t c memo united_states tax_court ronald e davis petitioner v commissioner of internal revenue respondent docket no 17419-16l filed date ronald e davis pro_se britton g wilson for respondent memorandum findings_of_fact and opinion marvel judge petitioner seeks review pursuant to sec_6330 of respondent’s determination to sustain a proposed collection action by levy relating 1unless otherwise indicated all section references are to the internal_revenue_code code as amended and in effect at all relevant times and all rule references are to the tax_court rules_of_practice and procedure to petitioner’s unpaid federal_income_tax liability for the taxable_year the issues for decision are whether respondent properly assessed the tax_liability underlying the proposed levy and whether the internal_revenue_service irs appeals_office abused its discretion in sustaining the proposed levy findings_of_fact some of the facts have been stipulated and are so found the stipulated facts and facts drawn from stipulated exhibits are incorporated herein by this reference petitioner resided in kansas when he petitioned this court petitioner worked as a skilled technician in the electrical industry until his retirement in petitioner has not filed tax returns for taxable years through and including the tax_year at issue here petitioner’s most recently filed income_tax return before was his tax_return for which respondent’s integrated data retrieval system idrs indicates he filed in 2the commissioner implemented the idrs to electronically provide the most current taxpayer information to employees see internal_revenue_manual irm pt a and b date employees access information in idrs by entering the command_code for the specific information sought 3command code enmod returns various sections of data the first of which is the established entity data eed section see irm pt a date the irm identifies the first field in line of the eed section as the year of the most recent return and the second field in line as the date the last return posted see irm exh date because petitioner failed to file a return for the taxable_year respondent prepared a substitute for return sfr pursuant to sec_6020 on date respondent mailed a notice_of_deficiency to petitioner based on the sfr in the notice_of_deficiency for respondent determined a deficiency of dollar_figure plus additions to tax for failure_to_file and failure to pay under sec_6651 and respectively respondent mailed the notice_of_deficiency to w st bucyrus ks bucyrus address petitioner’s last_known_address in respondent’s records the united_states postal service usps returned the notice_of_deficiency to respondent as undeliverable petitioner did not receive a copy of the notice_of_deficiency until his sec_6330 hearing respondent ascertained petitioner’s last_known_address using idrs the idrs last_known_address transcript lists the name s and address es associated with petitioner including the bucyrus address which was listed twice the 4because petitioner’s most recently filed return was filed for the tax_year we infer and find that petitioner’s tax_return showed the bucyrus address 5the last_known_address transcript is the output of the finds command_code which returns matching name s and address es for a given social_security_number see irm pt date the irs used this command to verify that the notice_of_deficiency was mailed to petitioner’s last_known_address bucyrus address first appears on the transcript in as w bucyrus ks the transcript shows a modification to the bucyrus address in which added st to the street address w 231st bucyrus ks finally the transcript shows that in date petitioner’s current mailing address johnson dr mission ks mission address was entered into idrs after waiting the appropriate amount of time after the issuance of the notice_of_deficiency respondent timely assessed the tax_deficiency for on date on date respondent mailed to petitioner at the mission address a notice_of_intent_to_levy in an effort to collect the unpaid liability 6although the last_known_address transcript does not identify the code at the end of each entry as representing a date the settlement officer’s notes identified the first four digits of that code as representing the year in which the address became effective 7petitioner testified that his line of work caused him to move frequently as he changed jobsites to avoid frequent address changes petitioner opted to receive mail at a rented private mailbox at the mission address which is a united parcel service neighborhood store although petitioner testified that he never lived at the bucyrus address he also testified that he had relatives who lived in bucyrus kansas on date petitioner filed a timely form request for a collection_due_process or equivalent_hearing with the irs appeals_office in his request petitioner disagreed with the proposed levy on grounds that he had filed a timely return and paid all or part of his taxes petitioner’s case was assigned to settlement officer so valerie chavez in the irs appeals_office so chavez reviewed the administrative file and confirmed that petitioner’s tax_liability for had been properly assessed and that all other requirements of applicable law and administrative procedure had been met on date so chavez acknowledged receipt of the request for a sec_6330 hearing scheduled a telephone conference for date and asked petitioner to send her hi sec_2012 tax_return petitioner replied by letter dated date in addition to various seemingly irrelevant arguments that could be viewed as frivolous petitioner refused to communicate by telephone requested a face-to-face hearing and demanded the issuance of a notice_of_deficiency in a date reply to petitioner’s letter so chavez again offered audit_reconsideration if petitioner 8respondent deemed petitioner’s original request unprocessable because it failed to include a basis for requesting the hearing petitioner supplemented the request by submitting a new form which respondent treated as an amendment to the original request provided hi sec_2012 tax_return she explained that petitioner had to provide a tax_return in order for her to consider his request for a face-to-face hearing finally she informed petitioner that the hearing would proceed via correspondence and requested that he submit any documents he would like considered petitioner replied on date reiterating his challenge to the sufficiency of the notice_of_deficiency and other meritless arguments because petitioner failed to submit the tax_return for as requested by so chavez the appeals_office issued a notice_of_determination concerning collection action s under sec_6320 and or sustaining the levy action petitioner timely petitioned this court on date although the petition appears to assert various irrelevant and or meritless contentions petitioner is pro_se and we construe his petition liberally see 138_tc_295 see also rule d liberally construed petitioner’s petition contends that the levy is improper on three grounds the tax_assessment underlying the collection action was invalid because respondent failed to send the notice_of_deficiency to petitioner’s last_known_address respondent denied petitioner a face-to-face hearing and petitioner in fact filed the tax_return and paid all or part of the tax opinion sec_6331 authorizes the secretary to levy upon property and property rights of a taxpayer liable for taxes if the taxpayer fails to pay those taxes within days after notice_and_demand for payment is made see also sec_6671 sec_6330 provides that no levy may be made on any property or right to property of any person unless the secretary has notified such person in writing of the right to a hearing before the levy if a taxpayer requests a hearing it must be held before an impartial officer_or_employee of the appeals_office sec_6330 during the hearing a taxpayer may raise any relevant issue including appropriate spousal defenses challenges to the appropriateness of the collection action and collection alternatives sec_6330 a taxpayer may contest the existence or amount of the underlying tax_liability but only if the taxpayer did not receive a notice_of_deficiency for the tax in question or did not otherwise have an earlier opportunity to dispute the tax_liability sec_6330 following the hearing the appeals_office must make a determination as to whether the proposed levy action may proceed in so doing the appeals_office must verify that the secretary met the requirements of applicable law and administrative procedure consider all relevant issues properly raised by the taxpayer and determine whether the proposed levy action appropriately balances the need for efficient collection_of_taxes with the taxpayer’s concerns regarding the intrusiveness of the proposed levy action sec_6330 if the taxpayer disagrees with the determination of the appeals_office the taxpayer may petition this court for review sec_6330 sec_6330 does not prescribe the standard of review that this court should apply in reviewing the commissioner’s administrative determination in a levy case however we have held that where the validity of a taxpayer’s underlying tax_liability is properly at issue the court will review that determination de novo 114_tc_176 if a determination does not involve the validity of a taxpayer’s underlying liability the court will review that determination for abuse_of_discretion only id pincite an abuse_of_discretion exists when a determination is arbitrary capricious or without a sound basis in fact or law 125_tc_301 aff’d 469_f3d_27 1st cir because we find that petitioner did not receive the notice_of_deficiency for before assessment we will review petitioner’s contentions with regard to his underlying liability de novo see goza v commissioner t c pincite only issues that petitioner properly raised related to his underlying liability are subject_to de novo review we will review all remaining issues under an abuse_of_discretion standard 118_tc_22 applying both de novo and abuse_of_discretion standards to different issues in a sec_6330 proceeding goza v commissioner t c pincite see eg o’brien v commissioner tcmemo_2012_326 at blaga v commissioner tcmemo_2010_170 slip op pincite hickey v commissioner tcmemo_2009_ slip op pincite i challenge to validity of assessment petitioner contends that the tax_assessment underlying the liability is invalid because respondent did not mail him a valid notice_of_deficiency specifically petitioner challenges the validity of the notice_of_deficiency on grounds that respondent failed to mail the notice to his last_known_address a collection action will not be sustained where the underlying liability is premised on an invalid assessment 131_tc_197 supplemented by 136_tc_463 125_tc_14 generally a federal_income_tax deficiency may not be assessed unless the commissioner first mails a notice_of_deficiency to the taxpayer’s last_known_address see sec_6213 sec_6212 hoyle v commissioner t c pincite ordinarily a taxpayer’s last_known_address is the address on the most recently filed and processed tax_return unless the taxpayer provides the irs with clear and concise notification of a different address see sec_301_6212-2 proced admin regs change_of address information provided by the taxpayer to a third party does not constitute clear and concise notification of a different address even if the third party files information returns with the irs that reflect that change id para b see eg blocker v commissioner tcmemo_2005_279 slip op pincite the only exception to this rule inapplicable here is where a taxpayer files a change_of address with the usps and the usps reports it to the irs through the national change_of address database see sec_301 b proced admin regs if a notice_of_deficiency is mailed to a taxpayer’s last_known_address and returned to the irs as undeliverable the notice_of_deficiency is not rendered invalid see 33_f3d_46 10th cir 15_f3d_970 10th cir aff’g tcmemo_1992_328 81_tc_42 nothing in the code or the regulations suggests that the irs is obligated to take additional steps to effectuate delivery if the notice is returned armstrong v commissioner f 3d pincite- quoting 857_f2d_676 aff’g 88_tc_1042 once the notice_of_deficiency is properly mailed the commissioner may assess the tax after waiting the appropriate time id petitioner contends that the bucyrus address where respondent mailed the notice_of_deficiency was not his last_known_address but the bucyrus address was petitioner’s last_known_address as reflected in respondent’s idrs and we find that it was the address shown on petitioner’s last filed and processed tax_return filed in for taxable_year see 91_tc_1019 although petitioner insists he notified respondent of a different address via third-party information returns change_of address information provided to a third party does not constitute clear and concise notification of a different address by a taxpayer to the irs under either our caselaw or the subsequent regulations see mccart v commissioner tcmemo_1992_3 63_tcm_1704 aff’d without published opinion 981_f2d_1247 3d cir white v commissioner tcmemo_1990_528 60_tcm_958 sec_301_6212-2 proced admin regs 9because petitioner’s return was filed before regulations were promulgated defining last_known_address we look to our caselaw at the time in 91_tc_1019 we held a taxpayer’s last_known_address is the address that appears on the taxpayer’s most recently filed return on the basis of the foregoing we conclude that respondent mailed the notice_of_deficiency to petitioner’s last known addressdollar_figure consequently respondent issued a valid notice_of_deficiency and properly assessed the tax liabilitydollar_figure ii review of determination to sustain levy we now address whether the appeals_office abused its discretion in sustaining the proposed levy in reviewing the determination we consider whether 10the doctrine_of official regularity entitles a court to presume that a governmental entity in exercising its official duties followed applicable procedures absent clear evidence to the contrary 272_us_1 the doctrine_of official regularity has been invoked to prove the act of mailing a notice_of_deficiency and the validity of a notice_of_deficiency see eg 530_f2d_781 8th cir invoking the doctrine_of official regularity to prove the validity of a notice_of_deficiency when its existence is not disputed the bucyrus address first appears in respondent’s records in if petitioner’s tax_return had listed any address other than the bucyrus address respondent would have updated petitioner’s last_known_address when processing the return in see abeles v commissioner t c pincite5 because respondent did not process any update to petitioner’s last_known_address in we may presume under the doctrine_of official regularity that petitioner’s last filed return--his return for filed in 1998--showed the bucyrus address petitioner offered no credible_evidence to rebut the presumption 11we reject petitioner’s testimony that he has never lived at the bucyrus address first we are under no obligation to accept uncorroborated and self-serving testimony see 87_tc_74 second petitioner testified that he never received mail at his residence so his residential address is of limited probative value the appeals_office properly verified that the requirements of any applicable law or administrative procedure had been met considered any relevant issues properly raised by petitioner and considered whether any proposed collection action balances the need for the efficient collection_of_taxes with the concern that any collection action be no more intrusive than necessary sec_6330 petitioner contends that the appeals_office abused its discretion in denying his request for a face-to-face hearing the regulations however provide that a sec_6330 hearing may but is not required to consist of a face-to-face meeting sec_301_6330-1 q a-d6 proced admin regs and we have repeatedly held that neither the statute nor the regulations require a face-to-face hearing and that a hearing conducted by telephone correspondence or document review will suffice see eg 115_tc_329 the appeals_office may refuse a face-to-face hearing when the taxpayer fails to file past due tax returns and or provide financial information see eg lindberg v commissioner tcmemo_2010_67 slip op pincite sec_301_6330-1 q a-d8 proced admin regs so chavez offered to consider petitioner’s request for a face-to-face hearing if he filed hi sec_2012 tax_return petitioner failed to provide so chavez with the required tax_return for consequently we find no abuse_of_discretion in so chavez’s refusal to grant petitioner a face-to-face hearing petitioner contends that he timely filed the return and paid all or part of the tax shown on that return but he offered no evidence other than his unsupported testimony to prove the contention we are not required to accept self-serving testimony that is uncorroborated by persuasive evidence see 87_tc_74 because petitioner failed to submit any credible_evidence in support of his contention we find he failed to carry his burden of proving that the appeals_office abused its discretion in finding that he failed to file a tax_return for as discussed above so chavez duly verified that all legal and procedural requirements were met including that respondent issued a valid notice_of_deficiency and made a timely assessment petitioner did not advance any argument that the collection action was more intrusive than necessary because the appeals_office did not abuse its discretion in sustaining the proposed levy we sustain the determination to proceed with collection by levy any contentions we have not addressed are irrelevant moot or meritlessdollar_figure to reflect the foregoing decision will be entered for respondent 12petitioner purported to raise issues related to violations of the taxpayer_bill_of_rights the irm and even the constitution among other authorities it does not appear however that petitioner properly raised these issues and we do not address them


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 tege eoeg teb presp-142950-06 date date dear ------------- this letter is in response to your application_for an allocation of authority to issue --------- ----------------in clean renewable energy bonds crebs under sec_54 of the internal_revenue_code the code sec_54 of the code imposes a limitation of dollar_figure on the amount of crebs which may be issued to finance qualified projects the limitation sec_54 provides that the limitation is to be allocated by the secretary of treasury in such manner as the secretary deems appropriate except that no more than dollar_figure of the limitation may be allocated to finance qualified projects of qualified borrowers which are governmental bodies section of notice_2005_98 2005_52_irb_1211 provides that the limitation will be allocated among qualified projects for which a share of such limitation has been requested beginning with the project s requesting the smallest share in dollar amount and continuing with the project s requesting the next-smallest share until the total limitation has been exhausted however in the event that dollar_figure has been allocated to qualified projects of qualified borrowers that are governmental bodies the remaining shares of the limitation will be allocated under the methodology described in the previous sentence only to qualified projects of qualified borrowers that are not governmental bodies for purposes of allocating the limitation among projects all qualified projects located at the same site and owned by the same qualified_borrower are treated as a single project and each project is treated as requesting a single allocation an allocation of shares of the limitation cannot be made with respect to the project owned by the borrower listed in appendix a because such borrower is a governmental body and dollar_figure has already been allocated to applications requesting a smaller presp-142950-06 share of the limitation to finance qualified projects owned by qualified borrowers that are governmental bodies we appreciate your submission of the application_for our consideration and encourage you to continue to pursue your plans for constructing a clean renewable energy project sincerely assistant chief_counsel exempt_organizations employment_tax government entities tax exempt government entities by timothy l jones senior counsel tax-exempt_bonds branch presp-142950-06 appendix a borrower name project type project location amount requested


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 b04 plr-161375-04 date date - - - - - - ------------------------------------------------------------------------------------ ---------------------- -------------------- -------------------- --------------------------- ------------------- ----------------------------------------------------------------------------------------- re -------------------------------- legend grantor spouse child child child trust a ----------------------------------------------------------------------------------------------------------- -------------------------------------------------- trust b trustee state x date date citation citation citation citation dear ----------------- --------------------------------------------------------------------- --------------------------- ------------------- ----------------------- ------------------- ---------------------------------------------------------- -------------------------------------------------------------------- --------------------------------------------------------------- ----------------------------------------------------------------- - - - - - - - - - plr-161375-04 this is in reference to your letter dated date and subsequent correspondence requesting rulings regarding the effect of the judicial construction of the trust instrument for federal estate and gift_tax purposes the facts submitted are as follows background sec_3 of trust a provides that whenever a gift is made to the trust during on date grantor created trust a and trust b both trust a and trust b are governed by the law of state x trust a is an irrevocable_trust that is primarily for the benefit of grantor’s spouse spouse and three of grantor’s children child child and child trustee an unrelated corporation that is in the business of administering trusts is the trustee of trust a among the assets of trust a are life_insurance policies on grantor’s life trust a is the owner of the insurance policies and grantor is prohibited from exercising withdrawal rights in any capacity including but not limited to a fiduciary capacity trust b is a revocable_trust grantor is the primary beneficiary and trustee of trust b grantor’s life spouse and children shall have the right to withdraw from the trust in the year of the gift an amount_of_the_gift up to the maximum federal gift_tax_exclusion under sec_2503 of the internal_revenue_code the withdrawal amount shall be cumulative but may not be exercised after the death of the person holding such right and on january of each year the total amount which may be withdrawn by each holder of the withdrawal right shall be reduced by and lapse to the extent of the greater of dollar_figure or five percent of the assets of trust a on that date the trustee within a reasonable period of time after receipt of a gift will give written notice of the gift to each person who has a withdrawal right the insured of any policy is specifically prohibited from exercising a withdrawal right in any capacity sec_4 of trust a provides that during grantor’s lifetime the trustee in its discretion may distribute the net_income and principal to spouse and child child and child children that is appropriate for their health education including higher education and support in reasonable comfort any income not distributed would be accumulated and added to principal sec_5 and b of trust a provide that upon the death of grantor specific pecuniary amounts will be distributed to specified beneficiaries and the remainder will be distributed as provided under sec_5 sec_5 provides that if spouse survives grantor trustee may distribute as much of the net_income and principal to or for the benefit of spouse and the children as trustee considers appropriate for their health education including higher education and support in reasonable comfort trustee is directed to give spouse primary consideration in distributions of income and plr-161375-04 principal the distributions may be in equal or unequal amounts and any income not distributed will be added to principal paragraph c of trust a provides that after spouse’s death but not later than the first day on which federal estate_tax can no longer be assessed with respect to spouse’s estate the division date trustee shall distribute the trust assets then held and any assets received by trustee by reason of spouse’s death to the then trustee under trust b dated the date of this agreement or under any revocable_trust agreement subsequently executed by grantor as a successor to or replacement of this agreement the trust agreement to be added to and administered under the terms of the family_trust created thereunder if as of the division date no family_trust will be established under the terms of the trust agreement trustee shall administer the trust assets as directed in section sec_5 of trust a provides that if spouse does not survive grantor trustee shall not later than the first day on which federal estate_tax can no longer be assessed with respect to grantor’s estate dispose_of the trust assets then held and any assets received by trustee by reason of grantor’s death as directed in paragraph c above section of trust a provides that the trustee will divide the trust assets into equal shares one share for each of the children living on the division date and one share for each of the children not living on the division date who has a descendant then living the share for any deceased child who has living descendants will be distributed to those living descendants per stirpes or if none the share will be added to the shares for the living children or the shares of any children who are not then living but have descendants living if child is then living the trustee will distribute child 1’s share to a separate trust established by spouse on date for the benefit of child if child or child is then living their shares will be held in separate trusts for their benefit the income of which will be distributed to them quarterly with the trustee having the discretion to distribute principal for the beneficiary’s health education including higher education and support in reasonable comfort the principal will be distributed to each beneficiary upon that beneficiary reaching age majority of income beneficiaries not under a legal disability and adult persons responsible for any income beneficiaries under a legal disability may appoint any bank or trust company having trust powers to serve as trustee section d provides that grantor may remove the trustee and appoint another bank or trust company which is authorized to conduct a_trust business to serve as trustee section c provides that if a trustee resigns or ceases to serve as trustee a article iii of trust b provides that upon grantor’s death if spouse survives under the terms of trust b the trustee will dispose_of the assets as grantor plr-161375-04 directs during grantor’s life the income will be distributed to grantor and if grantor is incapacitated the trustee will spend the income and principal liberally for the welfare and comfort of grantor and spouse grantor may terminate amend modify or supplement the terms of trust b at any time grantor the trustee will divide the assets into two trusts a marital trust and a family_trust upon spouse’s subsequent death any remaining assets in the marital trust will pass to the family_trust if grantor survives spouse and is survived by any descendants the assets of trust b will be administered under the terms of the family_trust upon grantor’s death under the terms of trust b while spouse is living the income of the family_trust will be distributed to spouse and the trustee may distribute the principal to or for the benefit of the children and their descendants for their health education including higher learning and support in reasonable comfort spouse also has a power to appoint the assets of trust b to any one or more of the children or their descendants and their spouses upon the death of the survivor of grantor or spouse the assets of trust b will be divided into equal shares one share for each of the children living on the division date and one share for each of the children not living on the division date who has a descendant then living the share for any deceased child who has living descendants will be distributed to those living descendants per stirpes or if none the share will be added to the shares for the living children or the shares of any children who are not then living but have descendants living if child is then living the trustee will distribute child 1’s share to the separate trust established by spouse for the benefit of child if child or child is then living their shares will be held in separate trusts for their benefit the income of which will be distributed to them quarterly with the trustee having the discretion to distribute principal for the beneficiary’s health education including higher education and support in reasonable comfort the principal will be distributed to each beneficiary upon that beneficiary reaching age or the division date if the beneficiary has attained age upon subsequent review of the trust provisions grantor spouse and their attorneys discovered that an error occurred in the drafting of the dispositive provisions of trust a you represent that sec_5 and d of trust a mistakenly provided for distribution of the trust assets upon the death of the survivor of spouse and grantor to trust b the revocable_trust rather than distribution under section of trust a to either the family_trust or to both the family_trust and the marital trust you represent that this error was a scrivener’s error in drafting the instrument and did not reflect the intentions of the grantor as drafted upon grantor’s death sec_5 and d would result in the assets of trust a the irrevocable_trust passing to trust b the revocable_trust and thus being includible in grantor’s gross_estate for estate_tax purposes plr-161375-04 grantor petitioned the appropriate local court to reform trust a on date the court found that the scrivener had made a mistake in drafting trust a that did not reflect the intentions of grantor to relinquish all beneficial control of the assets of trust a and issued an order reforming trust a the order reformed sec_5 paragraphs c and d of trust a effective as of date to read as follows after spouse ’s death the trustee shall administer the trust assets as c directed in section d assets then held and any assets received by trustee by reason of grantor’s death as directed in section if spouse does not survive grantor trustee shall administer the trust rulings requested you have requested the following rulings as a result of the judicial reformation of trust a the assets of trust a will not be includible in grantor’s gross_estate for estate_tax purposes under sec_2035 sec_2036 sec_2038 sec_2041 or sec_2042 of the internal_revenue_code the reformation of trust a does not result in grantor being deemed to have made a gift of an interest in trust a for gift_tax purposes the reformation of trust a does not constitute a release of a general power of law and analysis sec_2001 provides that a tax is imposed on the transfer of the taxable appointment by grantor for gift_tax purposes under sec_2514 issue estate of every decedent who is a citizen or resident_of_the_united_states decedent shall be determined by including to the extent provided for in sec_2031 through the value at the time of his death of all property real or personal tangible or intangible wherever situated all property to the extent of the interest therein of the decedent at the time of his death sec_2031 provides generally that the value of the gross_estate of the sec_2033 provides that the value of the gross_estate shall include the value of plr-161375-04 sec_2036 provides generally that the value of the gross_estate shall sec_20_2036-1 of the estate_tax regulations provides that the phrase sec_2035 and provide that if the decedent made a transfer by trust or otherwise of an interest in any property or relinquished a power with respect to any property during the 3-year period ending on the date of the decedent s death and the value of such property or any interest therein would have been included in the decedent s gross_estate under or if such transferred interest or relinquished power had been retained by the decedent on the date of his death the value of the gross_estate shall include the value of any property or interest therein which would have been so included include the value of all property to the extent of any interest therein of which the decedent has at any time made a transfer except in case of a bona_fide sale for an adequate_and_full_consideration in money_or_money's_worth by trust or otherwise under which he has retained for his life or for any period not ascertainable without reference to his death or for any period which does not in fact end before his death the possession or enjoyment of or the right to the income from the property or the right either alone or in conjunction with any person to designate the persons who shall possess or enjoy the property or the income therefrom right to designate the person or persons who shall possess or enjoy the transferred property or the income therefrom includes a reserved power to designate the person or persons to receive the income from the transferred property during the decedent's life or for any period not ascertainable without reference to his death or for any period which does not in fact end before his death with respect to such a power it is immaterial i whether the power was exercisable alone or only in conjunction with another person or persons whether or not having an adverse_interest ii in what capacity the power was exercisable by the decedent or by another person or persons in conjunction with the decedent and iii whether the exercise of the power was subject_to a contingency beyond the decedent's control which did not occur before his death eg the death of another person during the decedent's lifetime the phrase however does not include a power over the transferred property itself which does not affect the enjoyment of the income received or earned during the decedent's life nor does the phrase apply to a power held solely by a person other than the decedent but for example if the decedent reserved the unrestricted power to remove or discharge a trustee at any time and appoint himself as trustee the decedent is considered as having the powers of the trustee income or other enjoyment of the transferred property is considered as having been retained by or reserved to the decedent to the extent that the use possession right to sec_20_2036-1 provides that the term use possession right to the sec_2041 provides that the value of the gross_estate includes the value plr-161375-04 the income or other enjoyment is to be applied toward the discharge of a legal_obligation of the decedent or otherwise for his pecuniary benefit sec_2038 provides that the value of the gross_estate includes the value of all property to the extent of any interest therein of which the decedent has at any time made a transfer except in the case of a bona_fide sale for adequate_and_full_consideration in money_or_money's_worth by trust or otherwise where the enjoyment thereof was subject at the date of death to any change through the exercise of a power by the decedent to alter amend revoke or terminate the interest in the property or where the decedent relinquished such power within the three-year period ending on the date of the decedent's death of all property to the extent of any property with respect to which the decedent has at the time of his death a general_power_of_appointment created after date or with respect to which the decedent has at any time exercised or released such a power_of_appointment by a disposition which is of such nature that if it were a transfer of property owned by the decedent such property would be includible in the decedent's gross_estate under sec_2035 to inclusive for purposes of sec_2041 the power_of_appointment shall be considered to exist on the date of the decedent's death even though the exercise of the power is subject_to a precedent giving of notice or even though the exercise of the power takes effect only on the expiration of a stated period after its exercise whether or not on or before the date of the decedent's death notice has been given or the power has been exercised power_of_appointment means a power which is exercisable in favor of the decedent his estate his creditors or the creditors of his estate sec_2041 provides that the lapse of a power_of_appointment created after date during the life of the individual possessing the power shall be considered a release of such power sec_2041 provides that for purposes of sec_2041 the term general under ' the value of the gross_estate includes the value of all property to the extent of the amount receivable by all other beneficiaries as insurance under policies on the life of the decedent with respect to which the decedent possessed at his death any of the incidents_of_ownership exercisable either alone or in conjunction with any other person sec_20_2042-1 provides that the term aincidents of ownership is not limited in its meaning to ownership of the policy in the technical legal sense generally the term has reference to the right of the insured or his estate to the economic benefits of the policy thus it includes the power to change the beneficiary to surrender or plr-161375-04 cancel the policy to assign the policy to revoke the assignment to pledge the policy for a loan or to obtain from the insurer a loan against the surrender_value of the policy sec_20_2042-1 provides that a decedent is considered to have an in 387_us_456 the court considered incident_of_ownership in an insurance_policy on his life held in trust if under the terms of the policy the decedent either alone or in conjunction with another person or persons has the power as trustee or otherwise to change the beneficial_ownership in the policy or its proceeds or the time or manner of enjoyment thereof even though the decedent has no beneficial_interest in the trust whether a state trial court's characterization of property rights conclusively binds a federal court or agency in a federal estate_tax controversy the court concluded that the decision of a state trial_court as to an underlying issue of state law should not be controlling when applied to a federal statute rather the highest court of the state is the best authority on the underlying substantive rule_of state law to be applied in the federal matter if there is no decision by that court then the federal authority must apply what it finds to be state law after giving proper regard to the state trial court's determination and to relevant rulings of other courts of the state in this respect the federal_agency may be said in effect to be sitting as a state court terms of the trust that the settlor and the trustee intended the settlor or other interested_party may maintain a suit in equity to have the instrument reformed so that it will contain the terms that were actually agreed upon george gleason bogert george taylor bogert the law of trusts and trustees sec_991 rev 2d ed generally if due to a mistake in drafting the instrument does not contain the under state x law a court of equity has jurisdiction to reform and correct a deed executed through a mutual mistake of fact to conform to the actual agreement of the parties to the deed when such mistake results from the mistake of the scrivener in the preparation of the deed citation to justify the reformation of an instrument for mistake it is necessary first that the mistake should be one of fact not of law second that the mistake should be proved by clear_and_convincing evidence third that the mistake should be mutual and common to both parties of the instrument citation though parol evidence is admissible to establish mutual mistake of fact of the parties to a plain and unambiguous deed or other written instrument the proof required to justify a court of equity to reform and correct such instrument to conform to the true intention of the parties must be strong clear unequivocal preponderating and convincing citation see also citation citation citation in this case the documentation submitted by grantor strongly indicates that grantor intended to relinquish all control_over the assets held in trust a and that the provisions in trust a sec_5 and d that pass the trust a assets to plr-161375-04 grantor’s revocable_trust upon the death of the survivor of grantor and spouse were the result of scrivener error since such provisions serve to put the assets back under grantor’s control in reforming trust a the court also found that grantor intended to relinquish all control_over the assets of trust a and that the error by the scrivener resulted in trust a not reflecting the intentions of grantor at the time trust a was executed consequently we conclude that the court order on date that reformed trust a based on scrivener s error is consistent with applicable state x law that would be applied by the highest court of that state grantor has not retained any interest in the property in trust a for purposes of ' the reformation of trust a consistent with the terms of the court order will not be considered a release transfer or relinquishment of any retained_interest or power that would subject the trust a assets to inclusion in grantor s gross_estate for purposes of ' grantor has not retained for his life the right either alone or in conjunction with any person to designate who will possess or enjoy the property or income from the reformed trust within the meaning of ' grantor has not retained any power either alone or in conjunction with another person to alter amend revoke or terminate the reformed trust within the meaning of ' further grantor does not possess a general_power_of_appointment as defined under ' with respect to trust a_trust a not grantor is the owner of the life_insurance policies for purposes of ' additionally grantor has represented that he possesses no incidents_of_ownership in the policies under ' accordingly if trust a is reformed pursuant to the terms of the court order we conclude that the value of the property in trust a as reformed will not be includible in grantor s gross_estate under ' sec_2033 sec_2035 sec_2036 sec_2038 sec_2041 or sec_2042 issue sec_2 property by gift during the year by an individual or otherwise whether the gift is direct or indirect and whether the property is real or personal tangible or intangible adequate_and_full_consideration in money_or_money's_worth the amount by which the value of the property exceeded the value of the consideration shall be deemed a gift sec_2511 provides that the gift_tax shall apply whether the transfer is in trust sec_2512 provides that where property is transferred for less than an sec_2501 imposes a gift_tax for each calendar_year on the transfer of plr-161375-04 for gift_tax purposes sec_2514 provides that the exercise or release of a general_power_of_appointment created after date shall be deemed a transfer of property by the individual possessing such power for gift_tax purposes sec_2514 provides that the term ageneral power_of_appointment means a power which is exercisable in favor of the individual possessing the power his estate his creditors or the creditors of his estate sec_2514 provides that the lapse of a power_of_appointment created after date during the life of the person possessing the power is considered a release of the power under the terms of trust a as executed on date grantor did not have a power to appoint any assets of trust a in favor of himself his estate or the creditors of either the reformation of trust a as described will not constitute the exercise or release of a general_power_of_appointment by grantor within the meaning of ' b further the reformation of trust a as described will not be treated as a deemed transfer of an interest in trust a by grantor for gift_tax purposes under ' a copy of this letter should be attached to any gift estate or generation-skipping_transfer_tax returns that you may file relating to these matters 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 the appropriate party while this office has not verified any of the material submitted in support of the request for rulings it is subject_to verification on examination except as specifically ruled above no opinion is expressed as to the federal tax consequences of the facts described above under the cited provisions or any other provisions of the code or regulations this ruling is directed only to the taxpayer who requested it sec_6110 provides that it may not be used or cited as precedent sincerely yours lorraine e gardner senior counsel branch office of passthroughs and special industries enclosure copy for sec_6110 purposes cc


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 corp plr-138436-08 date date legend target ------------------------------------------------------------- ----------------------------------------------------------- --------------------------------------- acquiring --------------------------- ---------------------------------------------------------------- ----------------------------------------------------------- state a business a a b c d e ------ --------------- -- ------ ---- ----------- ---- dear ---------------- this responds to your date request for rulings on certain federal_income_tax consequences of a proposed transaction the information provided in that plr-138436-08 request and in later correspondence is summarized below the rulings contained in this letter are based on facts and representations submitted by the taxpayer and accompanied by a penalties of perjury statement executed by an appropriate party this office has not verified any of the materials submitted in support of the request for rulings verification of the information representations and other data may be required as part of the audit process summary of facts target is a closely held state a corporation that is engaged in business a target has a individual shareholders the shareholders each owning an equal amount of the common_stock outstanding acquiring is a publicly_held_corporation that has common_stock outstanding target owns approximately b percent of the common_stock of acquiring the stock of acquiring is target’s primary asset proposed transaction for what are represented to be valid business purposes target and acquiring will engage in the following transaction the proposed transaction i ii iii target will sell a portion of its assets other than its acquiring shares target will use the sales proceeds to purchase additional shares of acquiring common_stock and may also engage in margin borrowing to purchase additional shares of acquiring common_stock target will transfer any remaining assets other than its acquiring shares to one or more newly formed limited_liability companies or newly formed corporations the subsidiaries the membership interests or shares of which will be distributed to shareholders pursuant to the plan_of_reorganization target will transfer all of its acquiring shares the old acquiring shares to acquiring in exchange for a number of newly issued or treasury acquiring common shares the new acquiring shares on the date of the exchange the exchange the number of new acquiring shares which will be transferred to target in exchange for the old acquiring shares held by target at closing will be equal to the total rounded down to the nearest whole share of a c of the number of old acquiring shares minus b that many shares equal to dollar_figured divided by the average of the market_value per share of acquiring common_stock on the ten trading days immediately preceding the trading day which is two trading days prior to closing in connection with the exchange acquiring will not assume any plr-138436-08 target liabilities or receive any target assets which are subject_to liabilities iv within e months of step iii above target will distribute to the shareholders on a pro_rata basis the new acquiring shares and its ownership interests in the subsidiaries target will then initiate the dissolution process steps ii - iv collectively the downstream reorganization representations the following representations have been made regarding the proposed transaction a the fair_market_value of the new acquiring shares received by each target shareholder will approximately equal the fair_market_value of the target stock surrendered therefor by such shareholder in the exchange b during the five-year period ending on the closing date of the downstream reorganization a neither acquiring nor any person related as defined in sec_1 e to acquiring has acquired target shares with consideration other than acquiring shares b neither target nor any person related as defined in sec_1_368-1 without regard to sec_1_368-1 to target will have acquired target shares with consideration other than acquiring shares or target shares and c no distribution will have been made with respect to the stock of target other than ordinary normal regular dividend distributions made pursuant to the historic dividend paying practice of target either directly or through any transaction agreement or arrangement with any other person c at least of the proprietary interest in target will be exchanged for acquiring common_stock and will be preserved within the meaning of sec_1 e i d acquiring has no plan or intention to reacquire directly or through a related_person within the meaning of sec_1_368-1 any of the new acquiring shares issued in the proposed transaction e acquiring will acquire at least of the fair_market_value of the net assets and at least of the fair_market_value of the gross assets held by target immediately before the proposed transaction for this representation amounts paid_by target to dissenters if any amounts used by target to pay its reorganization expenses amounts paid_by target to shareholders who receive cash or other_property amounts paid_by target to acquiring for acquiring’s expenses_incurred in the proposed transaction and all redemptions and distributions except for regular normal dividends plr-138436-08 made by target immediately before the transfer will be included as assets of target held immediately before the proposed transaction f acquiring has no plan or intention to sell or otherwise dispose_of any of the assets of target acquired in the proposed transaction g target will distribute the stock securities and other_property it receives in the exchange and its other properties in pursuance of the plan_of_reorganization h there are no liabilities of target that will be assumed within the meaning of sec_357 by acquiring nor are there any liabilities to which the assets transferred by target to acquiring will be subject i following the proposed transaction acquiring will continue the historic_business of target or use a significant portion of target's historic_business_assets received in the proposed transaction in a business j acquiring target and the shareholders of target will pay their respective expenses_incurred in connection with the proposed transaction k target there is no intercorporate indebtedness existing between acquiring and l no two parties to the proposed transaction are investment companies as defined in sec_368 and iv m acquiring does not own directly or indirectly nor has it owned during the past five years directly or indirectly any stock of target n target is not under the jurisdiction of a court in a title_11_or_similar_case within the meaning of sec_368 o the non-issuance of fractional shares of acquiring stock to target in the exchange is solely for the purpose of avoiding the expense and inconvenience to acquiring of issuing fractional shares and any cash paid_by acquiring to target pursuant to the reorganization agreement in lieu of issuing such fractional shares is not separately bargained for consideration based solely on the information submitted and the representations made we rule as follows regarding the proposed transaction rulings plr-138436-08 the downstream reorganization will qualify as a reorganization within the meaning of sec_368 acquiring and target will each be a_party_to_a_reorganization within the meaning of sec_368 target will recognize no gain_or_loss on the transfer of its old acquiring shares to acquiring solely for new acquiring shares in the exchange sec_361 target will recognize no gain_or_loss on its distribution of the new acquiring shares to its shareholders sec_361 target will recognize gain on the distribution of the membership interests or shares of subsidiaries and other appreciated_property if any to the shareholders as if such property had been sold by target at its fair_market_value sec_361 acquiring will recognize no gain_or_loss on its receipt of the old acquiring shares solely in exchange for the new acquiring shares in the exchange sec_1032 gain will not be recognized by the shareholders on the exchange of target shares for new acquiring shares except to the extent cash or other_property other than the new acquiring shares is received by the shareholders in the downstream reorganization the amount of such gain if any shall not exceed the aggregate amount of cash and the fair_market_value of other_property received in the exchange other than new acquiring shares sec_356 if the exchange has the effect of the distribution of a dividend determined with the application of sec_318 then the amount of the gain recognized that is not in excess of the target shareholders’ ratable share of undistributed_earnings and profits of target will be treated as a dividend sec_356 the remainder if any of the gain recognized will be treated as gain from the sale_or_exchange of property sec_1001 no loss will be recognized on the exchange sec_356 shareholders’ basis in the new acquiring shares will equal the basis of the target shares surrendered in the exchange decreased by the amount of any money and the fair_market_value of any other_property received by the shareholders and increased by the amount if any which was treated as a dividend and the amount if any of gain not including any portion of such gain which was treated as a dividend to the shareholders which was recognized in the exchange sec_358 shareholders’ holding_period in the new acquiring shares received in the proposed transaction will include the period during which the stock of target surrendered in exchange therefor was held provided that the target stock is held as a capital_asset by the shareholders on the date of the exchange sec_1223 under sec_381 and sec_1_381_a_-1 the taxable_year of target will end on the effective date of the closing of the downstream reorganization and acquiring will succeed to and take into account the items of target described in sec_381 subject_to plr-138436-08 the provisions and limitations of sec_381 sec_382 sec_383 and sec_384 and the regulations thereunder caveats no opinion is expressed about the tax treatment of the proposed transaction under any other provisions of the code and regulations or the tax treatment of any condition existing at the time of or effect resulting from the proposed transaction that is not specifically covered by the above rulings in particular no opinion is expressed regarding the federal_income_tax consequences of step i the transfer of any remaining assets to subsidiaries in step ii or the distribution by target of any remaining assets to its shareholders in step iv procedural statements this ruling is directed only to the taxpayer who requested it sec_6110 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 this letter_ruling in accordance with a power_of_attorney on file in this office a copy of this ruling letter is being sent to your authorized representative cc sincerely __richard k passales_____ richard k passales senior counsel branch office of associate chief_counsel corporate


internal_revenue_service department of the treasury index no number info release date washington dc person to contact john t sapienza jr id no telephone number refer reply to cc dom it a - cor-110846-00 date date dear commissioner rossotti asked me to respond to your letter of date concerning obesity and weight-loss programs you asked the internal_revenue_service to issue a revenue_ruling allowing obese individuals to deduct the costs of weight-loss programs as medical_care expenses under sec_213 of the internal_revenue_code the current irs position on weight-loss programs is stated in revrul_79_151 1979_1_cb_116 this ruling holds that if participation in the program was to improve the participant’s appearance general health and sense of well-being the expenses of the program are not for medical_care and therefore are not deductible of course the expenses of a weight-loss program prescribed to treat a specific disease are for medical_care and are deductible we appreciate your suggestion and the references you provided to studies on obesity each year the irs and the department of the treasury review the many suggestions for revenue rulings and other forms of guidance to be published the projects selected are announced in the annual priority guidance plan input such as you have provided is helpful to us in selecting projects for the priority guidance plan i hope this information is helpful please call john t sapienza jr at the number above if you have any questions sincerely deputy assistant chief_counsel income_tax accounting by robert a berkovsky chief branch


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 corp plr-117041-10 date date legend parent --------------------------------------------------------------------------------------- ------------------------------------------------------ ----------------------------------------- sub ------------------------------------------------------ --------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------ ------------- sub ----------------------------------------- ---------------------------------------- sub ------------------------------------------------------ -------------------------------------------------------------------------------------------------------------------- ----------------------------------------- sub --------------------------------------------- ----------------------------------------------------- ----------------- sub -------------------------------------------------------------------------------------------------------------- ------------------------------------------------------ ------------------------------------------------------ ------------------------- sub ------------------------------------------------------ -------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------ ------------- plr-117041-10 state a business a date a date b x dear ------------- ------------- ---------------------------------------- -------------------------- -------------------------- ---- this letter responds to your date request for rulings as to the federal_income_tax consequences of a proposed transaction the information provided in that letter and in later correspondence is summarized below the rulings contained in this letter are based upon information and representations submitted by the taxpayer and accompanied by a penalties of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in support of the request for rulings it is subject_to verification on examination facts parent a state a corporation is the common parent of an affiliated_group_of_corporations that files a consolidated federal_income_tax return the parent group the parent group is engaged in various businesses including business a which is operated by sub a state a limited_liability_company parent indirectly owns all interests in sub through a chain of wholly-owned state a corporations comprised of sub sub and sub from the date of its formation until date a sub was disregarded as an entity separate from sub its sole owner for federal_income_tax purposes effective on date b sub made an election under sec_301_7701-3 to be classified as an association_taxable_as_a_corporation sub owns approximately x percent of the common_stock of sub a state a corporation parent also indirectly owns through another chain of corporations all the stock of sub a state a corporation as part of its efforts to expand business a and to raise capital for use in its other businesses parent is seeking an unrelated party to invest in business a through a joint_venture that is expected to be treated as a partnership for federal_income_tax purposes under sec_301_7701-3 sub cannot presently make another election to change its classification for federal_income_tax purposes parent plr-117041-10 also has determined that a contribution by sub of the business a assets and liabilities to a newly formed legal entity would not be practicable accordingly to facilitate the establishment of a joint_venture for business a parent has proposed the transaction described below the proposed transaction proposed transaction to achieve the business_purpose described above parent has proposed the following steps i ii iii iv v vi sub will sell its stock in sub to sub for fair_market_value the disposition sub will form a wholly owned state a corporation holdco holdco will form a wholly owned state a limited_liability_company investco that will be treated as a disregarded_entity for federal_income_tax purposes investco will form a wholly owned state a limited_liability_company opco that will be treated as a disregarded_entity for federal_income_tax purposes sub will merge with and into opco with opco surviving together with steps ii through iv the reincorporation holdco will sell a percent interest in investco to an unrelated third-party investor for a cash payment equal to the fair_market_value of such interest the jv formation representations in connection with the proposed transaction the taxpayer has made the following representations a b c immediately prior to the reincorporation holdco will be engaged in no business activity will have no tax_attributes including those specified in sec_381 and will hold no assets except for nominal assets necessary to pay incidental_expenses or maintain holdco's status as a corporation under state a law the fair_market_value of the stock of holdco received by sub in the reincorporation will be approximately equal to the fair_market_value of the interests in sub surrendered in the exchange there is no plan or intention by sub to sell exchange or otherwise dispose_of any of the stock of holdco received in the reincorporation plr-117041-10 d e f g h i j k l m n immediately following the reincorporation sub will own all of the outstanding_stock of holdco sub will own such stock solely by reason of its ownership of the interests in sub immediately prior to the reincorporation holdco has no plan or intention to issue additional stock following the reincorporation immediately following the reincorporation holdco through opco will possess the same assets and liabilities as those possessed by sub immediately prior to the reincorporation at the time of the reincorporation sub will not have outstanding any warrants options convertible securities or any other type of right pursuant to which any person could acquire an interest in sub except that it is possible that parent sub sub or their affiliates may enter into an exclusivity or similar agreement with an unrelated investor with respect to the jv formation holdco has no plan or intention to reacquire any of its stock issued in the reincorporation holdco through its indirect interest in opco has no current plan or intention to sell or otherwise dispose_of any of the assets of sub acquired through its indirect interest in opco in the reincorporation except for the jv formation dispositions made in the ordinary course of business or transfers described in sec_1_368-2 the liabilities of sub to be assumed by holdco within the meaning of sec_357 plus the liabilities if any to which the sub assets are subject at the time of the reincorporation were incurred by sub in the ordinary course of its business and are associated with such assets neither investco nor opco will elect to be classified as an association_taxable_as_a_corporation under sec_301_7701-3 effective on or before the date that sub merges with and into opco sub sub and holdco will pay their respective expenses if any incurred in connection with the reincorporation there is no plan for holdco to liquidate or to merge into any other corporation sub is not under the jurisdiction of a court in a title_11_or_similar_case within the meaning of sec_368 rulings plr-117041-10 based solely on the information submitted and the representations made we rule as follows for federal_income_tax purposes the reincorporation will be treated as a direct transfer by sub of all of its assets to holdco in exchange for all of the holdco stock and the assumption by holdco of the sub liabilities followed by a liquidation of sub in which the holdco stock is distributed to sub in cancellation of its interests in sub the reincorporation will constitute a reorganization under sec_368 sub and holdco each will be a_party_to_a_reorganization under sec_368 sub will recognize no gain_or_loss on the transfer of assets to holdco in exchange for holdco stock and holdco’s assumption of sub 4’s liabilities in the reincorporation sec_361 and sec_357 holdco will recognize no gain_or_loss on the receipt of sub 4’s assets in exchange for holdco stock in the reincorporation sec_1032 holdco’s basis in each asset received from sub in the reincorporation will be the same as sub 4’s basis in such asset immediately before the reincorporation sec_362 the holdco’s holding_period reincorporation will include the period during which such asset was held by sub sec_1223 for each asset received from sub in sub will recognize no gain_or_loss on the distribution of holdco stock to sub in the reincorporation sec_361 sub will recognize no gain_or_loss on its exchange of sub interests for holdco shares in the reincorporation sec_354 sub 3’s basis in the holdco stock received in the reincorporation will be the same as its basis in the sub interests surrendered in exchange therefor sec_358 sub 3’s holding_period for the holdco stock received in the reincorporation will include the holding_period for the sub interests exchanged therefor provided the sub interests are held as capital assets on the date of the exchange sec_1223 plr-117041-10 holdco will succeed to and take into account the tax_attributes of sub described in sec_381 sec_381 these items will be taken into account by holdco subject_to the conditions and limitations specified in sec_381 through and the treasury regulations thereunder the disposition and the jv formation will not prevent the reincorporation from qualifying as a reorganization under sec_368 revrul_96_29 1996_1_cb_50 caveats except as specifically set forth above we express no opinion concerning the tax consequences of the proposed transaction under any other provision of the internal_revenue_code or treasury regulations or the tax treatment of any conditions existing at the time of or effects resulting from the proposed transaction that are not specifically covered by the above rulings in particular other than as expressly provided above no opinion is expressed regarding the tax consequences of the disposition or the jv formation procedural statements this letter_ruling is directed only to the taxpayer who requested it sec_6110 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 pursuant to a power_of_attorney on file in this office a copy of this letter_ruling will be sent to your authorized representative sincerely mark s jennings branch chief branch office of associate chief_counsel corporate


internal_revenue_service number release date index number ----------------------------------- ------------------------------- --------------------------- -------------------------------- legend legend department of the treasury washington dc third party communication none date of communication not applicable_person to contact -------------------- id no ------------- telephone number -------------------- refer reply to cc fip b03 plr-106017-11 date august trust ---------------------------------------------------------------------- ------------------------------------------------------------------------ subsidiary --------------------------------------------- ---------------------------------------------------------------------- partnership ---------------------------------------------------------------------- -------------------------------------- management company state x state y city x ------------------------------ ------------ -------------------- -------------- date ------------------- date ------------------- date date date year a ------------------------- ------------------------- ------------------------ ------- -- plr-106017-11 b ----------- dear ------------- this responds to a letter dated date on behalf of trust and subsidiary requesting an extension of time under sec_301_9100-1 of the procedure and administration regulations to make an election under sec_856 of the internal_revenue_code code to treat subsidiary as a taxable_reit_subsidiary trs of trust effective as of date facts trust was formed on date as a state x corporation trust represents it will elect to be treated as a real_estate_investment_trust reit under subchapter_m part ii of the code beginning with its first taxable_year ending december year the business activities of trust are holding pursuant to sec_856 of the code partnership interests that own and operate real_estate_assets trust is a co-investment vehicle with a partnerships that are unrelated pursuant to sec_267 to trust trust's co- investment percentage is b partnership was formed on date as a state y limited_liability_company partnership operates a rental office complex in city x state y trust holds a b member interest in partnership subsidiary was formed on date as a state y limited_liability_company partnership is subsidiary's sole member and filed form_8832 entity classification election to treat subsidiary as a domestic eligible_entity to be classified as an association_taxable_as_a_corporation subsidiary's business_purpose is to qualify and operate as a trs in order to provide services that otherwise would result in trust recognizing impermissible_tenant_service_income pursuant to sec_856 in connection with the acquisition of the rental office complex_trust and its co- investment partners formed partnership to acquire and operate the rental office complex during the acquisition due diligence phase it was determined that partnership would own and operate a cafeteria the income from the operation of a cafeteria is generally considered impermissible_tenant_service_income pursuant to sec_856 subsidiary was formed to be treated as a trs and operate the cafeteria both trust and subsidiary intended to elect to treat subsidiary as a trs under sec_856 for subsidiary’s initial taxable_year beginning date in order to qualify as a trs as of date trust and subsidiary should have filed form_8875 by date plr-106017-11 the chief financial officer cfo for management company was responsible for the administration of trust including the operations of subsidiary as a trs the cfo left his position on date on or about date and in connection with the preparation for filing the initial form 1120-reit us income_tax return for real_estate_investment_trusts for the taxable_year ending december year trust discovered that form_8875 had not been filed with respect to trust and subsidiary trust and subsidiary also make the following additional representations the request for relief was filed by trust and subsidiary before the failure to make the regulatory election was discovered by the service granting the relief will not result in trust and or subsidiary having a lower tax_liability in the aggregate for all years to which the regulatory election applies than that taxpayer would have had if the election had been timely made taking into account the time_value_of_money trust and subsidiary did not seek to alter a return position for which an accuracy-related_penalty has been or could have been imposed under sec_6662 at the time trust and subsidiary requested relief and the new position requires or permits a regulatory election for which relief is requested being fully informed of the required regulatory election and related tax consequences trust and subsidiary did not choose to not file the election law and analysis the ticket to work and work incentives improvement act of p l included a change for tax years beginning after date to the reit provisions of sec_856 this change allows a reit to form a trs that can perform activities that otherwise would result in impermissible_tenant_service_income the election under sec_856 is made on form_8875 taxable_reit_subsidiary election officers of both the reit and the trs must jointly sign the form which is filed with the irs service_center in ogden ut sec_856 of the code provides that a reit and a corporation other than a reit may jointly elect to treat such corporation as a trs to be eligible for treatment as a trs sec_856 provides that the reit must directly or indirectly own stock in the corporation and the reit and the corporation must jointly elect such treatment the election is irrevocable once made unless both the reit and the subsidiary consent to its revocation in addition sec_856 specifically provides that the election and any revocation thereof may be made without the consent of the secretary plr-106017-11 in announcement 2001_1_cb_716 the service announced the availability of new form_8875 taxable_reit_subsidiary election according to the announcement this form is to be used for tax years beginning after for eligible entities to elect treatment as a trs the instructions to form_8875 provide that the subsidiary and the reit can make the election at any time during the tax_year however the effective date of the election depends upon when the form_8875 is filed the instructions further provide that the effective date on the form cannot be more than months and days prior to the date of filing the election or months after the date of filing the election if no date is specified on the form the election is effective on the date the form is filed with the service sec_301_9100-1 of the regulations provides that the commissioner has discretion to grant a reasonable extension of time to make a regulatory election defined in sec_301_9100-1 as an election whose due_date is prescribed by regulations or by a revenue_ruling a revenue_procedure a notice or an announcement published in the internal_revenue_bulletin or a statutory election but no more than months except in the case of a taxpayer who is abroad under all subtitles of the internal_revenue_code except subtitles e g h and i sec_301_9100-3 through c i sets forth rules that the internal_revenue_service generally will use to determine whether under the particular facts and circumstances of each situation the commissioner will grant an extension of time for regulatory elections that do not meet the requirements of sec_301_9100-2 sec_301_9100-3 provides that subject_to paragraphs b i through iii of sec_301_9100-3 when a taxpayer applies for relief under this section before the failure to make the regulatory election is discovered by the service the taxpayer will be deemed to have acted reasonably and in good_faith and sec_301_9100-3 provides that the interests of the government are prejudiced if granting relief would result in the taxpayer having a lower tax_liability in the aggregate for all years to which the regulatory election applies than the taxpayer would have had if the election had been timely made taking into account the time_value_of_money conclusion based on the information submitted and representations made we conclude that trust and subsidiary have satisfied the requirements for granting a reasonable extension of time to elect under sec_856 to treat subsidiary as a trs of trust effective as of date trust and subsidiary have days from the date of this letter to make the intended elections this ruling is limited to the timeliness of the filing of the form_8875 this ruling’s application is limited to the facts representations code sections and regulations cited herein plr-106017-11 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 in particular no opinion is expressed with regard to whether trust qualifies as a reit or whether subsidiary otherwise qualifies as a trs under subchapter_m of the code no opinion is expressed with regard to whether the tax_liability of trust and subsidiary is not lower in the aggregate for all years to which the election applies than such tax_liability would have been if the election had been timely made taking into account the time_value_of_money upon audit of the federal_income_tax returns involved the director’s office will determine such tax_liability for the years involved if the director’s office determines that such tax_liability is lower that office will determine the federal_income_tax effect the ruling contained in this letter is based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in support of the request for rulings it is subject_to verification on examination this ruling is directed only to the taxpayer requesting it sec_6110 of the code provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative sincerely alice m bennett branch chief branch office of associate chief_counsel financial institutions products enclosures copy of this letter copy for sec_6110 purposes cc


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 b02 plr-124150-08 date september internal_revenue_service number release date index number ------------------------ -------------------------------- -------------------------- -------------- ----------------------------- ty ------- ty ------- legend taxpayer --------------------------------------------------- --------------------- year year year fc country x country y trust ------- ------- ------- --------- ------------------ ----------- ------------------------- trustee o trustee r ---------------------------- ------------------------------ law firm p law firm q ------------------------------------------------------------------------------------------ ---------------------- ---------------------------------------------------------- dear ------------------ this is in response to your letter received by our office on date submitted by your authorized representative requesting the consent of the commissioner of the internal_revenue_service to make a retroactive qualified electing plr-124150-08 fund qef election under sec_1295 of the internal_revenue_code code and sec_1_1295-3 with respect to your investment in fc the rulings contained in this letter are based upon information and representations submitted by taxpayer and accompanied by a penalties of perjury statement executed by the appropriate parties while this office has not verified any of the material submitted in support of the request for rulings it is subject_to verification on examination facts taxpayer is a u s citizen and a named beneficiary of the trust established under the laws of country x by taxpayer's grandmother a citizen and resident of country y in year the trust acquired shares in fc a corporation organized under the laws of country y at all times since its formation the trust was administered and managed by various foreign nationals who served as the trustees of the trust trustee o who served as a trustee of the trust at all times since inception is an attorney with substantial experience in transnational tax planning and was a partner at law firm p during all the years at issue trustee o is competent to render international tax_advice trustee o and the other trustees had full access to all the records of the trust and trustee o was aware at all relevant times that taxpayer resided permanently in the united_states taxpayer is not a tax professional and has no experience in international tax matters taxpayer represents that as a beneficiary of the trust taxpayer had no control_over the assets of the trust and relied on the trustees to manage the assets of the trust at all times the trustees and in particular trustee o never informed taxpayer that the trust held shares of fc that fc was a passive_foreign_investment_company pfic under sec_1297 of the code for u s federal_income_tax purposes and of the consequences of such investment and of the possibility of making any elections qef or otherwise with respect to such shareholdings for u s federal_income_tax purposes in year after the death of taxpayer's father taxpayer engaged law firm q and others to determine the extent of the family's assets in year during its evaluation of the trust's assets law firm q determined that fc had been a pfic since year and informed taxpayer of fc's characterization as a pfic at that time taxpayer has submitted an affidavit signed under penalties of perjury describing the events that led to the failure to make the qef election by the election due_date plr-124150-08 including the role of the trustees taxpayer has also submitted affidavits of trustee o and trustee r corroborating the representations made by taxpayer taxpayer represents that as of the date of this request_for_ruling the pfic status of fc has not been raised by the irs on audit for any of the taxable years at issue ruling requested taxpayer requests the consent of the commissioner of the internal_revenue_service to make a retroactive qef election with respect to fc for year under sec_1_1295-3 law sec_1295 of the code provides that any pfic shall be treated as a qef with respect to a taxpayer if an election by the taxpayer under sec_1295 applies to such company for the taxable_year and the company complies with such requirements as the secretary may prescribe for purposes of determining the ordinary_earnings and net capital_gains of such company under sec_1295 a qef election may be made for any taxable_year at any time on or before the due_date determined with regard to extensions for filing the return for such taxable_year to the extent provided in regulations such an election may be made after such due_date if the taxpayer failed to make an election by the due_date because the taxpayer reasonably believed the company was not a pfic under sec_1_1295-3 a taxpayer may request the consent of the commissioner to make a retroactive qef election for a taxable_year if the shareholder reasonably relied on a qualified_tax professional within the meaning of sec_1_1295-3 granting consent will not prejudice the interests of the united state sec_3 government as provided in sec_1_1295-3 the request is made before a representative of the internal_revenue_service raises upon audit the pfic status of the corporation for any taxable_year of the shareholder and the shareholder satisfies the procedural requirements of sec_1 f the procedural requirements include filing a request for consent to make a retroactive election with and submitting a user_fee to the office of the associate chief_counsel international sec_1_1295-3 additionally affidavits signed under penalties of perjury must be submitted that describe plr-124150-08 the events which led to the failure to make a qef election by the election due_date the discovery of such failure the engagement and responsibilities of the qualified_tax professional and the extent to which the shareholder relied on such professional sec_1_1295-3 and iii conclusion based on the information submitted and representations made with taxpayer’s ruling_request we conclude that taxpayer has satisfied sec_1_1295-3 accordingly consent is granted to taxpayer to make a retroactive qef election with respect to fc for year provided that taxpayer complies with the rules under sec_1_1295-3 regarding the time and manner for making the retroactive qef election this private_letter_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 a copy of this ruling must be attached to any_tax return to which it is relevant in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to taxpayer's authorized representative sincerely ethan a atticks senior technical reviewer branch international cc


number release date id office uilc cca_2009120416394754 -------------- from -------------------------- sent friday december pm to -------------------------------------- cc --------------------------------------- subject re tefra and employment_tax audits if the service intends to disregard the partnership_distribution and characterize the transfer of money from the tefra partnership to the s_corporation shareholders as wages paid to the s_corporation shareholders then the service must issue an fpaa sec_301_6231_a_3_-1 any assessment of a deficiency on this ground without an fpaa would be invalid sec_6225 -------------------------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------------------------------- -----------------------------------


office_of_chief_counsel internal_revenue_service memorandum number release date ------------------------------------- posts-140059-11 uilc 45k date date to ------------------------------------------------------- ------------------- from --------------------------------------------------- ------------------------------------------------------------------------------------------------- subject qualification of coke or coke gas facilities under sec_45k of the internal_revenue_code this chief_counsel_advice memorandum responds to your request for assistance dated date concerning whether a taxpayer must meet certain requirements of sec_45k and f of the code in order to claim a credit pursuant to sec_45k issue whether a taxpayer must meet the requirement of sec_45k and place its facility in service after date in order to claim a credit pursuant to sec_45k for fuel produced at a facility for producing coke or coke gas other than from petroleum products conclusion a facility producing fuel from coke or coke gas other than from petroleum based products need not be placed_in_service after date to qualify for a credit under sec_45k posts-140059-11 facts taxpayer’s coke facility was placed_in_service prior to date exam identified the taxpayer at issue as having claimed credit for producing fuel from a nonconventional fuel source pursuant to sec_45k for the production of coke or coke gas other than from petroleum based products for taxable years through exam has learned that the taxpayer and its parent_corporation brother sister entities and subsidiaries never sold coke gas prior to the years in which it took a sec_45k credit thus the taxpayer would not have been eligible for the credit under the old sec_29 exam is confident that the taxpayer and related entities never claimed a sec_29 credit for the coke facility our analysis and conclusions are based are this underlying premise law and analysis the sec_45k credit the credit was redesignated from former sec_29 of the code by a of the energy act of pub_l_no effective for tax years ending after prior to its redesignation the credit was not part of the general_business_credit and no carryover of any unused_credit was permitted this provision was originally enacted as sec_44d of the code by a of the crude_oil windfall profit tax act of pub_l_no effective for tax years ending after it was redesignated from sec_44d to sec_29 by the tax_reform_act_of_1984 p l the credit has in most cases expired the credit has expired at different times for different fuels originally pursuant to sec_45k and sec_45k the credit for the following qualified_fuels were available oil produced from shale and tar sands gas produced from geopressured brine devonian_shale coal_seams_or_a_tight_formation or biomass and liquid gaseous or solid synthetic fuels produced from coal including lignite including such fuels when used as feedstocks the credit was available for those fuels that were either produced from a well drilled after and before or produced in a facility placed_in_service after and before and sold before more recently pursuant to sec_45k the credit applied to a facility producing gas from biomass or producing liquid gaseous or solid synthetic fuels from coke if it was placed_in_service after and before date provided the fuel was sold before sec_45k provides that this particular extension was not available to a facility that produced coke or coke gas unless the original_use of the facility began with the taxpayer claiming the credit notwithstanding these placed_in_service rules sec_45k established separate deadlines for synthetic_fuel produced from facilities producing coke or coke gas other than from petroleum based products under sec_45k the credit is available for a facility producing coke or coke gas other than from petroleum based products that posts-140059-11 was placed_in_service before or after and before and sold during the period beginning on the later of date or the date that the facility is placed_in_service and ending on the date that is four years after the date that period began in addition sec_45k provides that this special rule does not apply to any facility producing qualified_fuels for which a credit was allowed under the tax_year or a preceding tax_year by reason of the extension for certain facilities under sec_45k specifically the introductory language of sec_45k which contains rules in the case of certain coke or coke gas facilities other than from petroleum based products provides for these deadlines notwithstanding sub sec_45k that contains expired effective date provisions for the credit including that portion of the requirement of sec_45k requiring that the facility be placed_in_service after date this introductory language then directs a taxpayer to look to sec_45k rather than sec_45k for determining the availability of the credit for a facility producing coke or coke gas other than from petroleum based products accordingly it is our view that a taxpayer claiming the credit under the extension provisions of sec_45k is not required to place its facility in service after date this writing may contain privileged information any unauthorized disclosure of this writing may undermine our ability to protect the privileged information if disclosure is determined to be necessary please contact this office for our views please call -------------------------at --------------------- if you have any further questions


number release date id office uilc cca_2010072808303937 --------- from -------------------- sent wednesday date am to ---------------------- cc ------------ subject re tmp in bankruptcy under rev rule the trust can continue to act as tmp since it is not in bankruptcy since the husband grantor beneficiary is bankrupt you are correct that he personally automatically drops out of the tefra proceeding as a practical matter only the non-bankrupt wife will be subject_to tax based on the tefra proceeding --------------------------------------------------------------------------------------