internal_revenue_service number release date index numbers ------------------------------- ----------------------------------------------- -------------------------------- ----------------------- --------------------------------------------------- --------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ----------------- id no ------------- telephone number --------------------- refer reply to cc psi plr-144494-08 date date legend x --------------------------------------------------- -------------------------------- d country ---------------------- ---------- dear --------------- this is in response 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 to file an election under sec_301_7701-3 to be treated as a disregarded_entity for federal tax purposes facts according to the information submitted x was formed under the laws of country x intended to be treated as a disregarded_entity for federal tax purposes effective d however x inadvertently failed to timely file form_8832 entity classification election to be treated as a disregarded_entity for federal tax purposes law and analysis sec_301_7701-3 provides that a business_entity that is not classified as a corporation under sec_301_7701-2 or an eligible_entity can plr-144494-08 elect its classification for federal tax purposes an eligible_entity with a single owner can elect to be classified as an association or to be disregarded as an entity separate from its owner sec_301_7701-3 provides guidance on the classification of a foreign eligible_entity for federal tax purposes generally a foreign eligible_entity is treated as an association if all members have limited_liability unless the entity makes an election to be treated otherwise a foreign eligible_entity with a single owner having limited_liability may elect to be treated as a disregarded_entity pursuant to the rules of sec_301_7701-3 sec_301_7701-3 provides that an entity classification election must be filed on form_8832 and can be effective up to days prior to the date the form is filed or up to months after the date the form is filed under sec_301_9100-1 the commissioner may grant a reasonable extension of time to make a regulatory election or a statutory election but no more than six months except in the case of a taxpayer who is abroad under all subtitles of the internal_revenue_code except subtitles e g h and i section b defines the term regulatory election as including an election whose due_date is prescribed by a regulation published in the federal_register sec_301_9100-1 through provide the standards that the commissioner will use to determine whether to grant an extension of time to make an election sec_301_9100-1 sec_301_9100-2 provides automatic extensions of time for making certain elections sec_301_9100-3 provides rules for requesting extensions of time for regulatory elections that do not meet the requirements of sec_301_9100-2 requests for relief under sec_301_9100-3 will be granted when the taxpayer provides evidence to establish that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government conclusion based solely on the facts submitted and the representations made we conclude that the requirements of sec_301_9100-3 have been satisfied as a result x is granted an extension of time of days from the date of this letter to make an election to be treated as a disregarded_entity for federal tax purposes effective d x must make the election by filing a properly executed form_8832 with the appropriate service_center a copy of this letter should be attached to the form 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-144494-08 this ruling is directed only to the taxpayer requesting it sec_6110 provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative sincerely curt g wilson curt g wilson associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes cc


internal_revenue_service department of the uic washington dc contact person telephone number n reference to date t ep ra t3 feb legend taxpayer a individual b individual c accountant d ira x ira y company m dear this is in response to the letter submitted by your authorized representative in which you request relief under sec_301_9100-3 of the procedure and administration regulations the following facts and representations support your ruling_request taxpayer a who is unmarried maintained ira x an individual_retirement_arrangement described in code sec_408 with company m on or about date pursuant to the advice of individual b his financial advisor employed by company m taxpayer a converted ira x to a roth_ira ira y also with company m taxpayer a’s adjusted_gross_income for exceeded the limit found at sec_408a of the internal_revenue_code individual c an accountant assisted t meee taxpayer a in completing his federal tax_return however individual c did not advise taxpayer a that he was ineligible to convert his traditional_ira ira x to a roth_ira ira y additionally individual c reported taxpayer a’s date ira conversion as a rollover and did not report any portion of the converted ira proceeds as taxable_income thus taxpayer a did not pay federal_income_tax on the ira x proceeds which were converted to ira y during the and calendar years taxpayer a believed that he was eligible to convert his traditional_ira ira x to a roth_ira ira y however during calendar_year taxpayer a changed accountants and began using the services of accountant d accountant d advised taxpayer a that he was ineligible to convert ira x a traditional_ira to ira y a roth_ira because his income exceeded the code sec_408a limit because taxpayer a believed that his conversion of ira x to roth_ira y was valid he was unaware of the need to recharacterize ira y to a traditional_ira and consistent with his belief was unaware of the time limits found in announcements and for recharacterizing an amount that had been converted from a traditional tra to a roth_ira this ruling_request was submitted before the internal_revenue_service discovered the failure to recharacterize pursuant to said announcements taxpayer a timely filed his calendar_year federal_income_tax return based on the above you through your authorized representative request the following letter_ruling that pursuant to sec_301_9100-3 of the regulations taxpayer a is granted a period not to exceed six months from the date of this ruling letter to recharacterize her roth_ira ira y to a traditional_ira with respect to your request for relief under sec_301_9100-3 of the regulations sec_408a of the internal_revenue_code and sec_1_408a-5 of the income_tax regulations provide that except as otherwise provided by the secretary a taxpayer may elect to recharacterize an ira contribution made to one type of ira as having been made to another type of ira by making a trustee-to-trustee transfer of the ira contribution plus earnings to the other type of ira in a recharacterization the ira contribution is treated as having been made to the transferee ira and not the transferor ira under sec_408 a d and sec_1_408a-5 this recharacterization election generally must occur on or before the date prescribed by law including extensions for filing the taxpayer’s federal_income_tax returns for the year of contributions page sec_1_408a-5 question and answer-6 describes how a taxpayer makes the election to recharacterize the ira contribution to recharacterize an amount that has been converted from a traditional_ira to a roth_ira the taxpayer must notify the roth_ira trustee of the taxpayer’s intent to recharacterize the amount the taxpayer must provide the trustee and the transferee trustee if different from the transferor trustee with specified information that is sufficient to effect the recharacterization and the trustee must make the transfer code sec_408a provides in relevant part that an individual with adjusted_gross_income in excess of dollar_figure for a taxable_year is not permitted to make a qualified_rollover_contribution to a roth_ira from an individual_retirement_plan other than a roth_ira during that taxable_year sec_1_408a-4 q a-2 provides in summary that an individual with modified_adjusted_gross_income in excess of dollar_figure for a taxable_year is not permitted to convert an amount to a roth_ira during that taxable_year sec_301_9100-1 sec_301_9100-2 and sec_301_9100-3 of the procedure and administration regulations in general provide guidance concerning requests for relief submitted to the service on or after date sec_301_9100-1 of the regulations provides that the commissioner of the internal_revenue_service in his discretion may grant a reasonable extension of the time fixed by a regulation a revenue_ruling a revenue_procedure a notice or an announcement published in the internal_revenue_bulletin for the making of an election or application_for relief in respect of tax under among others subtitle a of the code sec_301_9100-2 lists certain elections for which automatic extensions of time to file are granted sec_301_9100-3 of the regulations generally provides guidance with respect to the granting of relief with respect to those elections not referenced in sec_301_9100-2 the relief requested in this case is not referenced in sec_301_9100-2 sec_301_9100-3 of the regulations provides that applications for relief that fall within sec_301_9100-3 will be granted when the taxpayer provides sufficient evidence including affidavits described in sec_301_9100-3 to establish that the taxpayer acted reasonably and in good_faith and granting relief would not prejudice the interests of the government sec_301_9100-3 of the temporary regulations provides that a taxpayer will be deemed to have acted reasonably and in good_faith i if its request for sec_301_9100-1 relief is filed before the failure to make a timely election is discovered by the service ii if the taxpayer inadvertently failed to make the election because of intervening events beyond the taxpayer's control iii if the taxpayer failed to make the election because after exercising reasonable diligence the taxpayer was unaware of the es page c necessity for the election iv the taxpayer reasonably relied upon the written advice of the service or v the taxpayer reasonably relied on a qualified_tax professional including a tax professional employed by the taxpayer and the tax professional failed to make or advise the taxpayer to make the election sec_301_9100-3 of the temporary regulations provides that ordinarily the interests of the government will be treated as prejudiced and that ordinarily the service will not grant relief when tax years that would have been affected by the election had it been timely made are closed by the statute_of_limitations before the taxpayer's receipt of a ruling granting relief under this section announcement 1994_24_irb_50 date provided that a taxpayer who timely filed his her federal_income_tax return would have until date to recharacterize an amount that had been converted from a traditional_ira to a roth_ira announcement 1999_44_irb_555 date provided that a taxpayer who timely filed his her federal_income_tax return would have until date to recharacterize an amount that had been converted from a traditional_ira to a roth_ira taxpayer a timely filed his federal_income_tax return as a result although he did not treat the balance of his ira x as taxable_income on his federal tax_return he was eligible for relief under either announcement or announcement however he missed the deadlines found in said announcements therefore it is necessary to determine if he is eligible for relief under the provisions of sec_301_9100-3 of the regulations in this case taxpayer a was ineligible to convert his ira x to roth_ira y since his adjusted_gross_income exceeded dollar_figure however until he discovered otherwise taxpayer a believed that he was eligible to convert his ira x to a roth_ira taxpayer a filed this request for sec_301 relief shortly after discovering that he was ineligible to convert ira x to a roth_ira and as noted above before the service discovered his failure to comply with the announcements referenced above calendar_year is not a closed tax_year with respect to your request for relief we believe that based on the information submitted and the representations contained herein the requirements of sec_301_9100-1 and sec_301_9100-3 of the regulations have been met and that you have acted reasonably and in good_faith with respect to making the election to recharacterize your roth_ira as traditional iras specifically the service has concluded that you have met the requirements of clauses i iii and v of sec_301_9100-3 of the page regulations therefore you are granted an extension of six months from the date of the issuance of this letter_ruling to so recharacterize 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 section j 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 ruling letter is being sent to your authorized representative sincerely yours kenneth t yednock fork manager employee_plans technical tax_exempt_and_government_entities_division enclosures deleted copy of ruling letter notice of intention to disclose


number release date id office uilc cca_2010021212513237 ---------- from ------------------- sent friday date pm to ------------------- cc ----------- subject re aar case if the two partnerships were obviously tefra based on the forms and k-1's then sec_6231 could not apply since that provision requires reasonable reliance on the return to determine that tefra does not apply in any event it does not appear that the agents in fact made any such determination based on the returns


id office uilc cca_2011022213581237 ---------- number release date from ------------------- sent tuesday date pm to --------------------- cc ----------- subject re tefra question - ------------------------ a payment from a partnership to a partner other than in the partner's capacity as a partner under sec_707 is a partnership_item under sec_301 a - a iii and a -1 c an affected_item would be limited to things such as the cost of goods a partner sold to the partnership but the gross payments between a partnership and partner as in your case would be partnership items


department of the treasury internal_revenue_service washington d c oo date aaa contact person d number telephone’number b2 employer_identification_number legend a b dear applicant this is in response to your letter dated date requesting the following rulings the amendment of the a vebas for union and salaried employees and the related plans and the use of the assets of the vebas to provide post-retirement medical and life benefits through the payment of premiums or otherwise for the non-a participants will not adversely affect the tax-exempt status of a vebas for union and salaried employees under sec_501 c of the code the amendment of a vebas for union and salaried employees and the related plans and the use of the assets of the vebas to provide post-retirement medical and life benefits through the payment of premiums or otherwise for the non-a participants will not be considered a disqualified_benefit under sec_4976 subject_to the excise_tax under sec_4976 of the code a as an independent company has adopted two separate welfare_benefit plans one for its salaried employees and the other for its union employees the plans provide for the payment of post-retirement medical and life coverage for a's eligible employees and their dependents the trusts for both plans have been recognized as exempt under sec_501 of the code even though the participants in the union plan are generally employees covered by a collective bargaining agreement the plan was established for the convenience of a and was not established pursuant to or as a result of the collective bargaining process age a has merged with b and is a separate operating subsidiary of b its former employees who continue their employment after the merger remain participants in their existing plans b and its subsidiaries other than a currently provide post-retirement medical and life benefits to their employees b intends to merge both plans and establish a single trust which will provide post-retirement benefits to all eligible employees entitled to benefits by reason of their employment by either a or b and any of b’s subsidiaries benefits will continue to be provided based on criteria that do not provide for disproportionate benefits to officers shareholders or highly compensated employees in addition the benefit plans will continue to be used exclusively to pay post-retirement medical and life benefits sec_501 of the code describes a voluntary employees’ beneficiary association veba providing for the payment of life sick accident or other_benefits to its members or their dependents or designated beneficiaries in which no part of its net earning inures other than through such payments to the benefit of any private_shareholder_or_individual sec_1_501_c_9_-2 of the income_tax regulations provides that the membership of an organization described in sec_501 must consist of individuals who become entitled to participate by reason of their being employees and whose eligibility for membership is defined by reference to objective standards that constitute an employment-related common bond among such individuals typically those eligible for membership in an organization described in sec_501 are defined by reference to a common employer or affiliated employers to coverage under one or more collective bargaining agreements with respect to benefits provided by reason of such agreement s to membership in a labor_union or to membership in one or more locals of a national or international labor_union the meaning of the term employee is defined in sec_1_501_c_9_-2 of the regulations whether an individual is an employee is determined by reference to the legal and bona_fide relationship of employer and employee the term employee includes the following an individual who is considered an employee i for employment_tax purposes under subtitle c of the internal_revenue_code and the regulations thereunder or ii for purposes of a collective bargaining agreement whether or not the individual could qualify as an empioyee under applicable common taw rules an individual who became entitled to membership in the association by reason of being or having been an employee the surviving_spouse and dependents of an employee sec_1_501_c_9_-3 of the regulations provides that the term life benefits means a benefit payable by reason of the death of a member or dependent a life benefit may be provided directly or through insurance it generally must consist of current protection but also may include a right to convert to individual coverage on termination of eligibility for coverage through the association or a permanent_benefit as defined in and subject_to the conditions in the regulations under sec_79 a life benefit also includes the benefit provided under any life_insurance_contract purchased directly from an employee-funded association by a member or provided by such an association to a member the term life benefit does not include a pension annuity or similar benefit except that a benefit payable by reason of the death of an insured may be settled in the form of an annuity to the beneficiary in lieu of a lump-sum death_benefit whether or not the contract provides for settlement in a lump sum sec_1 c -3 c of the regulations provides that the term sick_and_accident_benefits means amounts furnished to or on behalf of a member or a member's dependents such benefits may be provided through reimbursement to a member or a member's dependents for amounts expended because of illness or personal injury or through the payment of premiums to a medical_benefit or health insurance program similarly a sick and accident benefit includes an amount_paid to a member in lieu of income during a period in which the member is unable to work due to sickness or injury sick benefits also include benefits designed to safeguard or improve the health of members and their dependents sick_and_accident_benefits may be provided directly by an association to or on behalf of members and their dependents or may be provided indirectly by an association through the payment of premiums or fees to an insurance_company medical clinic or other program under which members and their dependents are entitled to medical services or to other sick_and_accident_benefits sick_and_accident_benefits may also be furnished in noncash form such as for example benefits in the nature of clinical care services by visiting nurses and transportation furnished for medical_care sec_1 c -4 a of the regulations provides that no part of the net_earnings of an employees’ association may inure to the benefit of any private_shareholder_or_individual other than through the payment of permissible benefits whether prohibited inurement has occurred is a question to be determined with regard to all the facts and circumstances sec_4976 of the code imposes an excise_tax on an employer equal to percent of any disqualified_benefit provided by an employer-maintained welfare_benefit_fund sec_4976 of the code defines disqualified_benefit to include any portion of a welfare_benefit_fund reverting to the benefit of the employer aye a sec_501 veba functions primarily as a cooperative device for pooling funds and distributing risks over and benefits to a defined group_of_employees sharing an employment - related common bond prohibited inurement arises when a veba benefits one or more individuals other than through the performance of functions characteristic of an organization described in sec_501 thus the inurement proscription would bar tax-exempt treatment of an organization predominantly organized and operated to promote the interest of an individual standing in relationship to the organization as an investor for private gain the parties intend to have all post-retirement medical and life benefits to be provided through the a veba's coverage for employees of b and b's subsidiaries previously provided by b will be transferred to the a veba's which have been recognized as exempt under sec_501 of the code all the eligible participating employees are employees of a single holding_company and its subsidiaries the sole benefits provided are qualifying sec_501 post-retirement life and health insurance benefits it has been represented that the benefits will be provided based on criteria that do not provide for disproportionate benefits to officers shareholders or highly compensated employees the continued payment of qualifying sec_501 benefits to qualifying employees is not inurement for the purposes of sec_501 of the code in addition the transfer of assets from one welfare_benefit_plan to another to provide for the payment of benefits to an expanded class of beneficiaries all of whom have a common employment bond is not a disqualified_benefit for the purposes of sec_4976 of the code accordingly we rule as follows the amendment of the a vebas for salaried and union employees and the related plans and the use of the assets of the vebas to provide post-retirement medical and life benefits through the payment of premiums or otherwise for the non-a participants will not adversely affect the tax-exempt status of a vebas for salaried and union employees under sec_501 of the code the amendment of a vebas for salaried and union employees and the related plans and the use of the assets of the vebas to provide post-retirement medical and life benefits through the payment of premiums or otherwise for the non-a participants will not be considered a disqualified_benefit under sec_4976 subject of the excise_tax under sec_4976 of the code this ruling is directed only to the organization that requested it sec_6110 of the code provides that it may not be used or cited as precedent we are informing the ohio ep eo key district_office of this ruling because this letter could help resolve any questions about your exempt status you should keep it in coy o your permanent records if you have any questions about reporting requirements or about excise employment or other federal taxes please contact the ohio ep eo customer service office pincite-5500 a toll free number or send correspondence to the following address internal_revenue_service ep eo customer service p o box cincinnati oh if you have any immediate questions about this ruling please contact the person whose name and telephone number are shown in the heading of this letter sincerely joseph chasin acting manager exempt_organizations technical group


internal_revenue_service department of the treasury washington dc contact percan telephone number op e bp t in reference to date m ay i999 uniform issue list no att'n legend company a company b company c company d company e company f plan x plan y dear this is in response to a ruling_request dated date submitted by your authorized representative as supplemented by and december correspondence dated september date the original ruling_request of date and replaced by the ruling_request of december to the distribution of assets from plan x under sec_401 a of the internal_revenue_code code relating is superceded in support of your ruling_request your authorized representative has presented the following facts plan x is a profit sharing plan containing a cash_or_deferred_arrangement described in sec_401 of the code yd page which was instituted by company a in a and employees of affiliated companies company b company c and company d participated in plan x employees of company on date company a and company b were acquired by the sale was a wholly owned subsidiary of a wholly owned subsidiary of company f a stock sale and the majority of rank and file as a condition of the sale company e required company e structured as employees remained employed in their present positions and company a continued to exist as company e company a to terminate plan x a signed a resolution on december as the date of termination of plan x to the appropriate key district_office for a determination that it was qualified upon termination prior to distributing the assets determination_letter to plan x indicating that the termination of the plan did not adversely affect the plan's qualification and stating that this favorable determination applies to the termination_date of december distributed in date the board_of directors of company designating that date company a submitted plan xx the key district_office issued a plan x assets were on date at the time of the sale company f maintained plan y a defined_contribution_plan containing a cash_or_deferred_arrangement described in sec_401 k provides retirement benefits for the employees of company f and the employees of company f's subsidiaries plan y employees of company a and company b are not eligible to participate in plan y until twelve months after all assets are distributed from plan x less than two percent of the participants in plan x have participated in plan y during the month period beginning one year prior to the termination of plan x and ending one year after the termination a representation has been made that under the terms of of the code plan y based on the aforementioned facts and representations you have requested a ruling that for purposes of rule under sec_1_401_k_-1 of the income_tax regulations the date of termination of plan x the two percent is december sec_401 k b i ii of the code provides in part that amounts held by a_trust which are attributable to employer contributions made pursuant to the employee's election may not ke distributable to participants or other beneficiaries earlier than an event described in paragraph sec_401 a i provides generally that distributions may be made upon the termination of the plan yy page without the establishment or maintenance of another defined_contribution_plan under sec_1_401_k_-1 of the regulations a of this section is applied as sec_1 k -1 d further provides that distribution of amounts attributable to elective contributions under a qualified_cash_or_deferred_arrangement may not be made upon plan termination if the employer establishes or maintains a successor plan the definition of the term employer contained in paragraph g termination and a successor plan is any other defined_contribution_plan maintained by the same employer k -1 d plan rule which provides that if month period beginning months before the termination fewer than two percent of the employees who were eligible under the defined_contribution_plan that includes the cash_or_deferred_arrangement as the other defined_contribution_plan successor plan also contains an exception to the successor of the date of plan termination are eligible under at all times during the the other plan is not a of the date of plan section sec_1 k -1 g of the regulations provides that the term employer means the employer within the meaning of sec_1_410_b_-9 sec_1_410_b_-9 of the regulations provides in part that employer means the employer maintaining the plan and those employers required to be aggregated with the employer under sec_414 of the code c m or revrul_89_87 1989_2_cb_81 provides that in order for a qualified_plan to terminate the date of termination must the plan participants and other be established the benefits of liabilities under the plan must be determined as of the date of plan termination and all assets must be distributed to satisfy those liabilities in accordance with the terms of the plan as soon as administratively feasible after the date of termination revrul_89_87 further provides that a determination of whether the assets have been distributed as soon as administratively feasible is based upon all the facts and circumstances of a given case the date of termination for plan x designated by resolution of this date company a and company b were wholly owned by the board_of directors of company a as subsidiaries of company e are aggregated with company e for purposes of determining whether the employer maintains or establishes a successor plan under sec_1 k -1 d since company f and as such company a and company b of the regulations was date ys page on the date plan x terminated plan y would be the parent of company e maintained plan y contribution plan a successor plan within the meaning of sec_1 k -1 d of the regulations unless plan y meets the requirements of the exception to the successor plan rule provided in sec_1 k -1 d herein referred to as the two percent rule under sec_1 the exception to the successor plan rule is k -1 d a defined it is represented that less than two percent of the participants in plan x have participated in plan y during the month period beginning one year prior to the termination of plan x and ending one year after the termination represented that the board_of directors of company a signed a resolution establishing december termination for plan x determination_letter dated february district_office determined that the termination of plan x on december of the plan date company a distributed the assets of plan x did not adversely affect the qualified status company a requested and received a as the date of in which the key is also in it accordingly we conclude with respect to your ruling_request that for purposes of the two percent rule under sec_1 k -1 d termination of plan xk of the income_tax regulations the date of is date this ruling expresses no opinion on the qualified status of plan y a copy of this letter is being sent to your authorized representative in accordance with the power_of_attorney on file in this office sincerely yours ohn kiololle sr john g riddle jr chief employee_plans technical branch yb enclosures deleted copy of letter notice of intention to disclose


internal_revenue_service department of the treasury number release date index number washington dc person to contact telephone number refer reply to cc psi - plr-113432-01 date date x a d1 year dear this letter responds to your letter dated date and subsequent correspondence requesting a ruling under sec_1362 of the internal_revenue_code the information submitted states that x was incorporated on d1 in year a as the president of x represents that x was intended to be an s_corporation beginning year its first taxable_year the minutes of the organizational meeting of x evidences this intent however no form_2553 election by a small_business_corporation was filed with the internal_revenue_service for year x filed a form_1120s u s income_tax return for an s_corporation sec_1362 of the code provides that if -- a an election under sec_1362 is made for any taxable_year after the date prescribed by sec_1362 for making such election for such taxable_year or no such election is made for any taxable_year and b the secretary determines that there was reasonable_cause for the failure to timely make such election the secretary may treat such an election as timely made for such taxable_year based solely on the facts and the representations submitted we conclude that x has established reasonable_cause for failing to make a timely election to be an s_corporation for x's year taxable_year accordingly provided that x makes an election to be an s_corporation by filing a completed form_2553 with the appropriate service_center effective for its year taxable_year within days following the date of this letter then such election will be treated as timely made for x’s year taxable_year a copy of this letter should be attached to the form_2553 except as specifically set forth above no opinion is expressed concerning the federal tax consequences of the facts described above under any other provision of the code including whether x was or is a small_business_corporation under sec_1361 of the code 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 sincerely yours j thomas hines chief branch office of the associate chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes


internal_revenue_service department i dollar_figure washington dc contact person sin telephone number op e ep t in reference to date jul yas legend individual a individual b plan c trust d ira e dear - - - - - this is in response to a letter dated date as revised by letters dated date submitted on your behalf by your authorized representative in which a private_letter_ruling was requested under sec_402 of the internal authorized representative and representations and may following submitted code revenue facts your code the individual a died testate on march is his surviving_spouse individual b individual a was a participant in plan c which meets the requirements of sec_401 of the internal_revenue_code trust d is the primary beneficiary of individual a's interest in plan c section dollar_figure of trust d named individuals a and b as the co-trustees of trust d section dollar_figure of trust d provides that if either of the trustees named in article first shall for any reason cease to act as trustee then the other trustee shall act as sole trustee 3sf page and and the trust b the the of is sole individual residual the trust survivor's trust d provides that upon the death of individual a_trust d is required to be divided into two separate trusts designated as the survivor's trust sole beneficiary income_beneficiary of the residual trust individual b is the sole trustee of the survivor's trust and the residual trust trust d requires individual b to divide trust d and allows her to determine which assets are to be allocated to the survivor's trust and the residual trust trust d further states that be distributed as necessary to individual b and that individual b may withdraw all or any porion of the survivor's trust assets by written request finally section dollar_figure of trust d provides that on the death of the deceased spouse individual a the surviving_spouse individual b shall have the power to amend revoke or terminate the survivor's trust furthermore pursuant to section on revocation or termination of the survivor's trust the surviving_spouse individual b the survivor's trust be delivered to its assets income shall shall from all all in accordance with the terms of trust d individual b as the trustee the survivor's trust trust d has sufficient funds to allocate the required amount to the residual trust and allocate individual a's entire_interest in plan c to the survivor's trust selected the assets for individual b then revoked the survivor's trust as as trustee individual b has allocated of trust d's interest in individual a's plan c benefit to the survivor's trust to individual a's benefit in plan c and allocated the interest to herself as the revocable survivor's trust individual b promptly upon receipt by the survivor's trust of individual a's assets transferred such assets to the trustee of her own individual_retirement_account ira the applicable required_minimum_distribution as defined in sec_401 che sole beneficiary of of the internal_revenue_code the extent plan c assets were in excess of in plan c to e based on the above ruling you request the following letter that individual b will be treated as acquiring the proceeds of individual a's interest in plan c a surviving_spouse of a deceased participant and not be treated as acquiring such interest from ti-ust d as any sec_402 of the internal_revenue_code provides that amount any 3b sy any distributee distrusted actually by to page employees' trust described in sec_401 which is exempt from tax under sec_501 of the code is taxable to the distributee in the taxable_year in which it is distributed in general sec_402 of the code provides that sec_402 of the code does not apply if the distributee transfers any portion such distribution sec_402 b defines an eligible_retirement_plan and includes in its definition individual in sec_408 of the code retirement accounts described property retirement received eligible_plan the an to of in sec_401 of the code provides that a_trust shall constitute a sec_401 qualified_trust only if the plan the distributee of any eligible rollover distribution-- part provides that which trust such of if is a i elects to have such distribution paid directly to an eligible_retirement_plan and ii specifies such eligible_retirement_plan to which such distribution is to be paid in such form and at such time as the plan_administrator may prescribe such distribution shall be in the form of a direct trustee-to-trustee transfer to the eligible_retirement_plan so specified sec_401 apply that subparagraph the eligible_rollover_distribution would be includible in gross_income a determined without regard to sec_402 and a not transferred as provided in subparagraph code the of only provides the to extent shall that a if the term eligible_rollover_distribution when used in sec_401 of the code has the same meaning as when used in sec_402 of the code the term eligible_retirement_plan when used in section of the code includes iras defined in sec_408 a a and b of the code generally transfer described in section code constitutes a direct_rollover of an eligible rollover distribution’ and is entitled to tax-deferred treatment pursuant to sec_2ction c of the code trustee-to-trustee of a direct a the section any distribution attributable to an employee is pa-d to the spouse of the employee after the employee's death sec_402of the if that states code the c of bs page code shall apply to such distribution in the same manner as the spouse were the employee if thus pursuant to sec_402 of the code a surviving_spouse who acquires proceeds from a qualified_plan by reason of the death of his or her spouse may elect to treat those proceeds as his or her own and roll them over into an individual_retirement_account established in his or her name generally if a decedent's qualified_plan proceeds pass through to a third party eg a_trust and then are distributed to the decedeit's surviving_spouse said spouse will be treated as the decedent thus generally the surviving_spouse will not be eligible to roll over the ira proceeds into his or her own ira acquiring them party third from from and not the the has both however if the trustee of a_trust which is the beneficiary of a deceased participant's interest in a qualitied plan is the surviving_spouse of said deceased participant and the surviving_spouse to allocate the qualified_plan interest to a subtrust of the trust of which she is the sole beneficiary and also the power to terminate the subtrust which termination results in the qualified_plan interest being paid to the surviving_spouse then for purpose of sec_402 the internal_revenue_service will treat the surviving_spouse as having acquired the ira proceeds from the decedent and not from the trust power b the a's from trust case survivor's individual individual in this surviving_spouse is the sole trustee of trust d and the sole beneficiary of the survivor's trust under the terms of trust d all of the income as necessary tc individual b and she may revoke or terminate the survivor's tiust at will as trustee she has allocated all of individual a's interest in plan c to the survivor's trust of trust d and subsequently terminated the survivor's trust with respect to the plan c interest as a result of said termination the plan c interest became payable to individua b under this set is appropriate to treat individual a's interest in plan c as being paid to individual b directly from plan c and not through trust d be distributed circumstances believes service shall that the of it with respect follows to your ruling_request we conclude as bsg page that individual b will be treated as accuiring the proceeds of individual a's interest in plan cc a surviving_spouse of a deceased participant and will not be treated as acquiring such interest from trust d as this ruling is based on the assumption that plan cc is qualified under sec_401 of the code and its trust is tax- exempt under sec_501 the transfer and that the ira e meets the applicable_requirements of sec_408 of the code at all times relevant to the transaction described herein this ruling also assumes that the transfer of individual a's in the requirements of sec_402 the transfer e meet the time of ira the code at of the code at the time of plan of interest will to cc this ruling is directed only to the taxpayer who requested sec_6110 of the internal_revenue_code provides it that it may not be used or cited by others as precedent pursuant to a power_of_attorney on file in this office a copy of this letter_ruling is being sent to your authorized representative sincerely yours signed soyue b floyd joyce e floyd chief employee flans technical branch enclosures deleted copy of letter_ruling form_437 3s


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 b01 plr-139683-12 date date legend ------------------------- x ------------------------------------------- d1 d2 d3 d4 d5 d6 d7 d8 -------------------- ------------------------ --------------------------- --------------------------- --------------------------- ---------------------- --------------------------- ---------------------------- years ---------------- year1 year2 --------- ------- state ----------- dollar_figurea dollar_figureb ------------ ---- plr-139683-12 dollar_figurec ----- dear ---------------- this responds to a letter dated date submitted on behalf of x by x’s authorized representative requesting inadvertent termination relief under sec_1362 of the internal_revenue_code facts according to the information submitted and representations made x was incorporated on d1 under the laws of state effective d2 x elected to be taxed as an s_corporation for x’s taxable years ending d3 d4 and d5 x’s passive_investment_income exceeded ---- of its gross_receipts furthermore x had c_corporation accumulated_earnings_and_profits ce p for each of the years stated above as a result x’s s election terminated on d6 to correct the error x made an election under sec_1_1368-1 of the income_tax regulations to distribute all of its ce p of dollar_figurea through a deemed_dividend in year2 x represents that it distributed dollar_figurea throughout year2 x represents that it owes dollar_figureb for years and that it amended its tax_return for year1 and included its payment of dollar_figurec on d8 x represents that its previous tax advisor inadvertently failed to inform x of the passive investment rules in addition x represents that it has always intended to maintain its s_corporation status and that the termination of x’s s election was inadvertent and did not involve retroactive tax planning or tax_avoidance x further represents that x and its shareholders continued to consistently treat x as an s_corporation and that x and its shareholders agree to make any adjustments required as a condition of obtaining relief under the inadvertent_termination_rule of sec_1362 that may be required by the secretary law and analysis sec_1361 provides that the term s_corporation means with respect to any taxable_year a small_business_corporation for which an election under sec_1362 is in effect for such year sec_1361 defines a small_business_corporation as a domestic_corporation which is not an ineligible_corporation and which does not a have more than shareholders b have as a shareholder a person other than an estate a_trust described in sec_1361 or an organization described in sec_1361 who is not an individual c have a nonresident_alien as a shareholder and d have more than class of stock plr-139683-12 sec_1362 provides that an election under sec_1362 shall be terminated whenever at any time on or after the 1st day of the 1st taxable_year for which the corporation is an s_corporation such corporation ceases to be a small_business_corporation sec_1362 provides that an election under sec_1362 shall be terminated whenever the corporation i has accumulated_earnings_and_profits at the close of each of consecutive taxable years and ii has gross_receipts for each of such taxable years more than percent of which are passive_investment_income sec_1362 provides that except as otherwise provided in sec_1362 the term passive_investment_income means gross_receipts derived from royalties rents dividends interest and annuities sec_1362 provides in relevant part that if an election under sec_1362 by any corporation was not effective for the taxable_year for which made determined without regard to sec_1362 by reason of a failure to meet the requirements of sec_1361 the secretary determines that the circumstances resulting in such ineffectiveness or termination were inadvertent no later than a reasonable period of time after discovery of the circumstances resulting in such ineffectiveness or termination steps were taken so that the corporation for which the termination occurred is a small_business_corporation and the corporation for which the termination occurred and each person who was a shareholder in such corporation at any time during the period specified pursuant to sec_1362 agrees to make the adjustments consistent with the treatment of such 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 such corporation shall be treated as an s_corporation during the period specified by the secretary sec_1_1362-4 provides in relevant part that the determination of whether a termination was inadvertent is made by the commissioner the corporation has the burden of establishing that under the relevant facts and circumstances the commissioner should determine that the termination was inadvertent the fact that the terminating event was not reasonably within the control of the corporation and in the case of a termination was not part of a plan to terminate the election or the fact that the terminating event or circumstance took place without the knowledge of the corporation notwithstanding its due diligence to safeguard itself against such an event or circumstance tends to establish that the termination of the election was inadvertent sec_1_1362-4 provides that the commissioner may require any adjustments that are appropriate in general the adjustments required should be consistent with the treatment of the corporation as an s_corporation during the period specified by the commissioner plr-139683-12 sec_1375 imposes a tax on the income of an s_corporation that has accumulated_earnings_and_profits at the close of a taxable_year and that has gross_receipts more than of which are passive_investment_income within the meaning of sec_1362 sec_1375 provides that the amount of the excess_net_passive_income for any taxable_year shall not exceed the amount of the corporation's taxable_income for such taxable_year as determined under sec_63 a -- i without regard to the deductions allowed by part viii of subchapter_b other than the deduction allowed by sec_248 relating to organizational_expenditures and ii without regard to the deduction under sec_172 sec_1_1368-1 provides that an s_corporation may elect to distribute all or part of its accumulated_earnings_and_profits through a deemed_dividend if an s_corporation makes the election provided in sec_1_1368-1 the s_corporation will be considered to have made the election under sec_1368 and sec_1_1368-1 to distribute earnings_and_profits first conclusion based solely on the facts submitted and the representations made we conclude that x’s s_corporation_election terminated on d6 because for three consecutive years x had ce p and more than ---- percent of x’s income was passive_activity income under sec_1362 we further conclude that the termination of x’s s election on d6 was inadvertent within the meaning of sec_1362 pursuant to the provisions of sec_1362 x will be treated as continuing to be an s_corporation on and after d6 provided x's s_corporation_election was valid and is not otherwise terminated under sec_1362 except as specifically ruled upon above we express or imply no opinion concerning the federal tax consequences of the facts of this case under any other provision of the code specifically we express or imply no opinion regarding x’s eligibility to be an s_corporation this ruling is directed only to the taxpayer who requested it according to sec_6110 this ruling may not be used or cited as precedent plr-139683-12 pursuant to the power_of_attorney on file with this office we are sending a copy of this letter to your authorized representative sincerely joy c spies joy c spies senior technician reviewer branch office of the associate chief_counsel passthroughs special industries enclosures copy of this letter copy of this letter for sec_6110 purposes cc


internal_revenue_service number release date index number ---------------------------------- ---------------------------------------- ------------------------ ---------------------------------------- ---------------------------------- ty ------- ty ------- 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 b03 plr-135904-08 date date legend corp a ----------------------- ------------------------ ----------------------------------------------- ------------------------------------------ -------------------------------------------- ------------------------------------------ ------------------------------------------------- --------------------------------------------- --------- --------------------------- -------------- -------------- ----------------- ----------------- corp b corp c corp d corp e corp f corp g country l date o p percent q percent r percent s percent tax_year x ------- tax_year y ------- dear ---------------- this is in response to your letter dated date in which you request consent for corp a to revoke effective for tax_year y and for all subsequent taxable years its election effective beginning for tax_year x to use the safe_harbor method described in sec_1_901-2a in determining the amount of foreign_income_tax paid_or_accrued or deemed paid_or_accrued to country l the information submitted for consideration is substantially as set forth below the ruling contained in this letter is based upon information and representations you submitted and accompanied by your penalty of perjury statement while this office has plr-135904-08 not verified any of the material submitted in support of the request for rulings it is subject_to verification on examination corp a is a domestic_corporation that is the common parent of an affiliated_group_of_corporations corp a group that has filed a u s consolidated federal_income_tax return for tax_year x and for all subsequent tax years the due_date including extensions for corp a’s u s consolidated federal_income_tax return for tax_year y is date o which is more than days after date corp a group owns directly and indirectly percent of corp b a controlled_foreign_corporation cfc for u s tax purposes corp b owns percent of corp c another cfc in tax_year y corp c owned percent of corp d a foreign company treated as an entity disregarded from corp c for u s tax purposes p percent of corp e a foreign_corporation and p percent of corp f a foreign company treated as a partnership for u s tax purposes the remaining p percent of of each of corp e and f was owned by an unrelated third party corps d e and f owned q percent r percent and s percent respectively of corp g a country l company treated as a partnership for u s tax purposes corp g conducts operations in country l corp g is and has been a dual_capacity_taxpayer as defined in sec_1_901-2 with respect to its operations in country l sec_1_901-2a permits dual capacity taxpayers in computing foreign tax_credits for qualifying levies of each country to use either a facts and circumstances method or a safe_harbor method to determine the amount of a levy that is not paid in exchange for a specific_economic_benefit corp a filed a safe_harbor method election under sec_1_901-2a with respect to country l levies paid_or_accrued or deemed paid_or_accrued by members of corp a group effective for tax_year x and for subsequent years that safe_harbor method election has not been revoked under sec_1_901-2a sec_1_901-2a describes the manner in which taxpayers may elect and revoke the safe_harbor method sec_1_901-2a provides that the safe_harbor method election may not be revoked without the consent of the commissioner consent is normally given provided the conditions set forth in the regulation are satisfied the regulation provides that an application_for consent to revoke the election must be made not later than days before the due_date including extensions for the filing of the income_tax return for the first taxable_year for which the revocation is sought to be effective with certain exceptions not applicable to this situation the commissioner may make his consent to any revocation conditioned upon adjustments being made in one or more taxable years so as to prevent the revocation from resulting in a distortion of the amount of any item relating to tax_liability in any taxable_year the commissioner will normally consent to a revocation under the circumstances described in sec_1_901-2a through vi plr-135904-08 sec_1_901-2a provides that the commissioner will normally consent to a revocation of a safe_harbor method election if the election has been in effect with respect to at least three taxable years prior to the taxable_year for which the revocation is to be effective based solely on the information and representations submitted corp a’s application_for consent to revoke the safe_harbor method election with respect to qualifying levies of country l was made not later than days before date o the due_date including extensions for corp a’s u s consolidated federal_income_tax return for tax_year y and the applicable safe_harbor method election has been in effect with respect to at least corp a’s last three taxable years prior to tax_year y accordingly consent is granted to corp a to revoke the safe_harbor method election with respect to qualifying levies of country l effective for tax_year y and for all subsequent taxable years no opinion was requested and no opinion is expressed as to whether based upon all of the relevant facts and circumstances the amount if any paid pursuant to a levy or levies imposed by country l is not an amount_paid in exchange for a specific_economic_benefit 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 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 a copy of this letter must be attached to any income_tax return to which it is relevant alternatively taxpayers filing their returns electronically may satisfy this requirement by attaching a statement to their return that provides the date and control number of the letter_ruling sincerely richard l chewning senior counsel branch international enclosure copy for purposes


department of the treasury employer_identification_number contact person - id number contact telephone number uil internal_revenue_service p o box cincinnati oh number release date date date legend n name of bank p application q form r application s foundation t foundation u university v state w university x university y dollars amount z dollars amount dear you asked for advance approval of your scholarship grant procedures under sec_4945 this approval is required because you are a private_foundation that is exempt from federal_income_tax you requested approval of your scholarship program to fund the education of certain qualifying students our determination we approved your procedures for awarding scholarships based on the information you submitted and assuming you will conduct your program as proposed we determined that your procedures for awarding scholarships meet the requirements of code sec_4945 as a result expenditures you make under these procedures won't be taxable also awards made under these procedures are scholarship or fellowship grants and are not taxable to the recipients if they use them for qualified_tuition_and_related_expenses subject_to the limitations provide in code sec_117 letter catalog number 58263t description of your request your purpose is to provide educational scholarships to individuals attending a college or university you have four different types of scholarships three types of your scholarships are publicized by s who you contract with to advertise the scholarships s maintains a centralized application portal for scholarships and promotes its portal on its website local television and radio news broadcasts and print media your fourth type of scholarship is advertised by t and x directly to their students the criteria for each of your four types of scholarships are as follows type -an applicant must be a current or incoming undergraduate or graduate student be enrolled at u be a resident of v and have a minimum gpa of type -an applicant must be a current junior senior or graduate student enrolled at an accredited domestic college or university participate in a study abroad program through the domestic college or university and have a minimum gpa of type -an applicant must i be african- american be enrolled in an undergraduate or graduate degree program at an accredited college or university in v and have a minimum gpa of type -an applicant must be a foreign student enrolled full-time in an undergraduate or graduate degree program at the w or x and have a minimum gpa of to apply for the first three types of scholarships applicants must complete and submit an application through the website portal of s by the date specified in the application applicants must complete sections including application information letters of recommendation academic history and plans academic performance financial need extracurricular activities and community service affiliation questions and a personal statement for the fourth type of scholarship applicants should complete and submit the r through the website of thew or the p and q through the website of x by the date specified applicants using the r must provide applicant information letters of recommendation the q official transcripts personal statements and essays the p asks applicants to complete sections including applicant information official transcripts extracurricular activities academic performance and parent legal guardian information scholarship recipients are selected by the trustee's trust administration committee which is comprised of individuals holding various positions at n for the first three types of scholarships s prepares a file for each applicant conducts the preliminary screening for eligibility criteria and verifies the applicant's enrollment and good standing at a letter catalog number 58263t - - - - - - - - - - college or university wand x conduct the preliminary screening and verification of good standing for the fourth type of scholarship s w and x then provide the applicant files and verifications of good standing to your trustee and recipients are selected based on criteria such as financial need scholastic achievement academic records and letters of recommendations for all types of scholarships you give preference to students pursuing studies in the social sciences pertaining to international understanding and interracial fellowship applicants that are disqualified persons with respect to you within the meaning of sec_4946 are not eligible for scholarships the number of scholarship grants you make each year is determined annually by the trustee based upon the number of qualified applicants and the estimated minimum_required_distribution to avoid liability for the tax imposed by sec_4942 you typically award between ten and fifteen scholarships each year in amounts ranging from y dollars to z dollars you make a scholarship payment for the recipient's fall semester upon receiving proof that an incoming freshman recipient is enrolled at an accredited domestic college or university or that a current student is in good standing at an accredited domestic college or university payments are made directly to the college or university the recipient must be in good standing to maintain the scholarship and receive the second payment for the spring semester if a recipient does not remain enrolled at the college or university then you require any unused payments to be returned to you a recipient may qualify for a renewal of the scholarship but must reapply each year you represent that you will complete the following arrange to receive and review grantee reports annually and upon completion of the purpose for which the grant was awarded investigate diversions of funds from their intended purposes and take all reasonable and appropriate steps to recover the diverted funds ensure other grant funds held by a grantee are used for their intended purposes and withhold further payments to grantees until you obtain grantees' assurances that future diversions will not occur and that grantees will take extraordinary precautions to prevent future diversion from occurring you also represent that you will maintain all records relating to individual grants including information obtained to evaluate grantees identify a grantee is a disqualified_person establish the amount and purpose of each grant and establish that you undertook the supervision and investigation of grants described above basis for our determination the law imposes certain excise_taxes on the taxable_expenditures of private_foundations code sec_4945 a taxable_expenditure is any amount a private_foundation pays as a grant to an individual for travel study or other similar purposes however a grant that meets all of the following requirements of code sec_4945 is not a taxable_expenditure the foundation awards the grant on an objective and nondiscriminatory basis the irs approves in advance the procedure for awarding the grant letter catalog number 58263t the grant is a scholarship or fellowship subject_to the provisions of code sec_117 the grant is to be used for study at an educational_organization described in code sec_170 a ii other conditions that apply to this determination this determination only covers the grant program described above this approval will apply to succeeding grant programs only if their standards and procedures don't differ significantly from those described in your original request this determination applies only to you it may not be cited as a precedent you cannot rely on the conclusions in this letter if the facts you provided have changed substantially you must report any significant changes to your program to the cincinnati office of exempt_organizations at internal_revenue_service exempt_organizations determinations p o box cincinnati oh you cannot award grants to your creators officers directors trustees foundation managers or members of selection committees or their relatives all funds distributed to individuals must be made on a charitable basis and further the purposes of your organization you cannot award grants for a purpose that is inconsistent with code sec_170 you should keep adequate_records and case histories so that you can substantiate your grant distributions with the irs if necessary we've sent a copy of this letter to your representative as indicated in your power_of_attorney please keep a copy of this letter in your records if you have questions please contact the person listed at the top of this letter sincerely jeffrey i cooper director exempt_organizations rulings and agreements letter catalog number 58263t


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 b01 plr-112436-15 date september legend x d --------------------------------------- ------------------- state ---------- dear ---------------------- this is in response 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 to file an election under sec_301_7701-3 to be treated as an association_taxable_as_a_corporation for federal tax purposes facts according to the information submitted x was formed on d under the laws of state x intended to be treated as an association_taxable_as_a_corporation for federal tax purposes effective d however x inadvertently failed to timely file form_8832 entity classification election to be treated as an association_taxable_as_a_corporation for federal tax purposes law and analysis sec_301_7701-3 provides that a business_entity that is not classified as a corporation under sec_301_7701-2 or an eligible_entity can plr-112436-15 elect its classification for federal tax purposes an eligible_entity with a single owner can elect to be classified as an association or to be disregarded as an entity separate from its owner sec_301_7701-3 provides that an eligible_entity may elect to classified other than as provided under sec_301_7701-3 by filing form_8832 with the service_center designated on the form sec_301_7701-3 provides that an election made under sec_301_7701-3 will be effective on the date specified by the entity on form_8832 or on the date filed if no such date is specified on the election form the effective date specified on form_8832 can not be more than days prior to the date on which the election is filed and can not be more than months after the date on which the election is filed sec_301_7701-3 provides that such an election must be signed by either a each member of the electing entity who is an owner at the time the election is filed or b any officer manager or member of the electing entity who is authorized under local law or the entity’s organization documents to make the election and who represents to having such authorization under penalties of perjury sec_301_7701-3 provides that if an election is to have a retroactive effective date each person who was an owner between the date the election is to be effective and the date the election is filed and who is not an owner at the time the election is filled must also sign the election under sec_301_9100-1 the commissioner may grant a reasonable extension of time to make a regulatory election or a statutory election but no more than six months except in the case of a taxpayer who is abroad under all subtitles of the internal_revenue_code except subtitles e g h and i section b defines the term regulatory election as including an election whose due_date is prescribed by a regulation published in the federal_register sec_301_9100-1 through provide the standards that the commissioner will use to determine whether to grant an extension of time to make an election sec_301_9100-1 sec_301_9100-2 provides automatic extensions of time for making certain elections sec_301_9100-3 provides rules for requesting extensions of time for regulatory elections that do not meet the requirements of sec_301_9100-2 requests for relief under sec_301_9100-3 will be granted when the taxpayer provides evidence to establish that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government plr-112436-15 conclusion based solely on the facts submitted and the representations made we conclude that the requirements of sec_301_9100-3 have been satisfied as a result x is granted an extension of time of days from the date of this letter to make an election to be treated as an association_taxable_as_a_corporation for federal tax purposes effective d x must make the election by filing a properly executed form_8832 with the appropriate service_center a copy of this letter should be attached to the form this ruling is contingent on x and its owners filing within days from the date of this letter all required federal_income_tax and information returns including amended returns consistent with the requested relief granted in this letter a copy of this letter must be attached to any income_tax return to which it is relevant alternatively taxpayers filing their returns electronically may satisfy this requirement by attaching a statement to their return that provides the date and control number of the letter_ruling 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 this ruling is directed only to the taxpayer requesting it sec_6110 provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative sincerely curt g wilson deputy associate chief_counsel passthroughs special industries by david r haglund david r haglund branch chief branch office of the chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes


internal_revenue_service national_office technical_advice_memorandum august third party communication none date of communication not applicable tam-118916-06 number release date index uil no case-mis no ------------------------ ------------------------------------- ------------------ taxpayer's name taxpayer's address taxpayer's identification no year s involved date of conference legend -------------------------------- ------------------ ---------------------------- ---------------- ------------------------ ---------- -------------------------------- academy lease agreement ---------------------------------------------------------- state state law a ------------ ------------------------------------------------------------------------------------------ --------------------------- ------------------------------------------------------------------------------------------ --------------------------- ------------------------------------------------------------------------------------------ -------------------------------------------------------------------- state law b state law c tam-118916-06 state law d ------------------------------------------------------------------------------------------ --------- state constitution ------------------------------------------------ university board or authorizing body university charter ------------------------- ------------------------------------------------------ ------------------------------------------------------------------------------------------ ----------------------------------------------------------------------------------------- -------------------------- -------------------------- -------------------------------------------------------------------------------- whether the academy is a political_subdivision within the meaning of sec_1_103-1 alternatively if the academy is not a political_subdivision whether its debt is issued on behalf of a state_or_local_governmental_unit within the meaning of sec_1_103-1 the academy is not a political_subdivision within the meaning of sec_1_103-1 because it has not been delegated a substantial amount of the sovereign powers of the state even though the academy is not a political_subdivision of the state the debt of the academy is issued on behalf of the state within the meaning of sec_1_103-1 date lender state funds issues conclusions tam-118916-06 facts on date the academy entered into a lease-purchase agreement the lease agreement with the lender the lease agreement is a capital lease the proceeds of the lease agreement were used by the academy to acquire educational facilities the financed property pursuant to the lease agreement payments of principal and interest thereon are made from state funds received by the academy the repayment of the lease agreement was further secured_by a mortgage on the financed property at the time the lease agreement was entered into counsel to the lender provided a legal opinion that payments of interest on the lease agreement were tax-exempt because the academy is a political_subdivision within the meaning of sec_103 of the internal_revenue_code_of_1986 the code the academy designated the lease agreement as a qualified_tax-exempt_obligation pursuant to sec_265 of the code the academy is incorporated as a nonprofit corporation pursuant to the provisions of state law a and was organized for the purposes of operating as a public school academy in the state pursuant to state law b the academy is prohibited under its articles of incorporation the articles from carrying on any activity which is not an integral part of the function of providing public education to students residing in the state the articles provide that no part of the net_earnings of the academy shall inure to the benefit of or be distributable to its directors board officers or other private persons or organization organized and operated for profit upon dissolution of the academy the academy is required to dispose_of its assets to the authorizing body defined below or to the state or any political_subdivision of the state state law b provides for numerous functions permitted activities manner of creation and method of supervision of public school academies such as the academy academies formed under state law b are considered public schools under the state constitution including for purposes of receiving state funds under state law b a public school academy is a body corporate and a governmental agency and the powers granted to it constitute the performance of essential public purposes and governmental functions of the state under state law b a public school academy is permitted to borrow money and issue tax-exempt_bonds bonds issued by a public school academy are the full faith and credit obligations of the academy pledging the general funds of the academy or any other money available to repay debt any debt of a public school academy does not constitute an obligation of the state or the authorizing body public school academies are not permitted to levy ad valorem property taxes and are not delegated police powers an academy may condemn property after just compensation has been determined and paid in accordance with state law c but only with the express written consent of its authorizing body there is no evidence in this case that this approval would be automatically given by the university board tam-118916-06 state law b provides that a public school academy must be authorized to operate by entering into a contract with an authorizing body state law b permits the governing board_of a state public university to act as an authorizing body the academy entered into such a contract the charter with the university board a governing body of a state public university the university pursuant to which the university board approved the establishment of the academy as a public school academy the university is a state public university created pursuant to the state constitution and the laws of the state the university board is an eight-member state controlled body corporate whose members are appointed by the governor of the state by and with the consent of the state senate the parties agree that the university board is a part of the state the university board is charged with the general supervision of the university and the control and direction of all expenditures from the funds of the university the university board approved the academy’s articles and its bylaws the academy is prohibited from making any amendments to the articles or its bylaws without the approval of the university board members of the board_of directors of the academy the academy board are appointed and can be removed by the university board the initial members of the academy board were authorized by the university board subsequent replacements are appointed by the university board from a list of recommendations submitted by the academy all members of the academy board are considered public officials under the state constitution and are required to take the oath of public_office the academy and its incorporators board members officers employees and volunteers have governmental immunity under the laws of the state under state law b the university board is required to oversee the academy’s compliance with the terms of the charter and with applicable law on an ongoing basis the university board can revoke the charter if the academy fails to meet the educational goals contained in the charter comply with applicable law meet generally accepted public sector accounting principles or if the university board finds the existence of one or more grounds for revocation as specified in the charter the decision to revoke the charter is solely within the discretion of the university board is final and is not subject_to review by any court or state_agency the operations of the academy are also supervised by the state board_of education the board_of education has leadership and general supervision over all public education including public school academies but excluding institutions of higher education granting baccalaureate degrees the board_of education serves as the general planning and coordinating body for all public education and advises the state legislature as to financial requirements in connection therewith the members of the board_of education are elected additionally the governor of the state has a non-voting ex-officio appointment as a member of the board_of education the board_of education also has the ability under state law b to suspend the power of an authorizing body to tam-118916-06 issue new contracts for public school academies if it determines that an authorizing body is not engaging in appropriate continuing oversight of a public school academy the academy is to be financed primarily from state funds received pursuant to state law d state funds are generated by the taxing power of the state and distributed to each public school in the state on a per pupil basis public school for this purpose includes public school academies such as the academy the university board is the academy’s fiscal agent for purposes of receiving and transmitting the academy’s allocation of the state funds accordingly all payments of state funds allocable to the academy are transmitted to the university board which then transmits the funds to the academy law and analysis sec_103 provides that gross_income does not include interest on any state_or_local_bond sec_103 provides that the term state_or_local_bond means an obligation of a state or political_subdivision thereof sec_1_103-1 provides that obligations issued by or on behalf of any state_or_local_governmental_unit by constituted authorities empowered to issue such obligations are the obligations of such a unit the internal_revenue_code does not define the term political_subdivision however sec_1_103-1 provides that the term political_subdivision denotes any division of any state_or_local_governmental_unit which is a municipal corporation or which has been delegated the right to exercise part of the sovereign power of the unit as thus defined a political_subdivision of any state_or_local_governmental_unit may or may not for purposes of this section include special assessment districts so created such as road water sewer gas light reclamation drainage irrigation levee school harbor port improvement and similar districts and divisions of any such unit revrul_78_276 1978_2_cb_256 states that the term political_subdivision has been defined consistently for all federal tax purposes as denoting either a division of a state_or_local_government that is a municipal corporation or a division of such state_or_local_government that has been delegated the right to exercise sovereign power our first inquiry is whether the academy is a division of a state_or_local_government unit in determining whether an entity is a division of a state_or_local_governmental_unit important considerations are the extent the entity is controlled by the state_or_local_government unit and motivated by a wholly public purpose revrul_83_131 1983_2_cb_184 consideration of these principles as they apply to the facts in this case leads us to conclude that the academy is a division of the state in accordance with the state constitution education is a public purpose of the state public schools perform the tam-118916-06 education function for the state the academy was created pursuant to state law b which expressly permits and fosters the creation and operation of public school academies under state law b public school academies such as the academy are public schools and the powers granted by state law b to academies constitute the performance of essential public purposes and governmental functions private_inurement is not allowed in the organization or operation of the academy in addition the operations of the academy are subject_to the control and supervision of the university board which is a part of the state as well as by the state board_of education the state is the principal source of operating_expenses for the academy through the provision of state funds accordingly we conclude that the academy is a division of the state having concluded that the academy is a division of the state our next inquiry is whether the academy is a municipal corporation or has been delegated the right to exercise sovereign power and therefore can be considered a political_subdivision of the state the academy is not a municipal corporation so we therefore turn to the question of whether the academy has been delegated the right to exercise sovereign power three generally acknowledged sovereign powers of states are the power to tax the power of eminent_domain and the police power see 3_tc_131 acq c b aff’d 144_f2d_998 2d cir cert_denied 323_us_792 it is not necessary that all three of these powers be delegated in order to treat an entity as a political_subdivision for purposes of the code however possession of only an insubstantial amount of any or all of the sovereign powers is not sufficient all of the facts and circumstances must be taken into consideration including the public purposes of the entity and its control by a government revrul_77_164 1977_1_cb_20 revrul_77_165 1977_1_cb_21 the academy does not have the power to tax or police power under state law b the academy is granted the power to condemn property in accordance with certain sections of state law c however the academy can only exercise this power if it first obtains the written authorization of the university board and there is no evidence that this approval would be automatically given we believe that the approval required in this case represents a significant limitation on the ability of the academy to exercise the power to condemn based on the facts and circumstances of this case we do not believe that this limited power to condemn constitutes a substantial delegation of sovereign power accordingly the academy is not a political_subdivision of the state having concluded that the academy is not a political_subdivision of the state we next examine the question of whether the debt of the academy is issued on behalf of a state_or_local_governmental_unit within the meaning of sec_1_103-1 revrul_57_187 1957_1_cb_65 holds that bonds issued by an industrial development board are considered issued on behalf of a political_subdivision of the state because the following conditions are met the entity is formed only after the governing body of the state or political_subdivision has formally approved the entity’s creation the tam-118916-06 board_of directors of the entity is elected by the governing body of the state or political_subdivision the entity is empowered to issue bonds in furtherance of the purposes for which it is established the entity is a nonprofit organization and none of its net_earnings inure to the benefit of any private person and upon dissolution of the entity title to all property it owns vests in and becomes the property of the state or political_subdivision which creates it although this revenue_ruling dealt with an industrial development board the analysis contained therein has been applied to a variety of governmental entities applying the criteria of revrul_57_187 to the facts as presented we conclude that the academy qualifies as an on behalf of issuer of the state for purposes of sec_1_103-1 the academy was formed upon entering into the charter with the university board in accordance with state law b the university board which is a part of the state approves and appoints the members of the academy board the academy is authorized under state law b to issue bonds to carry out its purposes the academy is a nonprofit corporation and none of its net_earnings inure to the benefit of any private person upon dissolution of the academy title to all property will vest in and become the property of the university board or the state or any of its political subdivisions accordingly we conclude that the debt of the academy is issued on behalf of the state within the meaning of sec_1_103-1 caveat s a copy of this technical_advice_memorandum is to be given to the taxpayer s sec_6110 of the code provides that it may not be used or cited as precedent