust with respect to all decisions of the trust relating to the investment management and voting powers granted to the trustee with respect to trust property you have requested the following rulings as long as the distribution committee is serving no portion of the items of income deductions and credits against tax of trust shall be included in computing the taxable_income deductions and credits of grantors or any member of the distribution committee under sec_671 the contribution of property to trust by grantor will not be a completed_gift subject_to federal gift_tax any distribution_of_property by the distribution committee from trust to grantor will not be a completed_gift subject_to federal gift_tax by any member of the distribution committee any distribution_of_property by the distribution committee from trust to any beneficiary of trust other than to grantor will not be a completed_gift subject_to federal gift_tax by any member of the distribution committee the members of the distribution committee do not possess a general_power_of_appointment within the meaning of sec_2041 and accordingly trust will not be includible in any distribution committee member’s gross_estate under sec_2041 ruling sec_671 provides that where it is specified in subpart e of part i of subchapter_j that the grantor or another person shall be treated as the owner of any portion of a plr-120838-16 trust there shall then be included in computing the taxable_income and credits of the grantor or the other person those items of income deductions and credits against tax of the trust which are attributable to that portion of the trust to the extent that such items would be taken into account under chapter in computing taxable_income or credits against the tax of an individual sec_672 provides for purposes of subpart e the term adverse_party means any person having a substantial_beneficial_interest in the trust which would be adversely affected by the exercise or nonexercise of the power which he possesses respecting the trust sec_673 through specify the circumstances under which the grantor is treated as the owner of a portion of a_trust sec_673 provides that the grantor shall be treated as the owner of any portion of a_trust in which the grantor has a reversionary_interest in either the corpus or the income therefrom if as of the inception of that portion of the trust the value of such interest exceeds five percent of the value of such portion sec_674 provides in general that the grantor shall be treated as the owner of any portion of a_trust in respect of which the beneficial_enjoyment of the corpus or the income therefrom is subject_to a power of disposition exercisable by the grantor or a nonadverse_party or both without the approval or consent of any adverse_party sec_674 provides that sec_674 shall not apply to the powers described in sec_674 regardless of whom held sec_674 provides that sec_674 shall not apply to a power exercisable only by will other than a power in the grantor to appoint by will the income of the trust where the income is accumulated for such disposition by the grantor or may be so accumulated in the discretion of the grantor or a nonadverse_party or both without the approval or consent of any adverse_party sec_674 provides that sec_674 shall not apply to a power to distribute corpus to or for a beneficiary provided that the power is limited by a reasonably_definite_standard under sec_675 and applicable regulations the grantor is treated as the owner of any portion of a_trust if under the terms of the trust agreement or circumstances attendant on its operation administrative control is exercisable primarily for the benefit of the grantor rather than the beneficiary of the trust plr-120838-16 sec_675 provides that the grantor shall be treated as the owner of any portion of a_trust in respect of which a power_of_administration is exercisable in a nonfiduciary capacity by any person without the approval or consent of any person in a fiduciary capacity for purposes of sec_675 the term power_of_administration includes a a power to vote or direct the voting of stock or other_securities of a corporation in which the holdings of the grantor and the trust are significant from the viewpoint of voting control and b a power to control the investment of the trust funds either by directing investments or reinvestments or by vetoing proposed investments or reinvestments to the extent that the trust funds consist of stocks or securities of corporations in which the holdings of the grantor and the trust are significant from the viewpoint of voting control under sec_675 the power_of_administration includes the power to control the investment of the trust funds either by directing investments or reinvestment sec_1_675-1 of the income_tax regulations provides that if a power is not exercisable by a person as trustee the determination of whether the power is exercisable in a fiduciary or a nonfiduciary capacity depends on all the terms of the trust and the circumstances surrounding its creation and administration sec_676 provides that the grantor shall be treated as the owner of any portion of a_trust whether or not he is treated as such owner under any other provision of part i subchapter_j chapter where at any time the power to revest in the grantor title to such portion is exercisable by the grantor or a nonadverse_party or both sec_677 provides in general that the grantor shall be treated as the owner of any portion of a_trust whether or not he is treated as such owner under sec_674 whose income without the approval or consent of any adverse_party is or in the discretion of the grantor or a nonadverse_party or both may be distributed to the grantor or the grantor's spouse held or accumulated for future distribution to the grantor or the grantor's spouse or applied to the payment of premiums on policies of insurance on the life of the grantor or the grantor's spouse sec_678 provides that a person other than the grantor shall be treated as the owner of any portion of a_trust with respect to which such person has a power exercisable solely by himself to vest the corpus or the income therefrom in himself or such person has previously partially released or otherwise modified such a power and after the release or modification retains such control as would within the principles of inclusive subject a grantor of a_trust to treatment as the owner thereof sec_679 provides that a united_states_person who directly or indirectly transfers property to a foreign_trust shall be treated as the owner for his taxable_year of the portion of such trust attributable to such property if for such year there is a united_states_beneficiary of any portion of such trust plr-120838-16 accordingly based solely on the facts submitted and the representations made we conclude that an examination of trust reveals none of the circumstances that would cause grantor to be treated as the owner of any portion of trust under sec_673 sec_674 sec_676 or sec_677 as long as the distribution committee remains in existence also as long as trust is a domestic_trust grantor will not be treated as the owner of any portion of trust under sec_679 we cannot determine at this time whether grantor will be treated as the owner of trust under sec_675 the circumstances surrounding the administration of trust determine whether grantor holds the power_of_administration in a fiduciary capacity this is a question of fact the determination of which must be deferred until the federal_income_tax returns of the parties involved have been examined by the office of the district_director having examination jurisdiction over the returns further because none of the members of the distribution committee has a power exercisable by himself to vest trust income or corpus in himself none shall be treated as the owner of trust under sec_678 ruling sec_2 and sec_2501 provides that a tax is imposed for each calendar_year on the transfer of property by gift during such calendar_year by any individual resident or nonresident sec_2511 provides that the gift_tax applies whether the transfer is in trust or otherwise whether the gift is direct or indirect and whether the property is real or personal tangible or intangible sec_25_2511-2 of the gift_tax regulations provides that a gift is complete as to any property or part thereof or interest therein of which the donor has so parted with dominion and control as to leave in the donor no power to change its disposition whether for his own benefit or for the benefit of another but if upon a transfer of property whether in trust or otherwise the donor reserves any power over its disposition the gift may be wholly incomplete or may be partially complete and partially incomplete depending upon all the facts in the particular case accordingly in every case of a transfer of property subject_to a reserved power the terms of the power must be examined and its scope determined sec_25_2511-2 provides an example where the donor transfers property to another in trust to pay the income to the donor or accumulate it in the discretion of the trustee and the donor retains a testamentary power to appoint the remainder among the donor's descendants the regulation concludes that no portion of the transfer is a completed_gift however if the donor had not retained a testamentary_power_of_appointment but instead provided that the remainder should go to x or his heirs the plr-120838-16 entire transfer would be a completed_gift sec_25_2511-2 provides that a gift is incomplete in every instance in which a donor reserves the power to revest the beneficial title in himself or herself a gift is also incomplete if and to the extent that a reserved power gives the donor the power to name new beneficiaries or to change the interests of the beneficiaries as between themselves unless the power is a fiduciary power limited by a fixed_or_ascertainable_standard under sec_25_2511-2 a donor is considered as himself having a power if it is exercisable by the donor in conjunction with any person not having a substantial adverse_interest in the disposition of the transferred property or the income therefrom a trustee as such is not a person having an adverse_interest in the disposition of the trust property or its income sec_25_2511-2 provides that the relinquishment or termination of a power to change the beneficiaries of transferred property occurring otherwise than by death of the donor is regarded as the event which completes the gift and causes the gift_tax to apply sec_25_2511-2 provides that if a donor transfers property to himself as trustee or to himself and some other person not possessing a substantial adverse_interest as trustees and retains no beneficial_interest in the trust property and no power over it except fiduciary powers the exercise or nonexercise of which is limited by a fixed_or_ascertainable_standard to change the beneficiaries of the transferred property the donor has made a completed_gift and the entire value of the transferred property is subject_to the gift_tax sec_25_2511-2 does not define substantial adverse_interest sec_25_2514-3 provides in part that a taker in default of appointment under a power has an interest that is adverse to an exercise of the power sec_25_2514-3 also provides that a co-holder of a power is considered as having an adverse_interest where he may possess the power after the possessor's death and may exercise it at that time in favor of himself his estate his creditors or the creditors of his estate in 308_us_39 the taxpayer created a_trust for the benefit of named beneficiaries and reserved the power_to_revoke the trust in whole or in part and to designate new beneficiaries other than himself six years later in the taxpayer relinquished the power_to_revoke the trust but retained the right to change the beneficiaries in the taxpayer relinquished the right to change the beneficiaries the court stated that the taxpayer’s gift is not complete for purposes of the gift_tax when the donor has reserved the power to determine those others who would ultimately receive the property accordingly the court held that the taxpayer's plr-120838-16 gift was complete in when he relinquished his right to change the beneficiaries of the trust a’s retention of a power to change the beneficial interests in a_trust causes the transfer to the trust to be incomplete for gift_tax purposes even though the power may be defeated by the actions of third parties 37_tc_897 see also 51_tc_352 in this case grantor retained the grantor’s consent power over the net_income and principal of trust under sec_25_2511-2 a donor is considered as himself having a power if it is exercisable by him in conjunction with any person not having a substantial adverse_interest in the disposition of the transferred property or the income therefrom the distribution committee members are not takers in default for purposes of sec_25_2514-3 they are merely co-holders of the power under sec_25_2514-3 a co-holder of a power is only considered as having an adverse_interest where he may possess the power after the possessor's death and may exercise it at that time in favor of himself his estate his creditors or the creditors of his estate in this case the distribution committee ceases to exist upon the death of grantor accordingly the distribution committee members do not have interests adverse to grantor under sec_25_2514-3 and for purposes of sec_25_2511-2 therefore grantor is considered as possessing the power to distribute net_income and principal to any beneficiary himself because he retained the grantor’s consent power grantor also retained the grantor’s sole power over the principal of trust under sec_25_2511-2 a gift is incomplete if and to the extent that a reserved power gives the donor the power to name new beneficiaries or to change the interests of the beneficiaries as between themselves unless the power is a fiduciary power limited by a fixed_or_ascertainable_standard in this case the grantor’s sole power gives grantor the power to change the interests of the beneficiaries even though grantor's power is limited by an ascertainable_standard ie health education maintenance and support grantor's power is not a fiduciary power accordingly the retention of the grantor’s consent power and the grantor’s sole power causes the transfer of property to trust to be incomplete for federal gift_tax purposes further grantor retained the grantor’s testamentary power to appoint the property in trust to any persons other than to the grantor’s estates grantor’s creditors or the creditors of grantor’s estates under sec_25_2511-2 the retention of a testamentary power to appoint the remainder of a_trust is considered a retention of dominion and control_over the remainder accordingly the retention of this power causes the transfer of property to trust to be incomplete with respect to the remainder for federal tax purposes finally the distribution committee members possess the unanimous member power over net_income and principal this power is not a condition_precedent to grantor’s powers grantor’s powers over the net_income and principal are presently plr-120838-16 exercisable and not subject_to a condition_precedent grantor retains dominion and control_over the net_income and principal of trust until the distribution committee members exercise their unanimous member power accordingly the unanimous member power does not cause the transfer of property to be complete with respect to the income_interest for federal gift_tax purposes see 37_tc_897 51_tc_352 accordingly based on the facts submitted and the representations made we conclude that the contribution of property to trust by grantor is not a completed_gift subject_to federal gift_tax any distribution from trust to grantor is merely a return of grantor’s property therefore we conclude that any distribution_of_property from trust by the distribution committee to grantor will not be a completed_gift subject_to federal gift_tax by any member of the distribution committee further upon the death of grantor the fair_market_value of the property in trust is includible in his gross_estate for federal estate_tax purposes ruling sec_4 and sec_2514 provides that the exercise or release of a general_power_of_appointment created after date shall be deemed a transfer of property by the individual possessing such power sec_2514 provides that the term general_power_of_appointment means a power which is exercisable in favor of the individual possessing the power possessor the possessor's estate the possessor's creditors or the creditors of the possessor's estate sec_25_2514-1 provides that a power_of_appointment is not a general power if by its terms it is exercisable only in favor of one or more designated persons or classes other than the possessor or his creditors or the possessor's estate or the creditors of the estate or expressly not exercisable in favor or the possessor or his creditors or the possessor’s estate or the creditors of his estate sec_2514 provides that in the case of a power_of_appointment created after date if the power is exercisable by the possessor only in conjunction with the creator of the power such power is not deemed a general_power_of_appointment sec_2514 provides that in the case of a power_of_appointment created after date if the power is not exercisable by the possessor except in conjunction with a person having a substantial interest in the property subject_to the power which is adverse to the exercise of the power in favor of the possessor such power shall not be deemed a general_power_of_appointment for purposes of plr-120838-16 sec_2514 a person who after the death of the possessor may be possessed of a power_of_appointment with respect to the property subject_to the possessor's power which he may exercise in his own favor shall be deemed as having an interest in the property and such interest shall be deemed adverse to such exercise of the possessor's power sec_25_2514-3 provides in part that a coholder of a power has no adverse_interest merely because of his joint possession of the power nor merely because he is a permissible appointee under a power however a co-holder of a power is considered as having an adverse_interest where he may possess the power after the possessor's death and may exercise it at that time in favor of himself his estate his creditors or the creditors of his estate thus for example if x y and z held a power jointly to appoint among a group of persons which includes themselves and if on the death of x the power will pass to y and z jointly then y and z are considered to have interests adverse to the exercise of the power in favor of x similarly if on y's death the power will pass to z z is considered to have an interest adverse to the exercise of the power in favor of y sec_2041 provides that the value of the gross_estate shall include the value of all property to the extent of any property with respect to which the decedent has at the time of death a general_power_of_appointment created after date or with respect to which the decedent has at any time exercised or released such a power by a disposition which is of such nature that if it were a transfer of property owned by the decedent such property would be includible in the decedent's gross_estate under sec_2035 to inclusive under sec_2041 the term general_power_of_appointment is defined in relevant part to mean a power which is exercisable in favor of the decedent his estate his creditors or the creditors of his estate sec_2041 provides however that in the case of a power_of_appointment created after date if the power is not exercisable by the decedent except in conjunction with the creator of the power such power is not deemed a general_power_of_appointment sec_2041 provides however that in the case of a power_of_appointment created after date if the power is not exercisable by the decedent except in conjunction with a person having a substantial interest in the property subject_to the power which is adverse to the exercise of the power in favor of the decedent -- such power shall not be deemed a general_power_of_appointment for purposes of sec_2041 a person who after the death of the decedent may be possessed of a power_of_appointment with respect to the property subject_to the decedent's power which he may exercise in his own favor shall be deemed as having plr-120838-16 an interest in the property and such interest shall be deemed adverse to such exercise of the decedent's power sec_20_2041-3 of the estate_tax regulations provides in part that a co-holder of a power_of_appointment has no adverse_interest merely because of his joint possession of the power nor merely because he is a permissible appointee under a power however a co-holder of a power is considered as having an adverse_interest where he may possess the power after the decedent's death and may exercise it at that time in favor of himself his estate his creditors or the creditors of his estate thus for example if x y and z held a power jointly to appoint among a group of persons which includes themselves and if on the death of x the power will pass to y and z jointly then y and z are considered to have interests adverse to the exercise of the power in favor of x similarly if on y's death the power will pass to z z is considered to have an interest adverse to the exercise of the power in favor of y the power held by the distribution committee members under the grantor’s consent power is a power that is exercisable only in conjunction with the creator grantor accordingly under sec_2514 and sec_2041 the distribution committee members do not possess general powers of appointment by virtue of possessing this power further the power held by the distribution committee members under the unanimous member power is not a general_power_of_appointment for purposes of sec_2514 and sec_2041 as in the examples in sec_25_2514-3 and c the distribution committee members have substantial adverse interests in the property subject_to this power accordingly any distribution made from trust to a beneficiary other than to grantor pursuant to the exercise of these powers the grantor's consent power and the unanimous member power are not gifts by the distribution committee members instead such distributions are gifts by grantor based on the facts and representations made we conclude that any distribution_of_property from trust by the distribution committee to any beneficiary of trust other than grantor will not be a completed_gift subject_to federal gift_tax by any member of the distribution committee further we conclude that any distribution_of_property from trust to a beneficiary other than to grantor will be completed gifts by grantor finally we conclude that the powers held by the distribution committee are not general powers of appointment for purposes of sec_2041 and accordingly no member of the distribution committee upon his or her death will include in his or her estate any property held in trust because such member is deemed to have a general_power_of_appointment within the meaning of sec_2041 over property held in trust except as specifically ruled herein we express no opinion on the federal tax consequences of the transaction under the cited provisions or under any other provisions of the code specifically we express no opinion on the trust provisions plr-120838-16 permitting trustee to distribute income or principal to trustees of other trusts decanting this ruling is directed only to the taxpayer who requested it sec_6110 provides that it may not be used or cited as precedent sincerely enclosure copy for sec_6110 purposes lorraine e gardner lorraine e gardner senior counsel branch office of associate chief_counsel passthroughs and special industries


t c summary opinion united_states tax_court irene lucille griffen petitioner v commissioner of internal revenue respondent docket no 8098-04s filed date irene lucille griffen pro_se miriam c dillard for respondent dean special_trial_judge this case was heard pursuant to the provisions of sec_6330 and sec_7463 of the internal_revenue_code in effect at the time that the petition was filed unless otherwise indicated subsequent section references are to the internal_revenue_code in effect at relevant times the decision to be entered is not reviewable by any other court and this opinion should not be cited as authority the petition in this case was filed in response to a notice_of_determination concerning collection action s under sec_6320 and or notice_of_determination pursuant to sec_6330 petitioner seeks review of respondent’s determination to proceed with collection of her tax_liability of dollar_figure for the issue for decision is whether the appeals officer abused her discretion in sustaining a proposed levy to collect petitioner’s unpaid income_tax_liability the stipulation of facts and the exhibits received into evidence are incorporated herein by reference petitioner resided in bristol virginia at the time the petition was filed a petitioner’s tax_return background petitioner timely filed her form_1040 u s individual_income_tax_return for as a head_of_household on that return she claimed four dependency_exemptions and an earned_income_credit for two qualifying children respondent issued petitioner a refund of dollar_figure respondent later notified petitioner that her return was being examined because another individual had claimed the same children respondent requested documentation to verify petitioner’s claimed exemptions and credit petitioner submitted a copy of her daughter’s driver’s license social_security card and birth certificate she also submitted copies of her two granddaughters’ social_security cards and hospital birth records on date respondent issued to petitioner a notice_of_deficiency by certified mail in which respondent determined that petitioner is not entitled to head_of_household filing_status dependency_exemptions or the earned_income_credit the irs subsequently sent other correspondence concerning petitioner’s case to the same address s e 26th street morriston florida which petitioner received petitioner submitted canceled checks and utility statements in an attempt to obtain reconsideration of the deficiency respondent reviewed the documentation and notified petitioner of respondent’s refusal to change the determinations set forth in the notice_of_deficiency b respondent’s collection actions respondent withheld petitioner’s federal_income_tax refund and applied it toward the outstanding tax_liability for respondent also withheld petitioner’ sec_2001 and sec_2002 federal_income_tax refunds and applied them toward her balance on date respondent issued to petitioner a final notice_of_intent_to_levy and notice of your right to a hearing petitioner timely filed a form request for a collection_due_process_hearing hearing in which she asserted that she did not owe the taxes because the liability had been discharged in a chapter bankruptcy proceeding in c petitioner’s appeals hearing during the telephonic hearing petitioner told appeals officer carolyn jackson ms jackson that she had previously given the auditor all of the information requested she stated that as soon as she received the notice_of_deficiency she gave the auditor additional information to verify the earned_income_credit dependency_exemptions and head_of_household filing_status petitioner said she never heard from the auditor again regarding her consideration of the additional information she also stated that she had filed for bankruptcy and had been told that her slate had been wiped clean ms jackson discussed with petitioner installment agreements and the possibility of placing her account in currently not collectible status when petitioner indicated that she wanted to discuss the options in greater detail at a later date ms jackson set up a telephonic conference for date on that date petitioner called and indicated she would not be able to participate because her daughter was ill ms jackson rescheduled the conference to date on that date ms jackson was unable to contact petitioner and petitioner did not contact her to reschedule or to discuss the case on date ms jackson sent petitioner a notice_of_determination sustaining respondent’s proposed levy as the appropriate means of collecting petitioner’s unpaid liability for the tax_year discussion sec_6330 prescribes the matters that a person may raise at an appeals_office hearing sec_6330 provides that a person may raise collection issues such as spousal defenses the appropriateness of the commissioner's intended collection action and possible alternative means of collection see 114_tc_604 114_tc_176 in addition sec_6330 establishes the circumstances under which a person may challenge the existence or amount of his or her underlying tax_liability sec_6330 provides issues at hearing -- b underlying liability --the person may also raise at the hearing challenges to the existence or amount of the underlying tax_liability for any_tax period if the person did not receive any statutory_notice_of_deficiency for such tax_liability or did not otherwise have an opportunity to dispute such tax_liability on date respondent sent a notice_of_deficiency to petitioner’s s e 26th street address the notice was sent by certified mail but petitioner contends that she does not recall receiving a notice_of_deficiency and no petition for redetermination was filed with this court petitioner received mail subsequently sent to that address the notice_of_determination indicates that at the appeals_conference on date petitioner admitted receiving the notice_of_deficiency and that her address had not changed petitioner’s only evidence on the issue is that she does not recall receiving the notice_of_deficiency the court concludes that petitioner received the notice_of_deficiency because petitioner received the notice_of_deficiency and failed to file a petition with this court petitioner was not able to challenge her underlying tax_liability in the appeals_office hearing assuming arguendo that petitioner were permitted to challenge the underlying liability she has failed to present sufficient evidence to support her position where as is the case here the validity of the underlying tax_liability is not properly placed at issue the court will review the administrative determination of the appeals_office for abuse_of_discretion sego v commissioner supra pincite goza v commissioner supra pincite the court reviews only whether the appeals officer’s refusal to accept petitioner’s oic was arbitrary capricious or without sound basis in fact or law see 112_tc_19 petitioner alleges that her tax_liability was discharged in her chapter bankruptcy proceeding the supreme court has stated in 535_us_43 that a discharge under the bankruptcy code does not extinguish certain tax_liabilities for which a return was due within three years before the filing of an individual debtor’s petition u s c secs a a a a i or to put it another way an income_tax is a nondischargeable priority claim against the estate if it relates to a tax_return whose due_date including extensions was within years of the commencement of the bankruptcy case u s c sec_507 petitioner filed a bankruptcy petition on date which was discharged on date the tax_liability is therefore nondischargeable because it relates to a tax_return the due_date of which including extensions was within years of the date the bankruptcy petition was filed u s c secs a a a petitioner did not pursue her opportunities to discuss collection alternatives with ms jackson she also failed to submit any financial information for ms jackson to consider having reviewed the entire record the court cannot find that the determination sustaining respondent’s proposed levy was an abuse_of_discretion accordingly collection by levy of petitioner’s unpaid tax_liability reflected in the notice_of_determination may proceed reviewed and adopted as the report of the small_tax_case division decision will be entered for respondent


internal_revenue_service department of asury washington dc contact person telephone number in reference to op e ep t date date uniform issue list att'n legend corporation a subsidiary b buyer c_corporation d plan x dear this is in response to your request for a ruling dated date and supplemented by letters dated date and date submitted by your authorized representative conceming distributions from a plan described in sec_401 of the internal_revenue_code code your authorized representative submitted the following facts and representations in support of the requested ruling plan x is a defined contribution pension_plan qualified under code sec_401 a and 401_k_plan x includes a cash_or_deferred_arrangement coda as described in code sec_401 with employer matching_contributions and employer profit-sharing contributions plan x is a multiple_employer_plan within the meaning of code sec_413 corporation d sponsors plan x and plan x has been adopted by several employers including corporation a as a participating employer in plan x corporation a is an entity not treated as a single employer with corporation d under code sec_414 or sec_414 but has certain business relationships with corporation d subsidiary b a wholly owned subsidiary of corporation a was a participating employer in plan x until date on date corporation a sold all of its issued and outstanding_stock of subsidiary b to buyer c as a result of the sale subsidiary b became a direct wholly owned subsidiary of buyer c an unrelated corporation page effective date in connection with the above described sale by corporation a of subsidiary b to buyer c the status of subsidiary b as a participating employer in plan x was terminated by action of the board_of directors of subsidiary b however corporation a has continued to be a participating employer in plan x following the sale of subsidiary b to buyer c in plan x corporation a adopts amendments to plan x is a party to trust agreements entered into under plan x and maintains accounts on behalf of employees who have deferred vested accounts under plan x such accounts include employees of subsidiary b whose accounts are affected by the disposition of subsidiary b until such employees are determined eligible and elect to receive distributions of their accounts in its continuing capacity as a participating employer plan x provides generally for the distribution of a participant's vested account balance under the plan upon the disposition by corporation a of a subsidiary to an unrelated corporation which does not maintain the plan but only with respect to a participant who continues employment with the corporation acquiring such subsidiary plan x also provides that such distributions shalt be made in the form of a lump sum to the affected participants no later than the end of the second calendar_year after the calendar_year in which the sale occurred in accordance with this provision corporation a intends to make distributions to former employees of subsidiary b who continue employment with buyer c buyer c has not adopted or assumed plan x nor will it accept a transfer of assets or liabilities from plan x of the account balance of the employees of subsidiary b pursuant to an agreement buyer c’s employee_benefit_plan will accept direct rollovers of eligible rollover distributions of subsidiary b's employees’ account balances based on the foregoing facts and representations you have requested the following rulings that the disposition of subsidiary b by corporation a constituted the disposition of a subsidiary within the meaning of code sec_401 with respect to employees who continued employment with subsidiary b that the continued participation in and maintenance of plan x by corporation a satisfies the requirements of code sec_401 and sec_1 k -1 d i of the income_tax regulations that distributions from plan x of the entire balances to the credit of subsidiary b employees who have continued employment with subsidiary b following its disposition by corporation a may be made without adversely affecting the tax treatment of salary deferrals under plan x under code sec_402 provided that each distribution is a lump sum distribution within the meaning of code sec_401 that is made not later than the end of the second calendar_year after the calendar_year of such business disposition sec_401 of the code when read together with sec_401 k a iii and sec_1_401_k_-1 of the income_tax regulations provides in relevant part that amounts attributable to elective_deferrals may not be distributed from a cash_or_deferred_arrangement before the date of the sale_or_other_disposition by a corporation of such corporations interest in a subsidiary within the meaning of code page sec_409 but only with respect to an employee who continues employment with such subsidiary sec_401 of the code provides generally that the disposition will not meet the requirements of code sec_401 unless the transferor_corporation maintains the pian sec_1 k -i d of the income_tax regulations provides rules applicable to distributions upon the sale of assets sec_1_401_k_-1 of the regulations provides in relevant part that i the seller must maintain the plan and the purchaser may not maintain the plan after the disposition ii the employee receiving the distribution must continue employment with the purchaser of the assets iii the distribution must be in connection with the disposition of the subsidiary to an unrelated entity one that is not required to be aggregated with the seller under code sec_414 c m or after the sale_or_other_disposition sec_1 k -1 d of the regulations provides in part that a distribution may be made only if it is a lump sum distribution within the meaning of sec_402 of the code you have represented that subsidiary b has been operated as a wholly owned in this case corporation a sold to buyer c all the issued and subsidiary of corporation a outstanding_stock of subsidiary b you have represented that buyer c is a corporation unrelated to corporation a you have represented that in accordance with the terms of plan x the above described plan x distributions are being distributed as a lump sum distribution to former employees who continue employment with buyer c in accordance with the terms of plan x accordingly with respect to the first ruling we conclude that the stock acquisition of subsidiary b a wholly-owned subsidiary of corporation a resulted in a disposition of a subsidiary within the meaning of sec_401 of the code with respect to employees who continue employment with subsidiary b you have represented that corporation a has continued to be a participating employer in plan x and will maintain accounts on behalf of employees of subsidiary b who have deferred vested accounts under plan x buyer c will not maintain plan x accordingly with respect to the second ruling we have determined that in the described transaction corporation a maintains plan x as that term is used in code sec_401 and sec_1 k -1 d i of the regulation based on our determination in ruling requests one and two we conclude that distributions from plan x of the entire balances to the credit of subsidiary b employees who have continued employment with subsidiary b following its disposition by corporation a may be made without adversely affecting the tax treatment of salary deferrals under plan x under code sec_402 provided that each distribution is a lump sum distribution within the meaning of code sec_401 that is made not later than the end of the second calendar_year of such business disposition this ruting is based on the assumption that plan x continues to be qualified under sec_401 a of the code at all relevant times this ruling is also based on the assumption that any consent or election required under code sec_411 or sec_417 is obtained page this ruling is directed only to the taxpayer who requested it sec_61 k of the internal_revenue_code provides that it may not be used or cited by others as precedent a copy of this ruling has been sent to your authorized representative in accordance with a power_of_attorney on file in this office sincerely yours l renin beocn frances v sloan chief employee_plans technical branch enclosures deleted copy of letter notice of intention to disclose copy of letter to authorized representative ct


internal_revenue_service number release date index number -------------------------- -------------------------- ------------------------------------------- ------------------------------- in re ----------------------- department of the treasury washington dc person to contact --------------------- id no ------------- telephone number --------------------- refer reply to cc intl - plr-170434-03 date date legend -------------------------- -------------------------- ------------------------- ------------------------ -------- taxpayer ------------------------------------------------------------------ entity a ------------------------------------------------------------------ entity b country a individual a individual b cpa firm a cpa firm b date a date b date c date d date e date f ----------------------- ---------------------- ---------------------- --------------------- --------------------- ------------------------- ------------------------- -------------------------- --------------------------- in re plr-170434-03 dear ------------------- this replies to your letter dated date in which taxpayer requests an extension of time under sec_301_9100-3 to elect relief from the limitation in sec_1503 on the use of certain dual consolidated losses of entity a taxpayer requests permission to file documents described in sec_1_1503-2 for the tax_year ended on date e 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 taxpayer is a united_states_corporation and the common parent of a consolidated_group entity a is a country a subsidiary of taxpayer taxpayer states that pursuant to a previous election entity a is treated as a branch for united_states income_tax purposes entity b is also organized in country a entity a generated losses for taxpayer’s tax years ended on dates a b c d and e these losses were dual consolidated losses within the meaning of sec_1503 taxpayer used the losses generated by entity a to offset its income for those years on date f a date within taxpayer’s tax_year ended on date e entity a merged into entity b with entity b surviving taxpayer represents that pursuant to the law of country a the losses of entity a expired unused upon the merger and thus did not carryover to entity b taxpayer further represents that other than the deemed triggering event of sec_1 g iii a pursuant to the merger of entity a into entity b none of the triggering events described in sec_1_1503-2 requiring recapture have occurred taxpayer engaged cpa firm a to prepare taxpayer’s international tax filings for the tax years ended on dates a b c and d taxpayer engaged cpa firm b to prepare its international tax filings for the tax_year ended on date e individual a is the executive vice president chief financial officer and treasurer of taxpayer individual b is the partner of cpa firm b responsible for coordinating the tax services that cpa firm b provides to taxpayer in re plr-170434-03 the merger of entity a into entity b is a triggering event under sec_1_1503-2 unless taxpayer demonstrates that entity a’s losses cannot be used to offset the income of another person under the laws of the foreign_country at anytime after the merger of entity a into entity b the affidavits of individual a and individual b and the facts submitted indicate that cpa firm a failed to file or advise taxpayer to file the g i agreements with the taxpayer’s previously filed returns for dates a b c and d and the g vi b certifications with the previously filed returns for dates b c and d it is further stated that cpa firm b did not have sufficient time prior to the due_date of the tax_return for the tax_year ended on date e to determine whether those agreements and certifications should have been filed on those prior year returns therefore cpa firm b failed to file or advise taxpayer to file the g i agreement the g vi b certifications and the requisite rebuttal statement under sec_1_1503-2 with its tax_return for the tax_year ended on date e taxpayer was subsequently granted relief under sec_301_9100-3 to file late g i agreements and g vi b certifications for the above stated dates sec_301 -1 b provides that an election includes an application_for relief in respect of tax and 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_9100-1 provides that the commissioner has discretion to grant a taxpayer a reasonable extension of time under the rules set forth in sec_301_9100-3 to make a regulatory election under all subtitles of the internal_revenue_code except subtitles e g h and i 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 the election to file the documents described in sec_1 g iii b is a regulatory election as defined in sec_301_9100-1 therefore the commissioner has discretionary authority under sec_301_9100-1 to grant taxpayer an extension of time provided that taxpayer satisfies the rules set forth in sec_301_9100-3 based on the facts and information submitted we conclude that taxpayer satisfies in re plr-170434-03 sec_301_9100-3 accordingly taxpayer is granted an extension of time of days from the date of this ruling letter to file the documents described in sec_1_1503-2 for the tax_year ended on date e with respect to the triggering event the granting of an extension of time is not a determination that taxpayer is otherwise eligible to file the documents described in sec_1_1503-2 a copy of this ruling letter should be associated with the sec_1_1503-2 documents this ruling is directed only to the taxpayer who requested it sec_6110 provides that it may not be used or cited as precedent 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 pursuant to a power_of_attorney on file in this office a copy of this ruling letter is being furnished to taxpayer and its second representative sincerely associate chief_counsel international by s allen goldstein allen goldstein reviewer enclosure copy for purpose-


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-139730-08 date date x state a b c trust1 trust2 trust3 ----------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------- ----------------------- ----------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------- ----------------------- d1 d2 d3 d4 ----------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------- ------------------------ plr-139730-08 dear ------------- this responds to a letter dated date and subsequent correspondence submitted on behalf of x by x’s authorized representative requesting invalid election relief under sec_1362 of the internal_revenue_code the information submitted states that x was incorporated under the laws of state on d1 under the name a and elected to be an s_corporation effective d1 the x stockholders were c an individual trust1 trust2 and trust3 collectively the trusts the beneficiaries of trust1 trust2 and trust3 did not consent to the form_2553 election by a small_business_corporation for the trusts consequently trust1 trust2 and trust3 did not properly consent to x’s election to be an s_corporation the failure of the trusts’ beneficiaries to properly consent to x’s election made the election invalid on d1 under sec_1362 the form_2553 also contained several clerical errors on d2 stockholders of x contributed their x shares to corporation b in exchange for the stock of b on d4 x changed its name from a to x on d3 x represents that the irs granted x relief pursuant to revproc_98_55 1998_2_cb_643 for inadvertent failure to timely make qualified_subchapter_s_trust qsst elections for trust1 trust2 and trust3 x represents that the circumstances resulting in x’s invalid s_corporation_election were inadvertent and not motivated by tax_avoidance x further represents that from d1 x and its shareholders have filed all returns consistent with x’s status as an s_corporation x and its shareholders have agreed to make such adjustments consistent with the treatment of x as an s_corporation as may be required by the secretary sec_1362 provides that if an election under sec_1362 by any corporation a was not effective for the taxable_year for which it was 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 such ineffectiveness or termination were inadvertent no later than a reasonable period of time after discovery of the event resulting in the ineffectiveness or termination steps were taken a so that the corporation is a small_business_corporation or b to acquire the required 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 such ineffectiveness or termination the corporation shall be treated as an s_corporation during the period specified by the secretary plr-139730-08 based solely on the facts submitted and the representations made we conclude that x’s s_corporation_election was ineffective for the taxable_year beginning d1 because the failure of the trust1 beneficiary the trust2 beneficiary and the trust3 beneficiary to consent on behalf of each trust to x’s election to be an s_corporation we further conclude that the ineffectiveness of x’s s_corporation_election constituted an inadvertent invalid election within the meaning of sec_1362 in addition we conclude that the clerical errors on form_2553 did not cause the election to be invalid accordingly pursuant to the provisions of sec_1362 x will be treated as an s_corporation from d1 to d2 provided x’s s_corporation_election was otherwise valid and was not otherwise terminated under sec_1362 if x or its shareholders fail to treat themselves as described above this ruling is null and void based on the information submitted we rule that the facts set forth have no effect on the d2 inadvertent termination relief pursuant to revproc_98_55 for inadvertent failure to timely make qsst elections for trust1 trust2 and trust3 the inadvertent termination relief will remain in full force and effect except as specifically set forth above no opinion is expressed concerning the federal tax consequences of the facts described above under any other provision of the code specifically no opinion is expressed regarding x’s eligibility to be an s_corporation or the validity of its s_corporation_election further no opinion is expressed as to whether trust1 trust2 and trust3 qualify as qssts this ruling is directed only to the taxpayer who requested it sec_6110 of the code provides that it may not be used or cited as precedent pursuant to a power_of_attorney on file with this office a copy of this letter is being sent to x's authorized representative sincerely bradford r poston senior counsel branch office of the associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes cc


department of the treasury internal_revenue_service washington d c may uniform issue list se t ep rh th xxxxxxxxkaxxkkaakk xxxxxkxxkkxxxkxxxk xxxxxxxxxxxxxkxxxx xxxxxxxxkxxxkkxxxx legend taxpayer a individual j ira x xxxxxxxxxxaxxxx xxxxxxxxxxxxxk xxxxaaxxxkkxxk xxxxxxxxxxxxkx financial_institution a xxxxxxxxxxxxxx company p amount m fund date date date date year1 xxxxxaxxxxaxxx xxxxxxxxxxxxxx xxxxxxxxxkxkxk xxxxxxxxxxxxxx xxxxxakxxxkxkkkk xxxxxxxxxxaxxk xxxxkxkkxkxxkk xxxxxxxxxxxxxx oodookxxkkxokk dear xxxxxxx this is in response to your ruling_request dated date as supplemented by correspondence dated date and date in which you request a waiver of the 60-day rollover requirement contained in sec_408 of the intemal revenue code code the following facts and representations have been submitted under penalty of perjury in support of the ruling requested taxpayer a age represents that he received a distribution of amount m from ira x maintained by financial_institution a taxpayer a asserts that his failure to accomplish a rollover within the 60-day period prescribed by sec_408 of the code was due to errors made by individual j and company p taxpayer a further represents that amount m has not been used for any other purpose taxpayer a represents that he learned about an opportunity to invest in fund company p investment pool on date he met with individual j president of company p and inquired whether he could invest his self-directed_ira assets in fund he was informed by individual j that there would be no problem in making that investment because fund included other ira investors on date taxpayer a received a distribution of amount m from ira x and compieted the necessary paperwork to invest a portion of his ira with company p on date according to company p's instructions taxpayer a deposited a check in the amount of amount m payable to fund i company p opened the account in the name of taxpayer a's ira issued a mortgage-backed promissory note from fund in the name of taxpayer a's ira and set up procedures for fund to issue monthly interest checks on the note to ira x however fund was not registered as a qualified ira investment with financial_institution a on date individual j’s assistant assured taxpayer a that under no circumstance will amount m be a distribution from ira x but individual j was not aware that fund needed to be registered as a qualified ira investment with financial_institution a as a result individual j did not coordinate with financial_institution a to confirm that the subject investment was a permissible investment or follow financial_institution a’s procedures for establishing a qualified ira investment documentation provided indicates that individual j and company p inadequately advised taxpayer a regarding the steps necessary to properly invest his self- directed ira assets into fund specifically individual j has provided a statement under penalty of perjury that he was unaware that fund needed financial_institution a’s affirmative approval fo be a qualified ira investment both individual j and company p have provided statements that they erroneously believed that fund had complied with all necessary steps to have the investment remain part of ira x xkxxxxxxakxxxkrakk in year taxpayer a notified company p that the ira interest payments were being treated as contributions by financial_institution a upon investigation company p learned that it had erred by not registering fund with financial_institution a as a qualified ira investment_company p immediately took steps to have fund approved by financial_institution a although fund was subsequently approved because the approval was given after the 60-day rollover period had expired with respect to the distribution of amount m financial_institution a could not retroactively treat the transaction involving amount m as an ira investment and has continued to treat the transaction as a distribution thus necessitating the request for a private_letter_ruling based upon the foregoing facts and representations you request a ruling that the internat revenue service waive the 60-day rollover requirement contained in sec_408 of the code with respect to the distribution of amount m from ira x sec_408 of the code provides that except as otherwise provided in sec_408 any amount_paid or distributed out of an ira shall be included in gross_income by the payee or distributee as the case may be in the manner provided under sec_72 of the code sec_408 of the code defines and provides the rules applicable to ira_rollovers sec_408 d a of the code provides that sec_408 of the code does not apply to any amount_paid or distributed out of an ira to the individual for whose benefit the ira is maintained if i ii the entire amount received including money and any other_property is paid into an ira for the benefit of such individual not later than the day after the day on which the individual received the payment or distribution or the entire amount received including money and any other_property is paid into an eligible_retirement_plan other than an ira for the benefit of such individual not later than the day after the date on which the payment or distribution is received except that the maximum amount which may be paid inte such plan may not exceed the portion of the amount received which is includible in gross_income determined without regard to sec_408 sec_408 of the code provides that sec_408 does not apply to any amount described in sec_408 d '3 axi received by an individual from an ira if at any the time during the 1-year period ending in the day of such receipt such individual received any other amount described in section xox xaakakxxk d 3xa i from an ira which was net included in gross_income because of the application of sec_408 sec_408 of the code provides a similar 60-day rollover period for partial rollovers sec_408 i of the code provides that the secretary may waive the day requirement under sec_408 d 3a and d d of the code where the failure to waive such requirement would be against equity and good conscience including casualty disaster or other events beyond the reasonable control of the individual subject_to such requirement only distributions that occur after date are eligible for the waiver under sec_408 d i of the code revproc_2003_16 i r b provides that in determining whether to grant a waiver of the 60-day rollover requirement pursuant to sec_408 the service will consider ail relevant facts and circumstances including etrors committed by a financial_institution inability to complete a rollover due to death disability or hospitalization incarceration restrictions imposed by a foreign_country or postal error the use of amount distributed for example in the case of payment by check whether the check was cashed and the time elapsed since the distribution occurred the information presented and the documentation submitted by taxpayer a is consistent with his assertion that his failure to roll over the distribution within the 60-day rollover period prescribed by sec_408 of the code was a result of errors committed by individual j and company p therefore pursuant to sec_408 of the code the service hereby waives the 60-day rollover requirement with respect to the distribution of amount m from ira x taxpayer a is granted a period of days from the date of this ruling to contribute amount m to a rollover ira provided all other requirements of sec_408 of the code except the 60-day requirement are met with respect to such contribution amount m will be considered a vaiid rollover_contribution within the meaning of sec_408 of the code no opinion is expressed as to the tax treatment of the transactions described herein under the provisions of any other section of either the code or regulations which may be applicable thereto 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 xxxxamxxankkkk a copy of this letter is being sent to your authorized representative pursuant to a power of attomey on file in this office if you wish to inquire about this ruling please contact xxxxxxxx id number xxxxxxxx at xxxxxxxxxxaxxx please address all correspondence to se t ep ra t4 sincesely yours en b anarckanrtig - donzell littlejohn manager employee_plans technical group enclosures deleted copy of letter_ruling notice of intention to disclose


internal_revenue_service number info release date aug uilc cc psi 1-genin-134773-02 dear we are responding to correspondence regarding and a request for its s_corporation_election to be effective for date because you have responded pursuant to the day period set forth in a letter issued by cincinnati service_center we were able to intervene on your behalf within sixty days from the date stamped above you should expect to receive a letter confirming the acceptance of your election for please note that the irs has developed two cd-roms to help educate small_business owners on their tax responsibilities introduction to federal taxes for small_business self-employed and a virtual small_business workshop these items are free and can be ordered by calling the irs also provides a special website www irs gov smallbiz dedicated to providing information to small_business taxpayers please keep this letter with your tax records and feel free to provide a copy of it to your authorized representative we hope that the above information proves helpful sincerely yours s dianna k miosi dianna k miosi chief branch associate chief_counsel passthroughs and special industries