department of the treasury internal_revenue_service washington d c tax_exempt_and_government_entities_division date sep employer_identification_number legend ‘a’ b c a b dear sir or madam contact person identification_number contact telephone fo brl uil no this is in reply to your request for rulings concerning the federal tax consequences of your participation in a joint_venture that will expand your current tax-exempt activities the proposed transaction is described below you are exempt from income taxes under sec_501 of the internal_revenue_code you were established in to create affordable housing and combat blight in b you have participated in a number of programs to create and maintain affordable housing in you established a to act as your lending arm you and a have overlapping boards and officers in practice a is controlled by you a has provided small businesses with access to over a through its loan and grant programs alone and through the small_business administration it has become one of the largest micro-loan producers in the state businesses needing more than the dollar_figure that is the limit for the sba micro-loan program the u s treasury has authorized this fund to make loans of up to dollar_figure to eligible borrowers eligibility criteria include meeting sba size limits for the industry being outside traditional bank lending criteria and being either a minority or women- owned business it established a new fund for small as a support to borrowers and grant recipients a also provides extensive technical owned business as a support to borrowers and grant recipients a also provides extensive technical assistance this program known as c teaches planning skills financial goal-setting communications selling and contingency planning a also offers business training sessions and technical assistance to eligible proprietors to obtain minority and women business_enterprise certification you believe that the technical assistance and sound underwriting are responsible for the extremely low default rate only five of a ’s more than two hundred loans have ended in default you have identified an additional gap in availability of credit that includes borrowers who otherwise fall within your permitted class but who need larger loans than a is authorized to provide and may be unable to obtain them from conventional sources the increased use of credit scoring is the primary reason they are unable to obtain conventional funding you have identified a vehicle through which you can further your mission of advancing the economic development by bridging this funding gap rather than diverting the resources and efforts of a for this new project you propose to amend your articles of incorporation to expand your purposes to include promote community development by making grants and loans which benefit targeted populations of low-income persons and other persons who lack adequate access to capital and credit you believe that many of the businesses that borrow from a will graduate to this new program as their businesses grow and their financing needs increase the program that you propose to use is the sba a program sba a encourages commercial lenders to make loans by adding a federal guarantee for a portion of the loan among the criteria that the sba requires for lenders under this program is that they be supervised by a state or federal regulatory agency satisfactory to the sba the state bank law specifies the types of entities that may be supervised by the state banking department those that are not traditional banking institutions must have at least dollar_figure million of paid-up capital stock because neither you nor your proposed new entity is a traditional banking institution you would be subject_to the capital stock requirement however you are prohibited by the not-for-profit corporation law under which you were organized from issuing capital stock therefore you propose to organize and become a member of a limited_liability corporation llc which can issue equity interests to investors you will organize it as a joint_venture with for-profit lenders the leading commercial lenders in the area have given evidence of interest in participating you will contribute b cash in return for a class c interest your interest in the gains and profits will be no less than proportionate to your contribution the cash contribution to the llc represents less than of your available consolidated assets you will also provide services to the llc underwriting loan servicing technical assistance to the borrowers and accounting you will lease space to the llc for its offices service fees and rental payments made by the llc to you will be based upon an allocation of actual internal costs as determined by an independent consultant the nine-member board_of managers of the llc will be selected by the class a and the class c interest holders class b members are non-voting you will appoint members and the class a interest holders will appoint members who may be officers of the for-profit investors the operating_agreement will ensure that you will always appoint a majority of board members the definition of a quorum will include a requirement that a majority of the board members present must have been appointed by the class c interest holder the operating_agreement will state that the board’s duty to further your exempt purposes shall override any duty to operate the llc for the financial benefit of any member it will specify that any decision of the board to forego an activity or action which is not in furtherance of your exempt purposes or which fails to obtain your approval shall not constitute a breach of the duty_of loyalty to the for- profit members furthermore the positions of chairman of the board and ceo of the llc shall be reserved for your appointees and you will have the unilateral right to remove them majority approval of the board will be required for most decisions including annual budget distribution of earnings distribution of assets other than cash appointment of key employees engaging in business activities other than the a loan program and other major decisions your approval is also required to make any fundamental changes to the llc’s structure eg dissolution its purposes and any of its organizational documents all of the businesses to which you will lend will have been denied loans by commercial lending sources most will be owned by members of minority groups women or low- income individuals in other cases your underwriting process will ensure that the businesses to which loans are made are located within a distressed area will use the funds for businesses which employ individuals who fall into a targeted_population or live within a distressed area or will use the funds to provide necessary services or products that are otherwise unavailable to residents of distressed areas you have requested the following rulings the expansion of your tax-exempt corporate purposes to include lending to small businesses in the targeted populations described above and to provide technical and borrowing services and your participation in those activities will not alone or in the aggregate adversely affect your status under sec_170 a vi a c or a of the code the creation of the llc and your execution of the llc’s operating_agreement and related agreements the carrying out of the transactions including leasing space to the llc providing services to the llc and the sale of the loans by the llc contemplated by these agreements and your participation in the operation and ownership of the llc will not alone or in the aggregate adversely affect your status under sec_170 a vi a c or a of the code the transfer of a portion of your assets to the llc in exchange for the class c membership interest in the llc will not adversely affect your status under sec_170 a vi a c or a of the code the distributive_share of llc profits gains deductions and losses allocated to or received by you with respect to the class c interest in the llc whether attributable to interest on loans made by the llc or to the proceeds from the sale of such loans will not arise from an unrelated_trade_or_business as defined in sec_513 of the code will not result in ubt to you under sec_512 of the code and will not be subject_to tax under sec_511 of the code the payments received by you under the loan service agreement with the llc will not arise from an unrelated_trade_or_business as defined in sec_513 of the code will not result in ubti to you under sec_512 of the code and will not be subject_to tax under sec_511 of the code the payments received by you under the lease agreement entered into with the llc will not be treated as income derived from debt-financed_property as defined in sec_514 of the code will be excluded from ubti as provided in sec_512 of the code and will not be subject_to tax under sec_511 of the code sec_501 of the internal_revenue_code the code recognizes organizations as exempt from federal_income_tax organizations that are organized and operated exclusively for charitable purposes no part of the net_earnings of which inure to the benefit of any private_shareholder_or_individual sec_511 of the code imposes a tax on the unrelated_business_taxable_income defined in sec_512 of organizations exempt from tax under sec_501 sec_512 of the code provides that the term unrelated_business_taxable_income means the gross_income derived from any unrelated_trade_or_business that an organization carries on regularly sec_512 of the code excludes from unrelated_business_taxable_income rents_from_real_property sec_512 of the code provides different rules for income that an exempt_organization receives from an entity that it controls the definition of control for this paragraph is either ownership by vote or value of more than percent of the stock in a corporation or ownership of more than percent of the profits interest or capital interest in a partnership or ownership of more than percent of the beneficial interests in the entity sec_513 of the code defines the term unrelated_trade_or_business as one that is not substantially related to the exercise or performance by an organization of its charitable purpose or function constituting the basis for its exemption sec_514 of the code includes in unrelated business tax income a percentage of gross_income derived from property held to produce income with respect to which there is an acquisition_indebtedness unless substantially_all the use of the property is substantially related to the performance by the organization of its charitable function sec_1_501_c_3_-1 of the income_tax regulations provides that an organization will be regarded as operated exclusively for one or more exempt purposes only if it engages primarily in activities which accomplish one or more of such exempt purposes specified in sec_501 of the code an organization will not be so regarded if more than an insubstantial part of its activities are not in furtherance of an exempt_purpose sec_1_501_c_3_-1 of the regulations provides that an organization is not organized and operated exclusively for exempt purposes unless it serves a public rather than a private interest sec_1_501_c_3_-1 of the regulations provides that the term charitable includes the promotion of social welfare by organizations designed to relieve the poor and distressed to lessen neighborhood tensions or to combat community deterioration sec_1_501_c_3_-1 of the regulations states that an organization exempt under sec_501 of the code may operate a trade_or_business as a substantial part of its activities if the operation of such trade_or_business is in furtherance of the organization’s exempt purposes exemption will be denied to an organization that is organized or operated for the primary purpose of carrying on an unrelated_trade_or_business sec_1 c -1 d of the regulations states that a trade_or_business is related to exempt purposes only where the conduct of the business activities has causal relationship to the achievement of exempt purposes and it is substantially related for the purpose of sec_513 only if the causal relationship is a substantial one thus for the conduct_of_a_trade_or_business from which a particular amount of gross_income is derived to be substantially related to purposes for which exemption is granted the production or distribution of the goods or the performance of the services from which the gross_income is derived must contribute importantly to the accomplishment of those purposes sec_1_513-1 provides that gross_income derived from charges for the performance of exempt functions does not constitute gross_income from the conduct of an unrelated_trade_or_business revrul_74_587 1974_2_cb_162 held that a community development organization must do more than encourage business development to be recognized as an exempt_organization it must help needy individuals target economically disadvantaged or depressed areas assist those who are unable to obtain funds from conventional sources because of the financial risks or discrimination and help those who offer the greatest potential community benefit by training and employing the unemployed the direct recipients of the aid need not be a charitable_class as long as they act as the charitable instruments to accomplish the charitable purposes and only incidentally benefit businesses or others who are not a charitable_class revrul_77_111 1977_1_cb_144 laid out the factors by which the service will determine whether a community development organization furthers charitable purposes the three factors are whether assistance is provided to help local businesses rather than national whether the assistance is provided on noncommercial terms and whether there is a nexus between the business entities assisted and relieving the problems of a disadvantaged area or a disadvantaged group revrul_98_15 1998_1_cb_718 contrasts two joint ventures to illustrate the characteristics that define a joint_venture in which an exempt_organization may participate with a for-profit partner situation explicitly approves formation of a llc by an exempt hospital organization although in that ruling the other member is an unrelated for-profit entity in that situation the venture is governed by a majority of disinterested people of whom a majority represents the exempt partner a majority vote is needed for major decisions the governing instrument contains a charitable purpose that is explicitly given priority when it conflicts with the business interests of the venture returns of capital and distributions of earnings are proportional to ownership the management company has no previous ties to any parties was hired for a reasonable term subject_to the ability of the venture to terminate for cause situation concludes that the hospital organization's principal activity continues to be the provision of hospital care even when such activities are conducted through a llc because inter alia the tax-exempt hospital retains control_over the llc and the llc serves charitable purposes - the second situation lacks many of the above features that allow the exempt_organization to control the venture and thereby ensure that its charitable purpose will be furthered and that any benefit to private parties will be incidental to the charitable purpose for example the exempt_organization does not have a majority voice on the governing board there is no explicit charitable purpose in the governing instrument the management company and the officers are related to the for-profit partner and the management company has discretion to enter into all but unusually large contracts without board approval and may unilaterally extend the management agreement the revenue_ruling concludes that in the second situation the organization has failed to establish that it will be operated exclusively for exempt purposes when it formed the joint_venture the court in 113_tc_47 july stated that merely entering a partnership with private parties in which they receive returns on their capital_investment does not impermissibly confer private benefit however a detailed examination of the redlands surgery center venture convinced the court that the petitioner had ceded control to private parties having an independent economic_interest in the activity and no obligation to promote charitable purposes ahead of profit making therefore the applicant was not operated exclusively for exempt purposes the court pointed to the long-term management_contract with a party related to the for-profit giving the manager broad discretion and a fee based upon gross revenue furthermore the record did not show that the nonprofit had any role in negotiating the contract to the contrary the contract was executed for both parties by the same individual indicating self-dealing the petitioner also lacked informal control it did not have the resources or the ability to oversee the operations you plan expansion of your exempt purposes to include lending to smail businesses in the targeted populations of small businesses owned by women and minorities that have been unable to obtain capital through commercial channels and to provide technical services to these borrowers the service has long recognized that lending to small businesses may relieve the poor and distressed lessen neighborhood tension eliminate discrimination and combat community deterioration see rev ruls and supra an organization must show that the assistance is provided to an economically depressed area that it benefits a disadvantaged group such as minorities or the unemployed and that it aids businesses that have actually experienced difficulty in obtaining conventional financing due to the deteriorated area in which they are located or to the minority ownership of the business you have submitted information to show that the area you serve contains many distressed communities in addition you have and intend to continue through the new venture to target minority and women-owned small businesses that have experienced difficulty in obtaining conventional financing you have stated that you will consider the community benefits of your loans when your loans are not made directly to members of targeted populations you intend to lend to businesses that will create or retain jobs for individuals in targeted populations or in distressed areas provide important services such as childcare to the residents of distressed areas or will otherwise contribute to the economic revitalization of distressed areas the sba regulates the interest and other terms of the loans you will provide technical assistance and training to the borrowers to enable them to become eligible for traditional capital sources you have shown that your activities do assist a charitable_class and only incidentally benefit private parties as defined in rev ruls and you have structured the llc to further your charitable purposes and for you to retain control_over its on-going operation similar to the operating_agreement in situation of revrul_98_15 your operating_agreement has a charitable purpose and explicitly directs the board to further the charitable purpose in any conflict with the financial benefit of any member your agreement protects the board against claims of failing its fiduciary duty by providing that any decision to forego an activity or action which is not in furtherance of your exempt_purpose shall not constitute a breach of loyalty to the for- profit members the operating_agreement provides that the duty_of the board to operate in furtherance of its exempt purposes shall override any duty to operate the llc for the financial benefit of any of its members the llc’s purposes will be the same as yours your operating_agreement assures that you will appoint a majority of the board the chairman of the board and chief_executive_officer of the llc majority approval held by you will be necessary for most decisions including the annual budget distribution of earnings appointment of key employees and engaging in activities other than the sba a program you may receive a disproportionately greater percentage interest in the profits but not the losses of the llc but all of the other interest holders will obtain gains profits and losses in proportion to their capital contributions your own employees will perform much of the work involved in operating the llc including underwriting loan servicing and technical assistance to the borrowers by providing these services you exercise additional control_over the day-to-day management of the llc’s business and remove the issue of whether a private party will receive more than incidental benefit through contract arrangements these features were cited in situation of revrul_98_15 as demonstrating the control of the exempt_organization over the llc in which it participated and that the for-profit members are not benefiting more than incidentally because you have voting control of the board approval for decisions relating to the llc’s operations as well as major decisions regarding the llc’s organizational documents and appoint both the chairman of the board and the llc’s chief_executive_officer you satisfy the requirements that you control the llc -10- redlands supra also your contributions to the llc represent a relative small portion of your assets and will not impair your ability to continue to conduct your other charitable activities for the reasons discussed above we agree that the activities of the llc have a substantial causal relationship to your exempt purposes therefore your distributive_share of the profits gains deductions and losses in the llc will arise from a related trade_or_business as defined in sec_1 c -1 d income from such related business will not be subject_to tax under sec_511 of the code similarly payments received by you under a loan service agreement with the llc will be income from a business that is substantially related to your exempt_purpose and will not be subject_to tax under sec_511 of the code none of the rental income that you will receive from the llc will be subject_to unrelated_business_income_tax you have not incurred debt to acquire the office space that you will lease to the llc income from the llc will not be subject_to the controlled_entity rule for two reasons you own less than a interest in the llc’s capital or profits which is the definition of control that is relevant for sec_912 furthermore even if you were regarded as controlling the llc its income would be treated as related according based upon your representations and subject_to the conditions and limitations on your issuance of loans for charitable purposes we rule as follows the expansion of your tax-exempt corporate purposes to include lending to small businesses in the targeted populations described above and to provide technical and borrowing services and your participation in those activities will not alone or in the aggregate adversely affect your status under sec_170 sec_501 a c or a of the code the creation of the llc and your execution of the llc’s operating_agreement and related agreements the carrying out of the transactions including leasing space to the llc providing services to the llc and the sale of the loans by the llc contemplated by these agreements and your participation in the operation and ownership of the llc will not alone or in the aggregate adversely affect your status under sec_170 a vi a c or a of the code the transfer of a portion of your assets to the llc in exchange for the class c membership interest in-the llc will not adversely affect your status under sec_170 a vi a c or a of -11- the code the distributive_share of llc profits gains deductions and losses allocated to or received by you with respect to the class c intérest in the llc whether attributable to interest on loans made by the llc or to the proceeds form the sale of such loans will not arise from an unrelated_trade_or_business as defined in sec_513 of the code will not result in ubti to you under sec_512 of the code and will not be subject_to tax under sec_511 of the code the payments received by you under the loan service agreement with the llc will not arise from an unrelated_trade_or_business as defined in sec_513 of the code will not result in ubti to you under sec_512 of the code and will not be subject_to tax under sec_511 of the code the payments received by you under the lease agreement entered into with the llc will not be treated as income derived from debt-financed_property as defined in sec_514 of the code will be excluded from ubti as provided in sec_512 of the code and will not be subject_to tax under sec_511 of the code this ruling is directed only to the organization that requested it sec_61 k of the code provides that it may not be used or cited as precedent because this letter could help resolve any future questions about your income_tax responsibilities please keep a copy of this ruling in your permanent records if you have any questions about this ruling please contact the person whose name and telephone number are shown in the heading of this letter sincerely signed terrell m berkovsky terrell m berkovsky manager exempt_organizations technical group


internal_revenue_service number release date index number ------------------------------- --------------------------------------- --------------------------------- ------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ----------------- id no ---------------- telephone number -------------------- refer reply to cc intl b06 plr-122903-14 date october legend --------------------------------------------------------- -------------------------------- taxpayer partnership accounting firm --------------------------------------- law firm individual a individual b individual c individual d date date date -------------------------------- -------------------- --------------------- ---------------------- ------------------------------ ------------------------ --------------------------- --------------------------- dear ------------------- this responds to a letter dated date submitted by accounting firm requesting that the internal_revenue_service service grant taxpayer an extension of time under sec_301_9100-1 and sec_301_9100-3 to file form 4876-a election to be treated as an interest_charge_disc for taxpayer’s first taxable_year the rulings contained in this letter are based upon information and representations submitted by taxpayer and accounting firm and accompanied by affidavits and penalty of perjury statements executed by appropriate parties this office has not verified any of the materials submitted in support of the request for rulings it is subject_to verification on examination plr-122903-14 facts taxpayer is a domestic_corporation wholly owned by partnership individuals a b c and d hold equal partnership interests in partnership individual d’s partnership_interest is held through a_trust taxpayer was incorporated on date for the sole purpose of qualifying and operating as an interest charge domestic_international_sales_corporation ic-disc shortly before date accounting firm advised individual a of benefits that an ic-disc may provide partnership engaged accounting firm and law firm to form taxpayer as an ic-disc upon formation taxpayer operated as an ic-disc due to a misunderstanding between law firm and accounting firm about who was responsible for filing the form 4876-a taxpayer inadvertently failed to timely file a form 4876-a on date accounting firm filed taxpayer’s first federal_income_tax return using form 1120-ic-disc at this time accounting firm and law firm discovered that a form 4876-a had not been filed a few days later on date accounting firm filed a form 4876-a on behalf of taxpayer in order to operate as an ic-disc beginning on date taxpayer requested a ruling granting an extension of time to file form 4876-a for its first taxable_year law and analysis sec_992 of the internal_revenue_code the code provides that an election by a corporation to be treated as a disc1 shall be made by such corporation for a taxable_year at any time during the 90-day period immediately preceding the beginning of the taxable_year except that the secretary may give his consent to the making of an election at such other times as he may designate sec_992 of the code provides that such election shall be made in such manner as the secretary shall prescribe and shall be valid only if all persons who are shareholders in such corporation on such first day of the first taxable_year for which such election is effective consent to such election temporary sec_1_921-1t provides in part that a corporation electing ic-disc status must file form 4876-a and that a corporation electing to be treated as an ic-disc for its first taxable_year shall make its election within days after the beginning of that year sec_301_9100-1 provides in part that the commissioner in exercising the commissioner’s discretion may grant a reasonable extension of time as used in this letter the terms ic-disc and disc have the same meaning plr-122903-14 under the rules set forth in sec_301_9100-2 and sec_301_9100-3 to make a regulatory election under all subtitles of the code except subtitles e g h and i sec_301_9100-1 provides that a regulatory election is an election whose due_date is prescribed by a regulation published in the federal_register or a revenue_ruling revenue_procedure notice or announcement published in the internal_revenue_bulletin for this purpose an election includes an application_for relief in respect of tax sec_301_9100-3 provides that requests for extensions of time for regulatory elections that do not meet the requirements of sec_301_9100-2 automatic extensions must be made under the rules of sec_301_9100-3 requests for relief subject_to sec_301_9100-3 will be granted when the taxpayer provides 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 that the grant of relief will not prejudice the interests of the government based on the facts and representations submitted with taxpayer’s ruling_request we conclude that taxpayer satisfies sec_301_9100-3 accordingly taxpayer is granted an extension of time of days from the date of this ruling letter to file form 4876-a such filing will be treated as a timely election to be treated as an ic-disc for taxpayer’s first taxable_year the granting of an extension in this ruling letter is not a determination that taxpayer is otherwise eligible to make the election or to claim ic-disc status or benefits see sec_301_9100-1 taxpayer should attach a copy of this ruling letter to its federal_income_tax return for the taxable years to which this letter applies 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 except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter plr-122903-14 pursuant to a power_of_attorney on file in this office a copy of this ruling letter is being furnished to your authorized representative sincerely _________________________ joseph p dewald senior technical reviewer branch office of associate chief_counsel international enclosures copy of this letter copy for sec_6110 purposes cc


internal_revenue_service department of the treasury index number washington dc number release date person to contact telephone number refer reply to cc dom p si plr-100830-00 date date legend a x dear this letter responds to a submission from your authorized representative dated date requesting rulings under sec_7704 of the code and the regulations thereunder facts a proposes to operate a computerized matching service matching service described in detail below designed to facilitate the purchase and sale of interests in publicly registered limited_partnerships a proposes to structure the matching service that will allow transfers_of_partnership_interests units to occur without the risk that thepartnership will be classified as a publicly_traded_partnership under the rules contained in sec_7704 under a’s matching service proposal a potential seller of units calls a broker broker who works for a and presents the broker with a minimum price it would accept for each of its units the potential seller verbally indicates to the broker its intent to sell its units the broker requests from the potential seller information regarding the units that the potential seller wishes to sell and enters such information into a’s computer system system the broker enters that information into the system noting that the potential seller desires to dispose_of its units through a’s matching service procedures plr-100830-00 the broker contacts the general_partner gp or the transfer agent ta of the partnership to which the units relate and confirms ownership number of units and registration for the potential seller once ownership is confirmed a contract for the sale of the units contract to sell a power_of_attorney and other transfer forms are sent to the potential seller simultaneously a sends a letter letter to the potential seller confirming the potential seller’s intention to sell the particular units that are referenced in the letter the potential seller is asked to sign and return the letter to the broker the letter and the contract to sell provide that the potential seller may withdraw the units from a’s matching service on or prior to the 10th day following the matching of a bid from a qualified buyer for the potential seller’s units the signed letter serves as the written confirmation of the potential seller’s intent to sell its units and the notation of the date of receipt of the signed letter in the system serves as a record of the potential seller’s intent to sell and begins the 15-day period during which a binding agreement with respect to the sale of the units cannot be entered into as required by the regulations promulgated under sec_7704 period once a is in receipt of the signed letter or contract to sell the system will place the units on the list of units that are for sale to prospective buyers the system will not allow bids to be posted on any of the units nor will it allow matching of potential buyers with potential sellers of units during the period after the period the system matches prospective buyers with the potential seller based on which prospective buyer is the top bidder for the units provided the potential seller’s minimum price per unit noted in the letter and contract to sell has been met or exceeded and sends to such prospective buyer a contract for the purchase of the units contract to buy a power_of_attorney and other forms necessary to consummate the sale once a receives the executed contract to buy power_of_attorney and other forms from the prospective buyer it combines the relevant buy and sell paperwork with the appropriate x and general_partner or transfer agent forms if any and provided that at least days have lapsed since the date of matching the bid from the buyer for the potential seller’s units it sends the materials in the form of a transfer package to gp or ta the transfer package is sent to the gp or ta on a date no earlier than the 45th day after the date that the signed letter was received by a a letter of instruction accompanies the transfer package which indicates that this transfer is occurring under a’s matching service procedures and states the earliest permissible date on which the sale of the units can be consummated is the date of receipt of the transfer package the system will not allow a to enter a closing date for the transfer of the units submit a transfer package and or disburse funds to the potential seller until calendar days after the date of receipt by a of the signed letter and contract to sell a calls the gp or ta and requests a closing date for the transfer of the units and enters the date into the system pursuant to the contract to sell and contract to buy the date must be a date that is at least days from the date of receipt by a of the signed letter however such date may be later due to restrictions contained in the partnership_agreement that relates to the units being sold after the effective date of the consummation of the sale of the units a will send the proceeds from the sale to the potential seller plr-100830-00 if no match is found the system will remove the potential seller information from the matching service on the 120th day after receipt of the signed letter the system will note for days after the potential seller information is removed that such removal was due to lack of finding a match within days of receipt of the signed letter to prevent the customer from once again offering the units for sale during such 60-day period a will not offer the sale of units through any method other than the ask and bid process set forth above a will not make firm quotes to the public and will not stand ready to buy or sell interests for its own account the sum of the percentage interests in partnership capital or profits transferred during any taxable_year of each partnership that a provides matching services for will not exceed ten percent of the total interests in each partnership’s capital or profits a represents that matching service will operate in compliance with the requirements of sec_1_7704-1 analysis sec_7704 provides that a publicly_traded_partnership will be treated as a corporation sec_7704 provides that for purposes of sec_7704 a publicly_traded_partnership means any partnership if interests in the partnership are a traded on an established_securities_market or b readily_tradable on a secondary market or the substantial equivalent thereof sec_1_7704-1 provides that for purposes of sec_7704 an established_securities_market includes a national securities exchange registered under section of the securities exchange act of act a national securities exchange exempt from registration under section of the act because of the limited volume of transactions a foreign securities exchange that under the law of the jurisdiction where it is organized satisfies regulatory requirements that are analogous to the regulatory requirements under the act a regional or local exchange and an interdealer quotation system that regularly disseminates firm buy or sell quotations by identified brokers or dealers by electronic means or otherwise sec_1_7704-1 provides that for purposes of sec_7704 interests in a partnership that are not traded on an established_securities_market are readily_tradable on a secondary market or the substantial equivalent thereof if taking into account all of the facts and circumstances the partners are readily able to buy sell or exchange their partnership interests in a manner that is comparable economically to trading on an established_securities_market sec_1_7704-1 further clarifies that interests in a partnership are readily_tradable on a secondary market or the substantial equivalent thereof if interests in the partnership are regularly quoted by any person such as a broker or dealer making a market in the interests any person regularly makes available to the public including plr-100830-00 customers or subscribers bid or offer quotes with respect to interests in the partnership and stands ready to effect buy or sell transactions at the quoted prices for itself or on behalf of others the holder of an interest in the partnership has a readily available regular and ongoing opportunity to sell or exchange the interest through a public means of obtaining or providing information of offers to buy sell or exchange interests in the partnership or prospective buyers and sellers otherwise have the opportunity to buy sell or exchange interests in the partnership in a time frame and with the regularity and continuity that is comparable to that described in the other provisions of this sec_1_7704-1 sec_1_7704-1 provides certain safe harbors described in paragraphs e f g h and j of sec_1_7704-1 that allow certain types of transfers_of_partnership_interests to be disregarded in determining whether interests in the partnership are readily_tradable on a secondary market or the substantial equivalent thereof however these safe harbors do not apply to any transfers_of_partnership_interests on an established_securities_market sec_1_7704-1 provides a safe_harbor for partnership interests transferred pursuant to the use of a qualified matching service a matching service generally consists of a computerized or printed listing system that lists customers' non-firm bid and or ask quotes in order to match partners who want to sell their interests in a partnership with persons who want to buy those interests a matching service must meet several requirements to be a qualified matching service for purposes of this safe_harbor for example maintaining waiting periods of days between the date an interest is listed and the date a binding agreement is entered into and days between the date an interest is listed and the closing of the sale in addition the safe_harbor requires that the sum of the percentage interests in partnership capital or profits transferred during the taxable_year of the partnership other than in private transfers described in sec_1_7704-1 does not exceed percent of the total interests in partnership capital or profits rulings accordingly based solely on the facts as represented we rule as follows the matching service meets the requirements to be a qualified matching service under sec_1_7704-1 transfers of any units made through to the matching service will be disregarded in determining whether interests in a partnership are readily_tradable on a secondary market or the substantial equivalent thereof for purposes of sec_7704 provided that the sum of the partnership interests transferred during the taxable_year of the partnership other than through private transfers does not exceed ten percent of the total interests in partnership capital or profits determined as provided in sec_1_7704-1 and the matching service continues to operate in a manner consistent with the facts plr-100830-00 as represented maintenance of information required to permit a partnership to make the calculations relating to qualification for any applicable safe_harbor in sec_1_7704-1 will be the responsibility of the partnerships whose interests are traded and not the responsibility of a or the matching service except as specifically ruled upon above we express no opinion concerning the federal_income_tax consequences of this transaction under any other provisions of the code or regulations 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 sincerely yours william p o'shea chief branch office of the assistant chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes


tax_exempt_and_government_entities_division department of the treasury internal_revenue_service attn mandatory review mc dal commerce st dallas tx date date release number release date legend org organization name xx date address address org address employer_identification_number person to contact id number contact numbers voice fax certified mail return receipt requested dear this is a final adverse determination_letter with regard to your status under sec_501 of the internal_revenue_code you were established in june 19xx as a subordinate under group exemption number the parent organization was granted tax exempt status as an organization described in sec_501 of the code in january 19xx based on recent information received we have determined you have not operated in accordance with the provisions of sec_501 of the code you ceased operations at the end of 20xx currently you have no financial resources and no assets you also failed to meet the reporting requirements under sec_6001 and sec_6033 necessary for continued exemption from federal_income_tax under sec_501 accordingly your exemption from federal_income_tax is revoked effective december 20xx you are required to file federal_income_tax returns on form_1120 these returns should be filed with the appropriate service_center for all years beginning after december 20xx you have the right to contact the office_of_the_taxpayer_advocate taxpayer_advocate assistance is not a substitute for established irs procedures such as the formal appeals process the taxpayer_advocate cannot reverse a legally correct_tax determination or extend the time fixed by law that you have to file a petition in a united_states court the taxpayer_advocate can however see that a tax matter that may not have been resolved through normal channels gets prompt and proper handling you may call toll-free and ask for taxpayer_advocate assistance if you prefer you may contact your local taxpayer_advocate at not toll-free if you have any questions please contact the person whose name and telephone number are shown at the beginning of this letter sincerely nanette m downing director eo examinations tax_exempt_and_government_entities_division org address department of the treasury internal_revenue_service date taxpayer_identification_number form tax_year s ended person to contact id number contact numbers telephone fax certified mail - return receipt requested dear we have enclosed a copy of our report of examination explaining why we believe an adjustment of your organization's exempt status is necessary if you do not agree with our position you may appeal your case the enclosed publication the examination process explains how to appeal an internal_revenue_service irs decision publication also includes information on your rights as a taxpayer and the irs collection process lf you request a conference we will forward your written_statement of protest to the appeals_office and they will contact you enclosed for your convenience an envelope is lf you and appeals do not agree on some or all of the issues after your appeals_conference or if you do not request an appeals_conference you may file suit in united_states tax_court the united_states court of federal claims or united_states district_court after satisfying procedural and jurisdictional requirements as described in publication letter catalog number 34801v you may also request that we refer this matter for technical_advice as explained in publication exempt_organization appeal procedures for unagreed issues lfa determination_letter is issued to you based on technical_advice no further administrative appeal is available to you within the irs on the issue that was the subject of the technical_advice if we do not hear from you within days from the date of this letter we if you accept our findings please sign and return the enclosed form_6018 consent to proposed adverse action we will then send you a final letter modifying or revoking exempt status will process your case on the basis of the recommendations shown in the report of examination and this letter will become final in that event you will be required to file federal_income_tax returns for the tax period s shown above file these returns with the ogden service_center within days from the date of this letter unless a request for an extension of time is granted file returns for later tax years with the appropriate service_center indicated in the instructions for those returns you have the right to contact the office_of_the_taxpayer_advocate taxpayer_advocate assistance is not a substitute for established irs procedures such as the formal appeals process the taxpayer_advocate cannot reverse a legally correct_tax determination or extend the time fixed by law that you have to file a petition in a united_states court the taxpayer_advocate can however see that a tax matter that may not have been resolved through normal channels gets prompt and proper handling you may call toll-free and ask for taxpayer_advocate assistance if you prefer you may contact your local taxpayer_advocate at if you have any questions please call the contact person at the telephone number shown in the heading of this letter the most convenient time to call if we need to contact you if you write please provide a telephone number and letter catalog number v thank you for your cooperation sincerely for nanette m downing acting director eo examinations enclosures publication publication form_6018 report of examination envelope letter catalog number 34801v form 886-a weiss january te explanations of items schedule number or exhibit name of taxpayer org tax identification_number year period ended december 20xx legend org organization name manager ra ra issue xx date officer officer manager whether org qualifies for exemption under sec_501 of the internal_revenue_code facts the internal_revenue_service has made reasonable requests to org to file form_990 for the tax period ending december 20xx the following requests were made cover letter form_4564 information_document_request idr and publication were sent to the organization on june 20xx agent called eo officer at several occasions to discuss the case and requested delinquent_return for 20xx12 but demands for filing were not met a day notice_and_demand letter and idr were sent by certified mail to the organization on september 20xx the certified receipt was returned signed on 20xx by officer a letter was sent to eo manager on october 20xx requesting delinquent returns form sec_941 and but not respond was receipted org has failed to respond to irs correspondences and phone calls and failed to file the form_990 for the tax period ending december 20xx the organization reported wages paid in 20xx of dollar_figure and failed to file form sec_941 substitute-for-returns were established by ra and letter and form_2504 agreement to assessment and collection of additional tax was mailed to eo for consent but the form was not return the organization was required to file a return as well for the year ending december 20xx but failed to respond to multiple correspondence sent and phone calls background org was established in june 19xx as part of a group ruling group exemption number the organization was granted tax exempt status as a c non-profit organization in january 19xx according to the executive director officer the organization no longer exists and does not conduct exempt_activities eo ceased form 886-a catalog number 20810w page publish no irs gov deparunent of the treasury-internal revenue service form 886-a sevielanusraalee name of taxpayer org a schedule number or exhibit explanations of items tax identification_number year period ended december 20xx operations at the end of 20xx currently the organization has no financial resources and no assets a letter was received from quartermaster of the national_office ra confirming org ceased of operations in 20xx nonetheless org did not follow proper procedures for termination of its exempt status articles of dissolution were not filed nor a final return was submitted when requested failure_to_file form 990s sec_6001 provides that every person liable for any_tax imposed by the irc or for the collection thereof shall keep adequate_records as the secretary_of_the_treasury or_his_delegate may from time to time prescribe sec_6033 provides except as provided in sec_6033 every organization exempt from tax under sec_501 shall file an annual return stating specifically the items of gross_income receipts and disbursements and such other information for the purposes of carrying out the internal revenue laws as the secretary may by forms or regulations prescribe and keep such records render under oath such statements make such other returns and comply with such rules and regulations as the secretary may from time to time prescribe sec_1_6001-1 in conjunction with sec_1_6001-1 provides that every organization exempt from tax under sec_501 and subject_to the tax imposed by sec_511 on its unrelated_business_income must keep such permanent books or accounts or records including inventories as are sufficient to establish the amount of gross_income deduction credits or other matters required to be shown by such person in any return of such tax such organization shall also keep such books_and_records as are required to substantiate the information required by sec_6033 sec_1_6001-1 states that the books_or_records required by this section shall be kept at all times available for inspection by authorized internal revenue officers or employees and shall be retained as long as the contents thereof may be material in the administration of any internal revenue law sec_1_6033-1 provides that every organization which has established its right to exemption from tax whether or not it is required to file an annual return of information shall submit such additional information as may be required by the district_director for the purpose of enabling him to inquire further into its exempt status and to administer the provisions of subchapter_f sec_501 and the following chapter of the code and sec_6033 form 886-a catalog number 20810w page publish no irs gov department of the treasury-internal revenue service for 886-a unov january name of taxpayer org schedule number or exhibit explanations of items tax identification_number year period ended december 20xx revrul_59_95 1959_1_cb_627 concerns an exempt_organization that was requested to produce a financial statement and statement of its operations for a certain year however its records were so incomplete that the organization was unable to furnish such statements the service held that the failure or inability to file the required information_return or otherwise to comply with the provisions of sec_6033 and the regulations which implement it may result in the termination of the exempt status of an organization previously held exempt on the grounds that the organization has not established that it is observing the conditions required for the continuation of exempt status in accordance with the above cited provisions of the code and regulations under sec_6001 and sec_6033 organizations recognized as exempt from federal_income_tax must meet certain reporting requirements these requirements relate to the filing of a complete and accurate annual information and other required federal tax forms and the retention of records sufficient to determine whether such entity is operated for the purposes for which it was granted tax-exempt status and to determine its liability for any unrelated_business_income_tax conclusion it is the irs's position that the organization failed to meet the reporting requirements under sec_6001 and sec_6033 to be recognized as exempt from federal_income_tax under sec_501 accordingly the proposed revocation would be effective as of december 20xx any contributions to the organization would no longer be deductible as charitable_contributions any contributions to this organization by those who were in part responsible for or were aware of the activities or deficiencies on the part of the organization that gave rise to loss of exempt status will not be allowed as a deduction effective the date of revocation lf this revocation becomes final appropriate state officials will be advised of the action in accordance with internal_revenue_code c and applicable regulations form 886-a catalog number 10w page publish no irs gov department of the treasury-internal revenue service


internal_revenue_service cc psi 1-cor-104451-01 date number info release date uilc we are responding to correspondence submitted originally to the memphis service_center on your behalf by requesting relief in order to establish date as the effective date for your s_corporation_election the information submitted explains that a timely election was filed however it appears that the internal_revenue_service failed to receive a timely election further your election was due by date but the election was signed and dated on date late if you have proof of mailing an earlier form_2553 we can consider your request although we are currently unable to respond to to your request as submitted this letter provides useful information relating to your request based on the instructions to form_2553 taxpayers are generally notified of acceptance or nonacceptance of their election within three months of date of filing_date mailed if the irs questions whether the election was filed acceptable proof of filing is a certified or registered mail receipt b form_2553 with an accepted stamp c form_2553 with stamped irs received date or e an irs letter stating the election has been accepted in revproc_97_48 the internal_revenue_service provides special procedures that permit taxpayers in certain situations to obtain automatic late s_corporation relief instead of applying for a private_letter_ruling however you are ineligible for automatic relief because the service sent notice about the form_2553 deficiency within months of receiving your first form_1120s tax_return announcement copy enclosed provides guidance on seeking relief for late s_corporation elections and inadvertent invalid s_corporation elections generally to request relief for a late or invalid s_corporation_election you must request a private_letter_ruling from the national_office the procedures for requesting a private_letter_ruling are set out in revproc_2001_1 copy enclosed in addition revproc_2001_1 requires taxpayers to submit a user_fee along with their ruling_request the standard user_fee for a private_letter_ruling is dollar_figure however taxpayers with gross_income of less than dollar_figure million on their last-filed tax_return qualify for a reduced user_fee in the amount of dollar_figure if you are eligible to use the reduced fee provision you must include the statement described in b b of appendix a with your request please review appendix b for a sample format for requesting a private_letter_ruling if you decide to submit a formal request for a private_letter_ruling please include the proper user_fee if applying under the reduced fee provisions send a statement certifying gross_income and refer your request to our office by adding the following to the address attn cc p a p o box ben franklin station washington dc direct to cc psi room 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 enclosures announcement revproc_2001_1


department of the treasury internal_revenue_service washington d c date number info release date uilc cc tege eoeg et1 genin-124678-02 memorandum for director internal_revenue_service center kansas city mo attn entity control from subject office of division counsel associate chief_counsel tax exempt and government entities cc tege eoeg et1 - genin-124678-02 railroad retirement act tax status in accordance with the coordination procedure established between the service and the railroad retirement board rrb the rrb has provided us with its opinion that the following business became an employer under the railroad retirement act and the railroad unemployment insurance act effective date we have reviewed the opinion of the rrb and based upon the information submitted to the rrb we also conclude that became an employer under the railroad_retirement_tax_act effective date please take the appropriate action regarding this business will e mcleod cc


department of the treasury internal_revenue_service washington d c office_of_chief_counsel date number info release date index number cc intl br genin-169728-02 dear this is in response to your letter dated date in which you requested certain general information concerning the source_of_income rules in sec_861 through of the internal_revenue_code and the regulations thereunder on date the internal_revenue_service published notice_2001_40 2001_1_cb_1355 which provides in part that the internal_revenue_service and the treasury_department are aware that certain persons are promoting the view that u s citizens and residents are not subject_to tax on their wages and other income earned or derived within the united_states based on the claim that the internal_revenue_code imposes taxes only on income derived from certain foreign-based activities the service and treasury are issuing this notice to inform taxpayers that this reporting position has no basis in law a copy of notice_2001_40 is attached as notice_2001_40 addresses the issues raised by your inquiry we have provided you all the general information we have on this topic sincerely barbara a felker chief branch office of the associate chief_counsel international enclosure notice_2001_40


t c memo united_states tax_court joseph j and eileen h lipari petitioners v commissioner of internal revenue respondent docket no filed date joseph j lipari and bileen h lipari pro sese richard a rappazzo for respondent memorandum opinion vasquez judge respondent determined a deficiency of dollar_figure in petitioners’ federal_income_tax and a dollar_figure accuracy-related_penalty under sec_6662 after petitioners failed to appear when their case was called for trial the court orally granted respondent’s motion to dismi sec_1 all section references are to the internal_revenue_code in effect for the year in issue and all rule references are to the tax_court rules_of_practice and procedure - - for lack of prosecution the sole matter for decision is respondent’s motion for imposition of a sec_6673 penalty background at the time the petition was filed joseph j lipari and bileen h lipari resided in cottonwood arizona petitioners have admitted that during mr lipari performed services as a chiropractor nonetheless petitioners failed to report a large percentage of the income from such activity on their income_tax return petitioners claimed that such income was earned by and taxable to an entity called d d trust the trust respondent determined that the income reported by the trust is properly taxable to mr lipari individually on the grounds that the trust is a sham 1ie lacks economic_substance that should be disregarded for tax purposes respondent alleged alternatively that if the trust were respected for tax purposes the trust constitutes a grantor_trust whose income is taxable to petitioners discovery for date trial this case was originally calendared for the court’s trial session in phoenix arizona on date in preparation for trial and as reguired by rule a respondent first although petitioners alleged that they enjoyed no interest in property which was transferred to the trust petitioners admitted to receiving a life tenancy to all property owned by the trust and further to having use of the real and personal_property owned by the trust attempted to obtain information regarding the trust through informal_discovery requests this attempt was unsuccessful on date respondent proceeded with formal discovery serving on petitioners respondent’s request for production of documents and respondent’s interrogatories to petitioners petitioners produced none of the documents requested by respondent instead petitioners submitted a response in which they claimed to be unable to produce the requested documents on the grounds that the documents were in the exclusive possession and control of jimmy c chisum managing agent for d e sword trustee co trustee for d d trust on date respondent filed with the court a motion to compel production of documents on date the court ordered petitioners to produce the requested documents by date petitioners failed to respond to this order on date the court granted respondent’s motion to compel and ordered that petitioners would not be allowed to offer into evidence any petitioners contended that mr chisum refused to provide them with records of the trust this assertion however is difficult to reconcile with petitioners’ admission that mr chisum had become a good friend in the years since inception of the trust and that the parties met quite regularly in addition petitioners’ difficulty in obtaining documents from the trustee appears to have been selective as an exhibit to petitioners’ response to motion for date and time certain for trial filed with the court on date petitioners attached a copy of a notice_of_deficiency issued to the trust for the taxable_year at issue q4e- documents not produced to respondent by date once again petitioners failed to produce any documents in response to this order in addition to not producing the documents requested by respondent petitioners also failed to answer respondent’s interrogatories on date respondent filed a motion to compel responses to respondent’s interrogatories on date the court ordered petitioners to respond to the interrogatories by date and further ordered respondent to file a status report as to petitioners’ response by date on date petitioners provided their answers to respondent’s interrogatories after receiving respondent’s status report the court reviewed petitioners’ answers by order of date the court determined that answers to of the interrogatories were inadequate and ordered that petitioners would not be allowed to offer into evidence answers to such interrogatories petitioners’ bankruptcy on date at the calendar call for the trial session in which this case was originally to be heard petitioners appeared with a notice of proceeding in bankruptcy reflecting that petitioners had filed a bankruptcy petition earlier that day in accordance with relevant provisions of the bankruptcy code all proceedings were ordered automatically stayed on date petitioners’ bankruptcy case was dismissed with prejudice the stay of proceedings in this case was thereafter lifted and the case was rescheduled for trial during the court’s date trial session discovery for date trial confronted with petitioners’ refusal to work toward a stipulation of facts respondent filed a motion to show cause why proposed facts in evidence should not be accepted as established on date on date the court issued an order to show cause under rule f requiring petitioners to respond as to why matters set forth in respondent’s motion should not be deemed admitted petitioners filed a response on date but such response failed to address the proposed stipulations on date respondent proceeded with a second attempt at formal discovery serving on petitioners respondent’s second set of interrogatories respondent’s second request for production of documents and respondent’s requests for admission petitioners addressed these discovery requests in much the same manner as previous ones prompting respondent again to seek the assistance of this court in obtaining discovery on date respondent filed a motion to compel responses to respondent’s second request for production of documents on -- - date respondent filed a motion to compel responses to respondent’s second set of interrogatories on the same date respondent filed a motion to review the sufficiency of petitioners’ response to respondent’s requests for admission the court granted each of respondent’s above-described motions on april and the court ordered petitioners on or before date to produce to respondent each and every document requested in respondent’s second request for production of documents provide respondent with full complete and responsive answers to each and every interrogatory in respondent’s second set of interrogatories and provide respondent with complete answers to the requested admissions at that time the court also made absolute its order to show cause under rule f providing that the facts and evidence set forth in respondent’s proposed stipulation of facts were deemed established on date following petitioners’ failure to comply with the above-described orders ’ respondent filed a motion to the requested admissions at issue those for which respondent sought court review of petitioners’ responses consisted of certain statements made by mr lipari under oath during a hearing in the course of petitioners’ bankruptcy case mr lipari objected to the requested admissions on the grounds that he was unable to recall the detail of his prior testimony petitioners’ only correspondence with the court during this time period consisted of a motion for enlargement of time filed on date and a motion to dismiss filed on date both motions were denied - impose sanctions by order of date the court granted the motion and prohibited petitioners from offering into evidence any facts which petitioners should have provided in response to respondent’s second set of interrogatories and any documents covered by respondent’s second request for production of documents which petitioners had failed to produce this order further provided that the admissions for which respondent sought review of petitioners’ responses were deemed admitted date trial session the trial in this case was rescheduled for a date and time certain of date pincite p m at the calendar call for the trial session held on the morning of june respondent filed a motion to dismiss for lack of prosecution and a motion for penalty under sec_6673 not only were petitioners absent at the trial session calendar call petitioners also failed to appear when their case was called for trial later that day after noting petitioners’ absence when their case was called for trial the court orally granted respondent’s motion to dismiss for lack of prosecution the court then took respondent’s motion for imposition of a sec_6673 penalty under advisement discussion sec_6673 authorizes this court to penalize a taxpayer who institutes or maintains a proceeding primarily for --- - delay petitioners’ conduct in this case has convinced us that delay was in fact the primary purpose behind this proceeding petitioners’ repeated failure to comply with respondent’s discovery requests even in the face of orders from the court directing them to do so has resulted in a waste of limited judicial and administrative resources that could have been devoted to resolving bona_fide claims of other taxpayers see 806_f2d_948 9th cir accordingly we shall grant respondent’s motion and require petitioners to pay a penalty to the united_states pursuant to sec_6673 in the amount of dollar_figure to reflect the foregoing an appropriate order and order of dismissal and decision shall be entered


department of the treasury internal_revenue_service washington d c tax_exempt_and_government_entities_division apr uniform issue list legend taxpayer a ira b financial_institution c account d financial_institution e amount dear - - this letter is in response to a request for a letter_ruling dated date as supplemented by additional information dated date in which you request a waiver of the 60-day rollover requirement contained in sec_408 of the internal_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 she took a distribution from ira b totaling amount taxpayer a asserts that her failure to accomplish a rollover within the 60-day period prescribed by sec_408 of the code was due to an error by financial_institution e taxpayer a further asserts that amount has not been used for any purpose taxpayer a maintained ira b an individual_retirement_account under sec_408 of the code with financial_institution c on date taxpayer a iby received a distribution totaling amount from ira b the check for amount was made payable to taxpayer a she intended to use these funds to purchase a certificate of deposit in an ira with financial_institution e on date taxpayer a entered a branch of financial_institution e to purchase the ira cd she verbally instructed an employee of financial_institution e to deposit amount into an ira for unknown reasons amount was deposited into account d a non-ira account financial_institution e has acknowledged in writing a mistake by one of its employees caused the failure to deposit amount into an ira based on the above facts and representations you request that the internal_revenue_service service waive the 60-day rollover requirement contained in sec_408 of the code with respect to the distribution of amount sec_408 of the code provides that except as otherwise provided in sec_408 of the code 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 provides the rules applicable to ira_rollovers sec_408 of the code provides that sec_408 of the code does not apply to any amount_paid or distributed out of an ira to the individual for whose benefit the ira is maintained if - i the entire amount received including money and any other_property is paid into an ira for the benefit of such individual not later than the day after the day on which the individual receives the payment or distribution or ii the entire amount received including money and any other_property is paid into an eligible_retirement_plan other than an ira for the benefit of such individual not later than the day after the date on which the payment or distribution is received except that the maximum amount which may be paid into such plan may not exceed the portion of the amount received which is includible in gross_income determined without regard to sec_408 of the code sec_408 of the code provides that sec_408 of the code does not apply to any amount described in sec_408 of the code received by an individual from an ira if at any time during the 1-year period ending on the day of such receipt such individual received any other amount described in sec_408 of the code from an ira which was not includible in gross_income because of the application of sec_408 of the code sec_408 of the code provides a similar 60-day rollover period for partial rollovers d a t sec_408 of the code provides that the rollover provisions of sec_408 do not apply to any amount required to be distributed under sec_408 sec_408 of the code provides that the secretary may waive the 60-day requirement under sec_408 and sec_408 of the code where the failure to waive such requirement would be against equity or good conscience including casualty disaster or other events beyond the reasonable control of the individual subject_to such requirement only distributions that occurred after date are eligible for the waiver under sec_408 of the code revproc_2003_16 r b date provides that in determining whether to grant a waiver of the 60-day rollover requirement pursuant to sec_408 of the code the service will consider all relevant facts and circumstances including errors committed by a financial_institution inability to complete a rollover due to death disability hospitalization incarceration restrictions imposed by a foreign_country or postal error the use of the amount distributed for example in the case of payment by check whether the check was cashed and the time elapsed since the distribution occurred the information presented and the documentation submitted by taxpayer a is consistent with her assertion that her failure to accomplish a timely rollover of amount was due to an error by financial_institution e therefore pursuant to sec_408 of the code the service hereby waives the 60-day rollover requirement with respect to the distribution of amount from ira b taxpayer a is granted a period of days from the issuance of this letter_ruling to contribute amount into 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 will be considered a rollover_contribution within the meaning of sec_408 this ruling does not authorize the rollover of amounts that are required to be distributed by sec_401 of the code no opinion is expressed as to the tax treatment of the transaction described herein under the provisions of any other section of either the code or regulations which may be applicable thereto this letter is directed only to the taxpayer who requested it sec_6110 of the code provides that it may not be used or cited as precedent this ruling does not authorize the rollover of amounts that are required to be distributed by sec_401 of the code if you wish to inquire about this ruling please contact at d sincerely yours manager employee_plans technical group enclosures deleted copy of this letter notice of intention to disclose notice


internal_revenue_service number release date index number -------------------------------------------- -------------------------- ------------------------------------- -------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ------------------------ id no ------------------- ---------------------------------------------------- telephone number --------------------- refer reply to cc psi b03 plr-130011-11 date date legend x ------------------------------------------------------------------------------------------------- ----------------------- ------------- ------------------ state date decedent ------------------------ date year date ------------------ ------- ------------------- dear -------------- this letter responds to a letter dated date and subsequent correspondence submitted on behalf of x requesting an extension of time under sec_301_9100-3 of the procedure and administration regulations for x to file an election under sec_754 of the internal_revenue_code code facts the information submitted states that x was formed as a limited_liability_company under state law on date decedent died on date owning of x through his living_trust a partnership return was timely filed for x for the year in which decedent died however a sec_754 election to adjust the basis of the partnership property was inadvertently not filed with the return law and analysis sec_754 provides that if a partnership files an election in accordance with the regulations prescribed by the secretary the basis of the partnership property shall be plr-130011-11 adjusted in the case of a distribution_of_property in the manner provided in sec_734 and in the case of a transfer of a partnership_interest in the manner provided in sec_743 such an election shall apply with respect to all distributions of property by the partnership and to all transfers of interested in the partnership during the taxable_year with respect to which such election was filed and all subsequent taxable years sec_1_754-1 of the income_tax regulations provides that an election under sec_754 to adjust the basis of partnership property under sec_734 and sec_743 with respect to a distribution_of_property to a partner or a transfer of an interest in a partnership shall be made in a written_statement filed with the partnership return for the taxable_year during which the distribution or transfer occurs for the election to be valid the return must be filed not later than the time prescribed by sec_1 e including extensions thereof for filing the return for such taxable_year sec_301_9100-1 provides that the commissioner may grant a reasonable extension of time under the rules set forth in sec_301_9100-2 and sec_301_9100-3 to make a regulatory election or a statutory election but not more than months except in the case of a taxpayer who is abroad under all subtitles of the code except subtitles e g h and i sec_301_9100-1 defines regulatory election to include an election whose due_date is prescribed by a regulation published in the federal_register sec_301_9100-2 provides automatic extensions of time for making certain elections sec_301_9100-3 provides extensions of time for making elections that do not meet the requirements of sec_301_9100-2 sec_301_9100-3 provides that requests for relief subject_to sec_301_9100-3 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 conclusion based on the facts submitted and the representations made we conclude that the requirements of sec_301_9100-1 and sec_301_9100-3 have been satisfied as a result x is granted an extension of time until the earlier of days from the date of this letter or date the date the statute_of_limitations would otherwise expire to make an election under sec_754 effective for its year taxable_year and thereafter the election should be made in a written_statement filed with the appropriate service_center for association with x’s year return a copy of this letter should be attached to the sec_754 election except as expressly provided herein we express or imply no opinion concerning the federal tax consequences of any aspect of any transaction or item discussed or plr-130011-11 referenced in this letter specifically we express or imply no opinion as to whether x is a partnership for federal tax purposes 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 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 ruling requests it is subject_to verification on examination in accordance with the power_of_attorney on file with this office we are sending a copy of this letter to your authorized representative sincerely associate chief_counsel passthroughs and special industries by _______________________________ richard t probst senior technician reviewer branch office of the associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes cc