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 ita plr-123944-13 date date re request for extension of time to make the election not to deduct the additional first year depreciation legend ----------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------- p sec_1 sec_2 sec_3 date1 ---------------------------- date2 ---------------------------- date3 ---------------------------- dear -------------- this letter responds to a letter dated date and supplemental correspondence submitted by p on behalf of sec_1 sec_2 and sec_3 hereinafter sec_1 sec_2 and sec_3 will be collectively referred to as taxpayer requesting an extension of time pursuant to sec_301_9100-1 through of the procedure and administration regulations to make the election under sec_168 of the internal_revenue_code not to deduct the additional first year depreciation deduction under sec_168 and k for all classes of qualified_property placed_in_service in taxable years ended date1 date2 and date3 facts plr-123944-13 taxpayer represents that the facts are as follows p is the parent of an affiliated_group_of_corporations that includes sec_1 sec_2 and sec_3 the affiliated_group_of_corporations files consolidated federal_income_tax returns on a fiscal-year basis taxpayer is a modular buildings supplier who provides mobiles offices site trailers storage containers and modular buildings for temporary and permanent applications in north america taxpayer placed_in_service qualified_property as defined in sec_168 during its taxable years ended date1 date2 and date3 on p’s timely filed consolidated federal_income_tax returns for its taxable years ended date1 date2 and date3 taxpayer did not claim the additional first year depreciation deduction under sec_168 or k with respect to any qualified_property placed_in_service during each of these taxable years however taxpayer inadvertently failed to attach the election statement not to deduct the additional first year depreciation for such property to the consolidated federal_income_tax returns for its taxable years ended date1 date2 and date3 furthermore the period of limitation on assessment under sec_6501 has expired for the taxable years ended date1 and date2 taxpayer has disposed of qualified_property placed_in_service in taxable years ending date1 and date2 and some of the dispositions occurred in a taxable_year for which the period of limitation on assessment under sec_6501 has expired however taxpayer represents that the adjusted_basis of the disposed property reflected the reduction in basis for the greater of the depreciation allowed_or_allowable as if the election had been timely made by taxpayer taxpayer did not make the election under sec_168 to accelerate alternative_minimum_tax credits and if applicable research credits in lieu of the additional first year depreciation deduction for any class of property placed_in_service by taxpayer’s taxable years ending date1 date2 or date3 ruling requested taxpayer requests an extension of time pursuant to sec_301_9100-1 through to make an election not to deduct the additional first year depreciation deduction under sec_168 for all classes of qualified_property placed_in_service by taxpayer in taxable years ended date1 date2 and date3 law and analysis plr-123944-13 sec_168 allows a 50-percent additional first year depreciation deduction in the placed-in-service year for qualified_property acquired by a taxpayer after date and before date or acquired by a taxpayer generally after date and placed_in_service by the taxpayer generally before date sec_168 provides a 100-percent additional first year depreciation deduction in the placed-in-service year for qualified_property acquired by a taxpayer after date and generally before date and placed_in_service by the taxpayer after date and generally before date see sec_3 of revproc_2011_26 2011_16_irb_664 sec_168 provides that a taxpayer may elect not to deduct the additional first year depreciation for any class of property placed_in_service during the taxable_year the term class of property is defined in sec_1_168_k_-1 of the income_tax regulations as meaning in general each class of property described in sec_168 for example 5-year_property see section dollar_figure of revproc_2008_54 2008_2_cb_722 and section dollar_figure of revproc_2011_26 i r b pincite rules similar to the rules in sec_1_168_k_-1 for qualified_property or for 30-percent additional first year depreciation deduction apply for purposes of sec_168 as currently in effect sec_1_168_k_-1 provides that the election not to deduct additional first year depreciation must be made by the due_date including extensions of the federal tax_return for the taxable_year in which the property is placed_in_service by the taxpayer sec_1_168_k_-1 provides that the election not to deduct additional first year depreciation must be made in the manner prescribed on form_4562 depreciation and amortization and its instructions the instructions to form_4562 for the taxable years ended date1 date2 and date3 provided that the election not to deduct the additional first year depreciation is made by attaching a statement to the taxpayer’s timely filed tax_return indicating that the taxpayer is electing not to deduct the additional first year depreciation and the class of property for which the taxpayer is making the election under sec_301_9100-1 the commissioner has discretion to grant a reasonable extension of time under the rules set forth in sec_301_9100-2 and sec_301_9100-3 to make a regulatory election sec_301_9100-1 through provide the standards the commissioner will use to determine whether to grant an extension of time to make an election sec_301_9100-2 provides automatic extensions of time for making certain elections sec_301_9100-3 provides extensions of time for making elections that do not meet the requirements of sec_301_9100-2 plr-123944-13 sec_301_9100-3 provides that requests for relief under sec_301_9100-3 will be granted when the taxpayer provides evidence to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and the grant of relief will not prejudice the interests of the government sec_301_9100-3 provides in relevant part that the interests of the government are ordinarily prejudiced if the taxable_year in which the regulatory election should have been made or any taxable years that would have been affected by the election had it been timely made are closed by the period of limitations on assessment under sec_6501 before the taxpayer’s receipt of a ruling granting relief under this section conclusion based solely on the facts and representations submitted we conclude that the requirements of sec_301_9100-1 and sec_301_9100-3 have been satisfied accordingly taxpayer is granted calendar days from the date of this letter to make the election not to deduct the additional first year depreciation under sec_168 and k for all classes of property placed_in_service by taxpayer during the taxable years ended date1 date2 and date3 that qualify for the additional first year depreciation deduction for the taxable years closed by the period of limitations on assessment under sec_6501 the adjusted_basis of the property as of the beginning of the first open_year must reflect the reduction in basis for the greater of the depreciation allowed_or_allowable in the closed_year s had the election been made timely by the taxpayer for the taxable years closed by the period of limitations on assessment under sec_6501 this election must be made by p filing a statement indicating that taxpayer is electing not to deduct the additional first year depreciation for all classes of property placed_in_service during the taxable years ended date1 and date2 along with a copy of this letter_ruling with the irs service_center s where taxpayer filed its original federal tax returns for such taxable years for the open taxable_year this election must be made by p filing an amended consolidated federal tax income_tax return for such taxable_year with a statement indicating that taxpayer is electing not to deduct the additional first year depreciation for all classes of property placed_in_service during that taxable_year except as specifically set forth above we express no opinion concerning the federal tax consequences of the facts described above under any other provisions of the code including other subsections of sec_168 specifically no opinion is expressed or implied on whether any item of depreciable_property placed_in_service by taxpayer during the taxable years ended date1 date2 and date3 is eligible for the additional first year depreciation deduction plr-123944-13 this letter_ruling is directed only to the taxpayer requesting it sec_6110 provides that it may not be used or cited as precedent in accordance with the power_of_attorney we are sending a copy of this letter to taxpayer’s authorized representatives we are also sending a copy of this letter to the appropriate operating division director sincerely karla m meola karla m meola assistant to the branch chief branch office of associate chief_counsel income_tax and accounting enclosures copy of this letter copy for sec_6110 purposes


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 eb hw plr-144324-05 date date legend employer -------------------------- ---------------------- dear ---------------- this responds to your letter of date and subsequent correspondence requesting rulings on behalf of employer concerning the federal_income_tax treatment of long-term disability benefits under sec_104 and sec_105 of the internal_revenue_code the code you represent that employer intends to provide long-term disability coverage to its eligible employees disability benefits will be provided through a group_insurance policy with a third-party insurance carrier employer will pay for the cost of long-term disability coverage that provides benefits for up to two years after an employee becomes disabled employer-provided coverage will be paid on a pre-tax basis and employer will not include the cost of the coverage in the gross_income of its employees employer will also give employees the opportunity to elect supplemental long-term disability coverage that provides benefits solely for the period commencing after the two-year period during which benefits are provided through the employer-provided coverage and continuing until the employee’s attainment of age employees who elect supplemental disability coverage are required to purchase the coverage on an after-tax basis through after-tax payroll deductions eligible employees are not required to elect supplement coverage however if an employee does not elect supplemental coverage benefits will be provided only for a period of up to two years after the employee becomes disabled at no time will an employee receive benefits pursuant to both employer-provided and supplemental coverage contributions by employer for the long-term disability coverage and contributions by employees for the supplemental long- plr-144324-05 term disability coverage will be clearly demarcated as to the amounts that are earmarked to pay for the employer-provided coverage and the amounts that are earmarked to pay for the supplemental coverage sec_104 states that except in the case of amounts attributable to and not in excess of deductions allowed under sec_213 for any prior taxable_year gross_income does not include amounts received through accident_or_health_insurance or through an arrangement having the effect of accident_or_health_insurance for personal injuries or sickness other than amounts received by an employee to the extent such amounts are attributable to contributions by the employer which were not includible in the gross_income of the employee or are paid_by the employer sec_1_104-1 of the income_tax regulations states that if an individual purchases a policy of accident_or_health_insurance out of his own funds amounts received thereunder for personal injuries or sickness are excludable from his gross_income under sec_104 conversely if an employer is either the sole contributor to such a fund or is the sole purchaser of a policy of accident_or_health_insurance for his employees on either a group or individual basis the exclusion provided under sec_104 does not apply to any amounts received by his employees through such fund or insurance sec_1_104-1 refers to sec_1_105-1 of the regulations for rules relating to the determination of the amount attributable to employer contributions sec_1_105-1 of the regulations provides that all amounts received by employees through an accident_or_health_plan which is financed solely by their employer are subject_to the provisions of sec_105 under sec_105 amounts received by an employee through accident_or_health_insurance for personal injuries or sickness must be included in gross_income to the extent such amounts are attributable to contributions by the employer which were not includible in the gross_income of the employee or are paid_by the employer sec_1_105-1 of the regulations provides that in the case of amounts received by an employee through an accident_or_health_plan which is financed partially by his employer and partially by contributions of the employee sec_105 applies to the extent that such payments are attributable to contributions of the employer that were not includible in the employee s gross_income the portion of the amounts which is attributable to the contributions of the employer shall be determined in accordance with sec_1_105-1 of the regulations in the case of insured plans in revrul_2004_55 2004_2_irb_1 an employer provides long-term disability benefits through a group_insurance policy with a third party insurance carrier the employer pays the entire premium for the coverage and does not include the cost of the coverage in the employee's gross_income the employer amends the plan to provide that each employee may either continue to have the premiums_paid by the employer on a pre-tax basis or irrevocably elect to have the employer pay for the long-term disability coverage on an after-tax basis the ruling concludes that the plan is not a contributory plan under plr-144324-05 sec_1_105-1 of the regulations the ruling holds that long-term disability benefits received by an employee who elects to have the employer pay for coverage on an after-tax basis are excludable under sec_104 and the benefits received by an employee whose coverage is paid on a pre-tax basis are includible in gross_income under sec_105 in your case at no time do employees receive benefits pursuant to both the pre-tax employer-provided disability coverage and the employee-provided after-tax supplemental disability coverage supplemental disability benefits are paid only when an employee elects supplemental coverage and only after the employee is no longer entitled to receive employer-provided disability benefits at no time are benefits attributable to the pre-tax employer-provided coverage and the after-tax employee supplemental coverage financed by both employer and employee contributions therefore the plan is not a contributory plan within the meaning of sec_1_105-1 of the regulations based on the information submitted and the representations made we conclude as follows long-term disability benefits paid to an employee pursuant to employer- provided coverage ie benefits paid during the first two years of the employee’s disability are attributable solely to pre-tax employer contributions and are includible in the employee’s gross_income under sec_105 long-term disability benefits paid to an employee pursuant to the supplemental coverage ie benefits paid after the first two years of the employee’s disability are attributable solely to after-tax employee contributions and are excludable from the employee’s gross_income under sec_104 except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter this ruling is directed only to the taxpayer requesting it sec_6110 of the code provides that it may not be used or cited as precedent plr-144324-05 in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representatives enclosures copy of letter copy for sec_6110 purposes sincerely harry beker chief health and welfare branch office of division counsel associate chief_counsel tax exempt government entities


internal_revenue_service number release date index number ------------------------------------ --------------------------------------- ---------------------------- - attention office of legal counsel legend department of the treasury washington dc person to contact ----------------------- ---------------------- telephone number --------------------- refer reply to cc ita b05 - plr-101352-04 date date university college program ------------------------------------------------------------------------------------------------------- --------------------------- ---------------------------------------------- -------------------------------------------------------------------- date date dear taxpayer ---------------------------- --------------------------- ------------------ this is in response to your authorized representative's letter and submissions of date and date in which he requested on your behalf rulings under sec_117 of the internal_revenue_code_of_1986 code regarding the proper federal_income_tax treatment of certain tuition reduction benefits provided by you the university sometimes referred to herein as the taxpayer under the university’s tuition assistance program the program we are pleased to address your concerns the information submitted indicates that university is an educational_organization described in sec_170 of the code as of date the university including controlled affiliates employed approximately --------employees excluding those employees who are covered by a collective bargaining agreement employees who do not regularly work time or more and employees who have failed to complete a year_of_service with big_number or more hours_of_service of these --------employees -------- are highly compensated within the meaning of code sec_414 and --------are not highly compensated the program has been created to provide faculty and staff of college with tuition benefits to assist these employees with the cost of tuition for the education of their plr-101352-04 dependent_children none of the faulty administrators and staff who will be eligible for the program is covered by collective bargaining agreements and all have full-time permanent appointments under the program as amended eligible employees may apply for assistance with the cost of tuition for their dependent_children in first grade though baccalaureate level education program will have a uniformly applied ceiling to be established annually tuition benefits awarded pursuant to the program may be paid either directly to the school or by reimbursement to the employee eligibility ceases upon retirement or other employment termination as of date highly compensated college employees were eligible for benefits under the program as amended while non-highly compensated employees of college were eligible generally amounts paid to or for the benefit of employees are presumptively compensatory in nature and ordinarily includible in gross_income as wages sec_117 of the internal_revenue_code however provides a special rule in the case of a aqualified tuition reduction sec_117 provides that gross_income shall not include any aqualified tuition reduction sec_117 defines a aqualified tuition reduction as the amount of any reduction in tuition provided to any employee of a sec_170 educational_organization for the education below the graduate level at such an educational_organization of a such employee or b any person treated as an employee or whose use is treated as an employee_use under the rules of sec_132 sec_132 refers generally to spouses and dependent_children of employees sec_170 describes an educational_organization as one which normally maintains a regular faculty and curriculum and normally has a regular body of pupils or students in attendance at the place where its education activities are regularly carried on an entity described in sec_170 or of the code or an institution that is operated as an activity or function of such an entity may qualify as an aeducational organization described in sec_170 for purposes of sec_117 except for the case of certain graduate teaching and research assistants the exclusion from income provided by sec_117 is limited to education abelow the graduate level sec_117 provides an exception for individuals who are graduate students at the employing institution and who are engaged in providing teaching or research activities for that educational_institution sec_117 of the code provides that the exclusion from income of a qualified_tuition_reduction will apply to highly compensated employees only if such reduction is available on substantially the same terms to each member of a group_of_employees which is defined under a reasonable classification set up by the employer which does not discriminate in favor of highly compensated employees within the meaning of sec_414 plr-101352-04 sec_1_410_b_-4 of the income_tax regulations generally provides the test for determining whether a classification is reasonable and nondiscriminatory that test has two parts sec_1_410_b_-4 requiring that a classification established by an employer for its employees be reasonable and sec_1_410_b_-4 requiring that a plan pass an objective test to assure that the reasonable classification is nondiscriminatory the objective test has a safe_harbor an unsafe harbor and a facts and circumstances element a plan passes the objective test if it comes within a safe_harbor or satisfies the facts and circumstances considerations the test applies with respect to the minimum_coverage_rules of code sec_410 and may be incorporated into code sec_117 taking into account the differences between a qualified_retirement_plan and a qualified_tuition_reduction plan although sec_117 prohibits discrimination in favor of highly compensated employees described in sec_414 there is no specific language in sec_117 mandating that the same coverage tests applicable under sec_410 are also applicable under sec_117 thus the determination of whether a tuition reduction plan in fact discriminates in favor of highly compensated employees for purposes of sec_117 is made based upon an analysis of all relevant facts and circumstances sec_1_410_b_-4 of the regulations provides that a classification will be reasonable if based on all of the facts and circumstances the classification is reasonable and established under objective business criteria that identify the category of employees who benefit under the plan reasonable classifications include specified job categories nature of compensation ie salaried or hourly geographic location and other similar bona_fide business criteria the house ways_and_means_committee report on the deficit_reduction_act_of_1984 h_r rep no part 98th cong 2d sess provides additional examples of reasonable classifications the report explains that an employer could establish a classification based on such factors as seniority full-time versus part-time employment or job description provided that the classification is nondiscriminatory as of date college had faculty and administrative staff employees there are full-time permanent employees are faculty members and the other are staff members all of these full-time permanent employees are eligible to participate in the program as amended of the remaining employees all are either temporary part-time or non-permanent employees these temporary or part-time employees would not be eligible to participate in the amended program we have determined that the program satisfies the reasonable classification of employees test of sec_117 additionally based on all relevant facts and circumstances including the facts that the benefit is available to all college faculty and administrative staff excluding part-time temporary and non-permanent employees and that of the college’s total faculty and staff population is eligible to participate in the program we conclude that the program does not discriminate in favor of highly compensated employees thus college’s tuition based on the information provided and representations furnished we have plr-101352-04 reduction program satisfies the prohibition against discrimination in favor of highly compensated employees as described in sec_117 of the code determined that the described tuition reduction benefits provided under the taxpayer s amended tuition reduction program to employees within the meaning of sec_117 of the code of college for the education below the graduate level of dependent_children at any educational_institution described in sec_170 are excludable from the gross incomes of such employees under sec_117 of the internal_revenue_code as aqualified tuition reductions accordingly the value of the described tuition reduction benefits granted under the program to employees within the meaning of sec_117 of the code of the college for the education below the graduate level of such individuals does not constitute wages for purposes of sec_3401 additionally such amounts are not subject_to sec_3402 relating to withholding for income taxes at source sec_3102 relating to withholding under the federal_insurance_contribution_act fica or sec_3301 relating to the federal_unemployment_tax_act futa taxpayer is not required to file forms w-2 or any returns of information under sec_6041 with respect to such payments or remissions this letter_ruling is based on the facts and representations provided by the taxpayer and is limited to the matters specifically addressed no opinion is expressed as to the tax treatment of the transactions considered herein under the provisions of any other sections of the code or regulations which may be applicable thereto or the tax treatment of any conditions existing at the time of or effects resulting from such transactions which are not specifically addressed herein temporary or final regulations pertaining to one or more of the issues addressed in this ruling have not yet been adopted therefore this ruling may be modified or revoked by adoption of final regulations to the extent the regulations are inconsistent with any conclusions in this ruling see section dollar_figure of revproc_2004_1 2004_1_irb_1 pincite however when the criteria in section dollar_figure of revproc_2004_1 are satisfied a ruling is not revoked or modified retroactively except in rare or unusual circumstances in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative plr-101352-04 the rulings contained in this letter are based upon information and representations submitted by the university 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 because it could help resolve federal tax issues a copy of this letter_ruling should be maintained with the university’s permanent records this ruling is directed only to the taxpayer who requested it sec_6110 of the internal_revenue_code provides that it may not be used or cited as precedent sincerely s william a jackson william a jackson branch chief branch office of associate chief_counsel income_tax accounting enclosures copy of this letter copy for sec_6110 purposes