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 b01 plr-111505-12 date date legend parent date date date x -------------- ----------------------- ----------------------- ----------------------- ----------------------- -- company official tax professionals ------------------------- ------------------------------ -------------- ---------------------------------- ---------- --------------------------- --------------------- ---------------- --------------------------------- --------------------- dear ---------------- this letter responds to a letter dated date submitted on behalf of parent requesting an extension of time under sec_301_9100-3 of the procedure and plr-111505-12 administration regulations to file an election in particular parent is requesting an extension of time for the consolidated_group of which parent is the common parent to elect an extended carryback period the election for a consolidated_net_operating_loss cnol additional information was submitted in a letter dated date the material information submitted for consideration is summarized below parent is the common parent of a consolidated_group the parent group parent group incurred a cnol in the taxable_year ending date the year cnol parent seeks to carry back the year cnol x years to its taxable_year ending on date under sec_172 of the internal_revenue_code parent was required to file the election in order to carry back the year cnol to its taxable_year ending on date and to obtain the benefit of sec_56 the election was due on date but for various reasons a valid election was not filed after the due_date for the election it was discovered that the election had not been filed subsequently this request was submitted under sec_301_9100-3 for an extension of time to file the election the period of limitations on assessment under sec_6501 has not expired for the parent group’s consolidated_income_tax_return for the taxable_year in which the year cnol was incurred or any subsequent taxable_year parent has represented that it is not seeking to alter a return position for which an accuracy related penalty has been or could be imposed under sec_6662 at the time parent requested relief taking into account any qualified_amended_return filed within the meaning of sec_1 c and for which the new return position requires or permits a regulatory election for which relief is requested sec_172 generally permits a taxpayer to carry back a net_operating_loss nol to each of the taxable years preceding the taxable_year of the nol sec_172 permits a taxpayer to elect to carry back an applicable net_operating_loss applicable nol to each of the or taxable years preceding the taxable_year of the applicable nol in lieu of the 2-year period provided by sec_172 sec_172 provides that the term applicable nol means the taxpayer’s nol for a taxable_year ending after date and beginning before date sec_172 provides that the election under sec_172 shall be made by the due_date including extension of time for filing the return for the taxpayer’s last taxable_year beginning in the election is irrevocable and in general may be made only with respect to one taxable_year sec_1502 provides that the secretary shall prescribe such regulations as he may deem necessary in order that the tax_liability of any affiliated_group_of_corporations making a consolidated_return and of each corporation in the group both during and after the period of affiliation may be returned determined computed assessed collected plr-111505-12 and adjusted in such manner as clearly to reflect the income_tax_liability and the various factors necessary for the determination of such liability and in order to prevent avoidance of such tax_liability in carrying out the preceding sentence the secretary may prescribe rules that are different from the provisions of chapter that would apply if such corporations filed separate returns sec_1_1502-21 of the income_tax regulations provides that losses taken into account in determining a cnol may be carried to other taxable years whether consolidated or separate only under paragraph b of sec_1_1502-21 sec_1_1502-21 provides that nol carryovers and carrybacks to a taxable_year are determined under the principles of sec_172 and sec_1_1502-21 sec_1_1502-21t provides that a consolidated_group can elect an extended carryback period pursuant to sec_172 with regard to a cnol arising in a taxable_year ending after date and beginning before date revproc_2009_52 2009_49_irb_744 provides when and how a taxpayer may make an election under sec_172 sec_4 of revproc_2009_52 provides that the common parent of a consolidated_group makes the election for the group sec_4 and of revproc_2009_52 permit the election to be made for consolidated taxpayers by attaching a statement to the original or amended consolidated_return for the taxable_year of the applicable cnol by attaching a statement to the taxpayer’s amended consolidated_return applying the applicable cnol to the carryback_year or by attaching a statement to a claim for a tentative_carryback_adjustment on form_1139 corporation application_for tentative refund sec_4 b and b of revproc_2009_52 require the election regardless of the manner in which made to be filed no later than the due_date including extensions for filing the return for the taxpayer’s last taxable_year beginning in under sec_301_9100-1 the commissioner has discretion to grant a reasonable extension of time to make a regulatory election or a statutory election but no more than six months except in the case of a taxpayer who is abroad under all subtitles of the internal_revenue_code except subtitles e g h and i sec_301_9100-1 through provide the standards the commissioner will use to determine whether to grant an extension of time to make a regulatory election sec_301_9100-1 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 that granting relief will not prejudice the interests of the government sec_301_9100-3 plr-111505-12 the election by a consolidated_group to extend the carryback period under sec_172 for a cnol is a regulatory election therefore the commissioner has discretionary authority under sec_301_9100-3 to grant an extension of time for parent to file the election provided parent establishes to the satisfaction of the commissioner that it acted reasonably and in good_faith the requirements of sec_301_9100-1 and sec_301_9100-3 are satisfied and granting relief will not prejudice the interests of the government information affidavits and representations submitted by parent company official and tax professionals explain the circumstances that resulted in the failure to timely file a valid election the information establishes that parent reasonably relied on a qualified_tax professional who failed to make or advise parent to make the election and that the request for relief was filed before the failure to timely make the election was discovered by the internal_revenue_service see sec_301_9100-3 and v based on the facts and information submitted including the affidavits submitted and the representations made we conclude that parent has shown it acted reasonably and in good_faith the requirements of sec_301_9100-1 and sec_301_9100-3 are satisfied and granting relief will not prejudice the interests of the government accordingly provided the parent group qualifies substantively to file the election we grant an extension of time under sec_301_9100-3 until sixty days from the date on this letter for parent to file the election the time in which parent may file a form_1139 for the year cnol has expired however parent may file the election under sec_172 to carry back the year cnol to its taxable_year ending on date on form 1120x amended u s_corporation income_tax return for the taxable_year ending either date or date according to the procedures set forth in revproc_2009_52 a copy of this letter must be attached to the form 1120x if parent files form 1120x electronically parent may satisfy the requirement of attaching a copy of this letter by attaching a statement to the parent group’s amended_return that provides the date and control number plr-111505-12 of this letter_ruling the above extension of time is conditioned on the parent group’s tax_liability if any not being lower in the aggregate for all years to which the election applies than it would have been if the election had been timely made taking into account the time_value_of_money we express no opinion as to the parent group’s tax_liability for the years involved a determination thereof will be made by the director’s office upon audit of the income_tax returns involved except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any item discussed or referenced in this letter in particular we express no opinion with respect to whether parent qualifies substantively to make the election in addition we express no opinion as to the tax effects or plr-111505-12 consequences of filing the election late under the provisions of any other section of the internal_revenue_code or regulations or as to the tax treatment of any conditions existing at the time of or resulting from filing the election late that are not specifically set forth in this letter for purposes of granting relief under sec_301_9100-3 we relied on certain statements and representations made under penalty of perjury by parent company official and tax professionals the director however should verify all essential facts in addition notwithstanding that an extension is granted under sec_301_9100-3 to file the election any penalties and interest that would otherwise be applicable continue to apply 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 pursuant to the power_of_attorney on file in this office a copy of this letter is being sent to your authorized representative sincerely __________________ ken cohen senior technician reviewer branch office of associate chief_counsel corporate cc


department of the treasury internal_revenue_service tax_exempt_and_government_entities_division washington d c number release date date date contact person identification_number telephone number employer_identification_number uil legend foundations dear in response to your ruling_request regarding the proper treatment of a transfer of all of this is your net assets to other private_foundations under sec_507 sec_4940 sec_4941 sec_4942 sec_4943 sec_4944 and sec_4945 of the internal_revenue_code code facts sec_4947 you are a newly formed organization that is recognized as exempt from federal tax under sec_501 and are classified as a private_foundation under sec_509 you expect to receive assets in fulfillment of a bequest from a marital trust and annual payments from two charitable lead your directors have different unitrusts which are split-interest_trusts described in charitable philosophies and divergent charitable goals and they believe that their charitable endeavors will be more efficiently managed through two separate foundations that are also recognized as exempt under sec_501 and classified as private_foundations under sec_509 to accomplish this objective you propose to transfer pro_rata approximately two thirds of your assets to one of the foundations and the remaining one third of your assets to the other foundation together both transfers will constitute all of the assets to be received from the marital trust the transfers will be for no consideration and not out of current income in addition the charitable lead unitrusts will modify the terms of their agreements to designate the foundations as their charitable lead beneficiaries instead of you you and the foundations are not and will not be operating_foundations within the meaning of sec_4942 you have three directors all of whom are siblings two of those siblings and their spouses govern one transferee foundation and the third sibling his spouse and their child govern the other transferee foundation of your assets to the foundations immediately upon receipt of the distribution from the marital trust you will obtain an order of a state court of jurisdiction approving the transfers and the associated restructuring after completion of the transfers you will not have any assets not earlier than one day after final distribution of your net assets you will provide voluntary notice to the secretary of your intention to terminate your private_foundation_status under sec_507 your board proposes to transfer all you have made the following representations you have not notified the secretary of your intention to terminate your status as a private_foundation you the foundations and your respective foundation managers have each represented that they have i made a full disclosure of the factual situation to the service ii made reasonable attempts to ascertain whether the transfers are a violation of chapter iii concluded that to the best of their knowledge and information the transfers are not violations of chapter and iv have not committed willful repeated acts or failures to act or committed a willful and flagrant act or failure to act which gives rise to tax under chapter you have represented that the foundations are effectively controlled directly or indirectly by the same person or persons who effectively control you within the meaning of sec_1_507-3 of the regulations you do not currently have any outstanding grant that requires the exercise of expenditure_responsibility within the meaning of sec_4945 nor do you intend to make any such grants you do not have any outstanding pledges and will allocate pro_rata any charitable pledges made prior to your final distributions between the foundations rulings requested you have requested the following rulings the proposed transfers to the foundations will each constitute a significant disposition of assets to one or more private_foundations within the meaning of sec_1_507-3 and c the proposed transfers from you to the foundations will not result in a termination of private_foundation_status under sec_507 but will constitute a transfer between private_foundations within the contemplation of sec_507 the proposed transfers from you to the foundations will not constitute either a notification of your intent to voluntarily terminate your status as a private_foundation under sec_507 or willful repeated acts or failures to act or a willful and flagrant act or failure to act within the meaning of sec_507 such that you will therefore not be subject_to tax under sec_507 the proposed transfers to the foundations will not give rise to any investment_income under sec_4940 the proposed transfers to the foundations will not constitute self-dealing transactions and will not be subject_to excise_tax under sec_4941 you will not have any obligation to satisfy the minimum distribution_requirements under sec_4942 for the taxable_year of the transfers the proposed transfers investments for purposes of sec_4944 the proposed transfers from you to the foundations will not constitute taxable_expenditures under sec_4945 and you will not be required to exercise expenditure_responsibility under sec_4945 with respect to the proposed transfers constitute jeopardizing the foundations will from you not to law sec_501 provides an exemption from federal tax for organizations that are organized and operated exclusively for or educational_purposes no part of the net_earnings of which inures to the benefit of any private_shareholder_or_individual for public safety charitable scientific religious literary testing sec_507 states that a private_foundation may voluntarily terminate its private_foundation_status by notifying the secretary of its intention to voluntarily terminate its private_foundation_status pursuant to sec_507 and by paying any termination_tax under sec_507 sec_507 states that an organization’s private_foundation_status may be involuntarily terminated by the secretary if there have been either willful repeated acts or failures to act or a willful and flagrant act or failure to act giving rise to liability for tax under chapter and the secretary notifies such organization that by reason of these acts such organization is liable for the tax imposed by sub sec_507 and either such organization pays the tax imposed by sub sec_507 or any portion not abated under sub sec_507 or the entire amount of such tax is abated under sub sec_507 sec_507 states that in the case of a transfer of assets of any private_foundation to another private_foundation pursuant to any liquidation merger redemption recapitalization or other adjustment organization or reorganization the transferee private_foundation shall not be treated as a newly created organization sec_507 imposes on an organization that voluntarily terminates its private_foundation_status an excise_tax equal to the lower_of the aggregate tax benefits that have resulted from the private foundation’s exempt status under sec_501 or the value of the net assets of the private_foundation sec_507 states that for purposes of subchapter_c the aggregate tax_benefit resulting from the sec_501 status of any private_foundation is the sum of a the aggregate increases in tax under chapter sec_1 and which would have been imposed with respect to all substantial contributors to the foundation if deductions for all contributions made by such contributors to the foundation after date had been disallowed and b the aggregate increases in tax under chapter which would have been imposed with respect to the income of the private_foundation for taxable years beginning after date if i it had not been exempt from tax under sec_501 and ii in the case of a_trust deductions under sec_642 had been limited to percent of the taxable_income of the trust computed without the benefit of sec_642 but with the benefit of sec_170 and c interest on the increases in tax determined under subparagraphs a and b from the first date on which each such increase would have been due and payable to the date on which the organization ceases to be a private_foundation sec_4940 imposes on each private_foundation which is exempt from taxation under sec_501 for the taxable_year with respect to the carrying on of its activities a tax equal to two percent of the net_investment_income of such foundation for the taxable_year sec_4940 provides for a reduction in the excise_tax on net_investment_income to one percent where a private_foundation meets certain distribution_requirements sec_4941 imposes an excise_tax on acts of self-dealing between a private_foundation and any of its disqualified persons as defined in sec_4946 year following such taxable_year if such first day falls within the taxable_period a tax equal to sec_4942 imposes on the undistributed_income_of_a_private_foundation for any taxable_year which has not been distributed before the first day of the second or any succeeding taxable percent of the amount of such income remaining undistributed at the beginning of such second or succeeding taxable_year sec_4942 states the term undistributed_income means with respect to any private_foundation for any taxable_year as of any time the amount by which-- the distributable_amount for such taxable_year exceeds the qualifying distributions made before such time out of such distributable_amount_private_foundation sec_4942 adjusts the distributable_amount where distributions during prior years have exceeded income if for the taxable years in the adjustment period for which an organization is a of undistributed_income for such taxable years or as made out of corpus during such taxable years exceed b the distributable amounts for such taxable years then for purposes of this section the distributable_amount for the taxable_year shall be reduced by an amount equal to such excess the aggregate qualifying as made out distributions treated a sec_4944 imposes a tax on any investment that jeopardizes any exempt_purpose of a sec_501 private_foundation sec_4945 imposes a tax oneach taxable_expenditure payable by the private_foundation in addition sec_4945 imposes a tax on each foundation_manager who agrees to make a taxable_expenditure unless that agreement is not willful and is due to reasonable_cause sec_4945 defines in part the term taxable_expenditure to mean any amount_paid or incurred by a private_foundation as a grant to an organization unless the private_foundation exercises expenditure_responsibility with respect to such grant in accordance with subsection h sec_4945 states that the term expenditure responsibility’ means that a private_foundation is responsible to exert all reasonable efforts and to establish adequate procedures-- to see that a grant is spent solely for the purpose for which made to obtain full and complete reports from the grantee on how the funds are spent and to make full and detailed reports with respect to such expenditures to the secretary sec_4947 states that in the case of a_trust which is not exempt from tax under sec_501 not all of the unexpired interests in which are devoted to one or more of the purposes described in sec_170 and which has amounts in trust for which a deduction was allowed under sec_170 sec_545 sec_642 sec_2055 sec_2106 or sec_2522 sec_507 relating to termination of private_foundation_status sec_508 relating to governing instruments to the extent applicable to a_trust described in this paragraph sec_4941 relating to taxes on self-dealing sec_4943 relating to taxes on excess_business_holdings except as provided in subsection b sec_4944 relating to investments which jeopardize charitable purpose except as provided in subsection b and sec_4945 relating to taxes on taxable_expenditures shall apply as if such trust were a private_foundation foundation sec_1_507-3 states that except as provided in subparagraph of that paragraph a private_foundation is required to meet the distribution_requirements of sec_4942 for any taxable_year in which it makes a sec_507 transfer of all or part of its net assets to another private sec_1_507-3 states that for purposes of sec_4943 and whenever a private_foundation makes a sec_507 transfer of all or part of its net assets to another private_foundation the applicable_period of time described in sec_4943 or shall include both the period during which the transferor foundation held such assets and the period during which the transferee foundation holds such assets are which within private controlled effectively foundations sec_1_507-3 states that if a private_foundation transfers all of its net assets to one or more of sec_1_482-1 directly or indirectly by the same person or persons which effectively controlled the transferor private_foundation for purposes of chapter sec_4940 et seq and part il of subchapter_f of chapter sec_507 through such a transferee private_foundation shall be treated as if it were the transferor however where proportionality is appropriate such a transferee private_foundation shall be treated as if it were the transferor in the proportion which the fair_market_value of the assets less encumbrances transferred to such transferee bears to the fair_market_value of the assets less encumbrances of the transferor immediately before the transfer subdivision ii states that subdivision i of this subparagraph shall not apply to the requirements under sec_6033 and sec_6104 which must be complied with by the transferor private_foundation nor to the requirement under sec_6043 that the transferor file its liquidation dissolution or termination a return with respect to meaning the it state sec_1_507-3 in section is made by a private_foundation to another private_foundation pursuant to any sec_507 if or liquidation reorganization which includes any other significant disposition of assets to one or more private_foundations recapitalization organization redemption adjustment described transfer merger assets other that or of is a sec_1_507-3 defines the term significant disposition of assets to one or more private_foundations as any disposition or series of dispositions where the cumulative total of the dispositions i sec_25 percent or more of the fair_market_value of the net assets of the foundation at the beginning of the taxable_year sec_1_507-3 states that unless a private_foundation voluntarily gives notice pursuant to sec_507 a transfer of assets described in sec_507 will not constitute a termination of the such a transfer must nevertheless transferor's private_foundation_status under sec_507 satisfy the requirements of any pertinent provisions of chapter see subparagraphs through of sec_1_507-3 however if such transfer constitutes an act or failure to act which is described in sec_507 then such transfer will be subject_to the provisions of sec_507 rather than sec_507 rents and royalties received by a private_foundation from all sources sec_1_507-4 states that private_foundations that make transfers described in sec_507 are not subject_to the tax imposed under sec_507 with respect to such transfers unless the provisions of sec_507 become applicable sec_53_4940-1 of the excise_tax regulations states that for purposes of paragraph c of that section gross_investment_income means the gross amounts of income from interest dividends sec_53_4940-1 of the excise_tax regulations provides rules for determining capital_gain_net_income net_capital_gain for taxable years beginning before date for purposes of the tax imposed by sec_4940 sec_53_4946-1 of the excise_tax regulations states that for purposes of sec_4941 only the term disqualified_person shall not include any organization which is described in sec_501 other than an organization described in sec_509 revrul_2002_28 2002_1_cb_941 rules on the implications of sec_507 transfers under sec_4940 sec_4941 sec_4942 sec_4943 sec_4944 and sec_4945 for private_foundations in various situations analysis of your three directors one sibling has a differing charitable philosophy and divergent charitable goals from the other two siblings accordingly the proposed transfers are part of a larger transaction to distribute the marital and unitrust assets to the foundations so that the two sibling groups can direct the respective investment and exempt uses of those assets independent of the other ruling sec_1 and sec_507 describes a transfer from one private_foundation to another private_foundation according to any liquidation merger redemption recapitalization or other adjustment organization or reorganization sec_1_507-3 describes the terms other adjustment organization or reorganization as including any partial_liquidation or any other significant distribution of assets to one or more private_foundations other than transfers for full and adequate_consideration or distributions out of current income the term significant disposition of assets to one or more private foundations’ is defined by sec_1_507-3 as any disposition or series of dispositions where the aggregate value transferred i sec_25 percent or more of the fair_market_value of the net assets of the foundation at the beginning of the taxable_year since you are transferring all of your assets to the foundations for no consideration and not out of current income your proposed transfers will qualify as a significant disposition of assets under sec_507 a private_foundation shall pursuant to sec_1_507-4 a private_foundation that makes a transfer described in sec_507 is not subject_to the tax imposed under sec_507 with respect to such transfer however sec_507 states that the status of any organization as be terminated only if the organization notifies the secretary of its intent to accomplish such termination or with respect to the organization there have been either willful repeated acts or failures to act or a willful and flagrant act or failure to act giving rise to liability for tax under chapter and the secretary notifies such organization that by reason of sec_507 such organization is liable for the tax as discussed in the paragraph above your transfers will constitute a imposed by sec_507 significant distribution of assets described in sec_507 you have not notified the secretary of your intent to terminate your status as a private_foundation and you have not committed willful repeated acts or failures to act or committed a willful and flagrant act or failure to act which gives rise to tax under chapter therefore your proposed transfers of assets to the foundations under sec_507 will not constitute either a notification of your intent to voluntarily terminate your status as a private_foundation under sec_507 or willful repeated acts or failures to act or a willful and flagrant act or failure to act within the meaning of sec_507 such that you will therefore not be subject_to tax under sec_507 the proposed transfers also will not terminate your private_foundation_status under sec_507 but will constitute a transfer between private_foundations within the contemplation of sec_507 ruling sec_4940 imposes a two-percent excise_tax on the investment_income of a private_foundation sec_53_4940-1 and f state that gross_investment_income includes interest dividends rents royalties and capital_gains from the sale_or_other_disposition of property_held_for_investment purposes your transfers to the foundations which lack consideration and are not out of current income will not constitute investments or sales or other dispositions of investment_property which would generate investment_income subject_to excise_tax under sec_4940 therefore the transfers will not give rise to net_investment_income subject_to tax under sec_4940 ruling sec_4941 imposes an excise_tax on each act of self-dealing between a disqualified_person under sec_53_4946-1 a disqualified_person does not include and a private_foundation organizations that are exempt under sec_501 accordingly because the foundations are recognized by the service as organizations exempt under sec_501 your transfers to the foundations will not be acts of self-dealing and will not be subject_to the excise_tax under sec_4941 ruling sec_4942 generally imposes an excise_tax on the undistributed_income_of_a_private_foundation other than an operating_foundation under sec_4942 for any taxable_year since you are transferring all of your assets to the foundations which you represent are effectively controlled by the same persons who control you the foundations will be treated as though they were you for that taxable_year under sec_1_507-3 therefore for the taxable_year of the transfers the foundations will assume all obligations with respect to your undistributed_income within the meaning of sec_4942 if any and succeed to the amount of your excess qualifying distributions under sec_4942 using proportionality as appropriate in accordance with sec_1 a i accordingly you will not have any obligation to satisfy the minimum distribution_requirements under sec_4942 for the taxable_year of the transfers ruling sec_4944 imposes an excise_tax on investments that jeopardize a private foundation's in ruling above we determined that your transfers to the foundations charitable purpose which will lack consideration and will not be out of current income will not constitute investments or sales or other dispositions of investment_property therefore as explained in revrul_2002_28 supra your transfers to the foundations will not constitute investments that jeopardize your exempt purposes and will not be subject_to tax under sec_4944 ruling on each taxable_expenditure made by a private sec_4945 imposes an excise_tax foundation as a grant to an organization unless the private_foundation exercises expenditure however since you responsibility with respect to the grant in accordance with subsection h will transfer all of your assets to the foundations which you represent are effectively controlled directly or indirectly by the same persons that effectively control you for purposes of chapter the foundations will be treated as if they were you because the foundations will be treated as if they were you rather than as recipients of expenditure_responsibility grants there wll be no expenditure_responsibility requirements that must be exercised under sec_4945 or h with respect to your transfers to the foundations see revrul_2002_28 supra conclusion based on the foregoing we rule as follows the foundations will each constitute a significant the proposed transfers from you to disposition of assets to one or more private_foundations within the meaning of sec_1_507-3 and c the proposed transfers from you to the foundations will not result in a termination of private_foundation_status under sec_507 but will constitute transfers between private_foundations as described in sec_507 the proposed transfers from you to the foundations will not constitute either a notification of your intent to voluntarily terminate your status as a private_foundation under sec_507 or willful repeated acts or failures to act or a willful and flagrant act or failure to act ’ as described in sec_507 therefore you will not be subject_to tax under sec_507 the proposed transfers from you to the foundations will not give rise to any net_investment_income under sec_4940 the proposed transfers from you to the foundations will not constitute self-dealing transactions and will not be subject_to excise_tax under sec_4941 you will not have any obligation to satisfy the minimum distribution_requirements under sec_4942 for the taxable_year of the transfers the proposed transfers investments for purposes of sec_4944 the proposed transfers from you to the foundations will not constitute taxable_expenditures under sec_4945 and you will not be required to exercise expenditure_responsibility under sec_4945 with respect to the proposed transfers constitute jeopardizing the foundations will from you not to this ruling will be made available for public inspection under sec_6110 after certain deletions of for details see enclosed notice notice of intention to identifying information are made a copy of this ruling with deletions that we intend to make available for public disclose if you disagree with our proposed deletions you should inspection is attached to notice follow the instructions in notice this ruling is directed only to the organization that requested it that it may not be used or cited by others as precedent this ruling is based on the facts as they were presented and on the understanding that there will this ruling does not address the applicability of any be no material changes in these facts section of the code or regulations to the facts submitted other than with respect to the sections described because it could help resolved questions concerning your federal_income_tax status this ruling should be kept in your permanent records sec_6110 provides if you have any questions about this telephone number are shown in the heading of this letter_ruling please contact the person whose name and in accordance with the power_of_attorney currently on file with the internal_revenue_service we are sending a copy of this letter to your authorized representative sincerely theodore r lieber manager exempt_organizations technical group enclosure notice


t c memo united_states tax_court ronald lee bonaccorso petitioner v commissioner of internal revenue respondent docket no filed date ronald lee bonaccorso pro_se anne d melzer for respondent memorandum opinion cohen judge respondent determined deficiencies of dollar_figure and dollar_figure in petitioner’s federal income taxes for and respectively respondent also determined additions to tax of dollar_figure and dollar_figure under sec_6651 and dollar_figure and dollar_figure under sec_6654 for those years respectively at the time of trial respondent filed a motion for sanctions under sec_6673 unless otherwise indicated all section references are to the internal_revenue_code in effect for the years in issue background all of the facts have been stipulated and the stipulated facts are incorporated as our findings by this reference petitioner resided in new york at the time that he filed his petition during and frontier telephone of rochester paid petitioner compensation of dollar_figure and dollar_figure respectively hsbc bank usa paid petitioner dollar_figure of interest_income in each year level county bank of boston paid petitioner dollar_figure of dividends in and equiserve paid petitioner dollar_figure of dividends in during level county bank of boston paid petitioner dollar_figure of gross_proceeds from the sale of stocks and bonds petitioner has offered no proof of any basis in the stocks and bonds sold during equiserve paid petitioner dollar_figure of gross_proceeds from the sale of stocks and bonds petitioner has offered no proof of any basis in the stocks and bonds sold during western regional otb corp paid petitioner dollar_figure of gross_proceeds from gambling petitioner has offered no proof of any gambling_losses incurred in the same taxable_year petitioner filed form sec_1040 u s individual_income_tax_return for and showing on every line except the line for withholding credits line the line showing total payments line and the lines showing refunds due line sec_66 and sec_67a to each form_1040 he attached a copy of his form_w-2 wage and tax statement for the year and a letter summarizing his legal arguments the arguments included that no sections of the internal_revenue_code established an income_tax_liability required him to file a return or authorized the procedures followed by the internal_revenue_service petitioner did not make any estimated_tax payments for or discussion in the petition in this case petitioner did not state any facts or assign any errors in respondent’s determination of taxable_income and tax the petition merely repeated petitioner’s claim that i found no code section that made me liable for any income_tax the arguments that petitioner attached to his form sec_1040 for and have been long recognized as stale groundless and frivolous sec_1 imposes an income_tax on petitioner’s taxable_income sec_63 defines taxable_income as gross_income minus deductions all of the categories of income received by petitioner during the years in issue are specified in sec_61 which provides in relevant part sec_61 gross_income defined a general definition --except as otherwise provided in this subtitle gross_income means all income from whatever source derived including but not limited to the following items compensation_for services including fees commissions fringe_benefits and similar items gains derived from dealings in property interest dividends petitioner’s arguments to the contrary have been consistently rejected and characterized as frivolous in innumerable cases no further discussion of them is merited see 737_f2d_1417 5th cir 120_tc_163 petitioner stipulated that he had presented no evidence of basis that would reduce the proceeds he received from the sale of stock and that he offered no proof of any gambling_losses that would offset his gambling winnings he has not suggested that he had any deductions beyond the standard_deduction allowed by respondent in the statutory_notice_of_deficiency the stipulated facts also satisfy respondent’s burden of going forward with respect to additions to tax see cabirac v commissioner supra pincite 116_tc_438 petitioner was allowed time after the case was submitted to respond to respondent’s motion for sanctions under sec_6673 which provides sec_6673 tax_court proceedings -- procedures instituted primarily for delay etc --whenever it appears to the tax_court that-- a proceedings before it have been instituted or maintained by the taxpayer primarily for delay b the taxpayer’s position in such proceeding is frivolous or groundless or c the taxpayer unreasonably failed to pursue available administrative remedies the tax_court in its decision may require the taxpayer to pay to the united_states a penalty not in excess of dollar_figure petitioner did not file a response to the motion because petitioner’s arguments are frivolous and groundless and because the record compels the conclusion that this proceeding was instituted and maintained primarily for delay respondent’s motion will be granted and a penalty will be awarded to the united_states in the amount of dollar_figure petitioner is also advised that appellate courts have ordered sanctions for frivolous appeals in similar cases see 791_f2d_68 7th cir 770_f2d_17 2d cir 751_f2d_116 2d cir affg tcmemo_1984_223 to reflect the foregoing an appropriate order and decision for respondent will be entered


t c memo united_states tax_court horace monroe chambers petitioner v commissioner of internal revenue respondent docket no filed date horace monroe chambers pro_se randall craig schneider for respondent memorandum findings_of_fact and opinion kerrigan judge respondent determined a deficiency of dollar_figure and additions to tax under sec_6651 and of dollar_figure and dollar_figure respectively with respect to petitioner’s federal_income_tax for tax_year unless otherwise indicated all section references are to the internal_revenue_code in effect for the year at issue and all rule references are to the tax court rules_of_practice and procedure we round all dollar amounts to the nearest dollar the issues for our consideration are whether petitioner received unreported taxable_income of dollar_figure and whether petitioner is liable for additions to tax under sec_6651 and findings_of_fact petitioner resided in california when he filed the petition for tax_year petitioner did not file an income_tax return pursuant to sec_6020 respondent completed a substitute for return for petitioner for tax_year respondent allowed petitioner one exemption and the standard_deduction the income shown on the return is dollar_figure petitioner is an annuitant of the civil service retirement_system csrs the records of the office of personnel management opm show that in tax_year petitioner received a gross annuity of dollar_figure the records also reflect that dollar_figure was distributed to petitioner and dollar_figure was distributed to his former spouse petitioner does not contend that he had itemized_deductions and did not dispute the standard_deduction respondent concedes that petitioner’s gross annuity distribution amount should have been reduced by dollar_figure this reduction reflects petitioner’s contributions to his retirement_plan opinion petitioner has the burden of proving that respondent’s determinations are in error including the determination of unreported income see rule a 290_us_111 the u s court_of_appeals for the ninth circuit to which an appeal in this case would lie see sec_7482 has held that for the presumption of correctness to attach to the notice_of_deficiency in unreported income cases such as this the commissioner must establish some evidentiary foundation connecting the taxpayer with the income-producing activity or demonstrating that the taxpayer actually received unreported income see 596_f2d_358 9th cir rev’g 67_tc_672 see also 680_f2d_1268 9th cir holding that the commissioner’s determination_of_a_deficiency is presumptively correct once some substantive evidence is introduced demonstrating that the taxpayer received unreported income if the commissioner introduces some evidence that the taxpayer received unreported income the burden shifts to the taxpayer who must establish by a preponderance of the evidence that the deficiency was arbitrary or erroneous see 181_f3d_1002 9th cir aff’g tcmemo_1997_97 respondent has established that evidentiary foundation moreover petitioner has not claimed or shown that he meets the requirements of sec_7491 to shift the burden_of_proof to respondent as to any relevant factual issue i unreported income sec_61 provides g ross income means all income from whatever source derived including but not limited to the following items pensions petitioner does not dispute that he received dollar_figure from csrs in tax_year rather petitioner contends that opm has miscalculated his annuity petitioner believes that he should have received a higher amount petitioner contends that the amount on the notice_of_deficiency is incorrect petitioner’s contention as to the proper amount of his annuity for tax_year is not an issue that is properly before this court the tax_court is a court of limited jurisdiction and we may exercise our jurisdiction only to the extent authorized by congress see sec_7442 85_tc_527 see also 320_us_418 this court lacks jurisdiction over the allocation or amount of petitioner’s annuity payments petitioner does not dispute that he received dollar_figure respondent included this amount on the substitute for return we conclude petitioner’s taxable_income for is the dollar_figure of income from his annuity distribution less his dollar_figure of contributions to his retirement_plan ii additions to tax under sec_7491 the commissioner bears the burden of producing evidence with respect to the liability of the taxpayer for any addition_to_tax see rule a 116_tc_438 once the commissioner meets this burden the taxpayer must come forward with persuasive evidence that the commissioner’s determination is incorrect higbee v commissioner t c pincite a sec_6651 sec_6651 authorizes the imposition of an addition_to_tax for failure_to_file a timely return unless the taxpayer proves that such failure is due to reasonable_cause and is not due to willful neglect see 469_us_241 harris v commissioner tcmemo_1998_332 petitioner did not file a tax_return for respondent’s records show there was no tax_return filed for tax_year respondent has met the burden of production under sec_7491 petitioner did not show reasonable_cause for his failure_to_file a timely tax_return therefore petitioner is liable for the addition_to_tax under sec_6651 for tax_year b sec_6651 sec_6651 imposes an addition_to_tax for failure to timely pay the amount shown on a return in a case such as this where the taxpayer did not timely file a return for the tax_year at issue the commissioner must introduce evidence that a valid substitute for return was made pursuant to sec_6020 sec_6651 petitioner did not dispute the validity of the substitute for return petitioner did not show reasonable_cause for his failure to pay the amount shown as due on his tax_return we hold that petitioner is liable for the addition_to_tax under a for tax_year any contentions we have not addressed are irrelevant moot or meritless because the amounts of the deficiency and the additions to tax must be reduced to account for petitioner’s contributions of dollar_figure to his retirement_plan decision will be entered under rule


significant index no e00601 department of the treasury internal_revenue_service washington d c tax_exempt_and_government_entities_division in re company this letter constitutes notice that a waiver of the minimum_funding above-named plan for the plan_year ending ns subject_to the following conditions standard for the been granted the company make due on octob december equired quarterly contributions to the plan that are and january for the plan_year ending in a timely manner the company m due on april for the plan_year ending december e requi uly rterly contributions to the plan that mand january in a timely manner and the company make contributions to the plan in amounts sufficient to meet the minimum_funding december a december september funding standard requirements for the plan for the plan years ending respectively without applying for a waiver of the minimum by september and _ you agreed to these conditions in letter sent via facsimile dated date if these conditions are not satisfied the waiver is retroactively null and void this conditional waiver has been granted in accordance with sec_412 of the internal_revenue_code and sec_303 of the employee_retirement_income_security_act_of_1974 erisa the amount for which this conditional waiver has been granted is the contribution that would otherwise be required to reduce the balance in the funding_standard_account to zero as of december the company is a specializing in larger parts that require j on pressure ending in the current financial hardship was brought on by economic by the manufacturing industry sales declined in the fiscal years rienced to me the company also experienced losses in those years as well increased in the fiscal years ending in the company's sales have company has shown a small profit in those years as well while the company is still experiencing cash_flow difficulties its financial waiver for the plan_year ending december conditions set forth above position has improved hence the has been granted subject_to the j and j the your attention is called to sec_412 of the code and sec_304 of erisa which describe the consequences that would result in the event the plan is amended to increase benefits change the rate in the accrual_of_benefits or to change the rate of vesting while any portion of the waived_funding_deficiency remains unamortized please note that any amendment to a profit sharing plan or any other retirement plans covering employees covered by this plan maintained by the company to increase the liabilities of those plans would be considered an amendment for purposes of sec_412 of the code and sec_304 of erisa similarly the establishment of a new profit sharing plan or any other retirement_plan by the company covering employees covered by this plan would be considered an amendment for purposes of sec_412 of the code and sec_304 of erisa this ruling is directed only to the taxpayer that requested it sec_6110 of the code provides that it may not be used or cited by others as precedent when filing form_5500 for the plan_year ending december letter should be entered on schedule b actuarial information suggest that you furnish a copy of this letter to the enrolled_actuary who is responsible for the completion of the schedule b the date of this this reason we for we have sent a copy of this letter to the manager ep classification in to the manager ep compliance unit in if you require further assistance in this matter please contact - sincerely yours donna m prestia manager employee_plans actuarial group


internal_revenue_service number release date index number --------------------------------- ------------------------------------ ------------------------------------------ ------------------------------ -------------------- - department of the treasury washington dc third party communication none date of communication not applicable_person to contact ----------------------- id no ------------- telephone number --------------------- refer reply to cc psi b02 plr-108691-05 date date --------------------------- ----------------------------------- -------------------------------------------- legend x ------------------------------------------ country date dear --- -------------- this responds to a letter dated date submitted on behalf of x requesting that the service grant x an extension of time under sec_301_9100-3 of the procedure and administration regulations to elect to be treated as a disregarded_entity under sec_301_7701-3 x represents that x is a foreign_entity eligible to elect to be treated as a disregarded_entity however the service has no record of a timely filed form_8832 entity classification election electing to treat x as a disregarded_entity effective date entity for federal_income_tax purposes generally a foreign eligible_entity is treated as an association_taxable_as_a_corporation if all members have limited_liability unless the entity makes an election to be treated otherwise if the foreign eligible_entity has only one owner it may elect to be treated as a disregarded_entity pursuant to the rules in sec_301_7701-3 the information submitted states that x was formed under the laws of country sec_301_7701-3 provides guidance on the classification of a foreign sec_301_9100-1 through provide the standards the sec_301_9100-1 provides that the commissioner may grant a reasonable sec_301_7701-3 provides that an entity classification election must be filed plr-108691-05 on form_8832 and can be effective up to seventy-five days prior to the date the form is filed or up to twelve months after the date on which the form is filed extension of time to make a regulatory election 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_9100-1 defines the term regulatory election as an election whose due_date is prescribed by a regulation published in the federal_register or a revenue_ruling revenue_procedure notice or announcement published in the internal_revenue_bulletin commissioner will use to determine whether to grant an extension of time to make the election sec_301_9100-2 provides the rules governing automatic extensions of time for making certain elections sec_301_9100-3 provides the standards the commissioner will use to determine whether to grant an extension of time for regulatory elections that do not meet the requirements of sec_301_9100-2 under sec_301_9100-3 a request for relief 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 granting relief will not prejudice the interests of the government conclude that the requirements of sec_301_9100-3 have been satisfied as a result x is granted an extension of time of days from the date of this letter to file a form_8832 with the appropriate service_center and elect to be treated as a disregarded_entity effective date a copy of this letter should be attached to the form_8832 a copy is enclosed for that purpose federal tax consequences of the facts described above under any other provision of the code provides that it may not be used or cited as precedent except as specifically set forth above no opinion is expressed concerning the based solely on the information submitted and the representations made we this ruling is directed only to the taxpayer requesting it sec_6110 plr-108691-05 being sent to x’s authorized representatives pursuant to a power_of_attorney on file with this office a copy of this letter is sincerely heather c maloy associate chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes


o f f i c e o f t h e c h i e f c o u n s e l department of the treasury i n t e r n a l r e v e n u e s e r v i c e w a s h i n g t o n d c date cc intl b1 genin-117029-10 number info release date uil ------------------- ------------- -------------------------------- ------------------------------------ ---------------------------- dear ------------- this letter responds to your request of date for general information relating to the federal_income_tax treatment of certain entities including foreign entities and foreign individuals including athletes and employees that may be temporarily present in the united_states in connection with a future ---------------------------------- and a future -- --------------------- the competitions you have described the competitions as being owned by and conducted under the auspices of ------ the world governing body of ------- ------------------------------------------------------ and stated that the competitions would involve the participation of regional and national ------------------------ other events related to the athletic competition service providers required to stage the competitions broadcasters and other media you have informed us that some of the entities either already have exempt status under sec_501 of the internal_revenue_code because they are described in sec_501 or c or will obtain such status before the competitions to the extent an entity has exempt status it is generally exempt from federal_income_tax to the extent provided in subchapter_f of chapter of the code in the case of a foreign_entity that does not have exempt status it generally will be subject_to a net_basis federal_income_tax on income that is effectively connected with the conduct_of_a_trade_or_business within the united_states the determination of whether a foreign_entity conducts a trade_or_business_within_the_united_states and if so how much income is effectively connected with the conduct of such trade_or_business is based on all the facts and circumstances if a particular foreign_entity is eligible for benefits under an income_tax treaty to which the united_states is a party the entity may be exempt from federal_income_tax on business profits that are not genin-117029-10 effectively connected with a permanent_establishment in the united_states in all cases the foreign_entity may be subject_to a gross_basis_withholding tax on certain u s - source income of a passive nature eg dividends or royalties the withholding rate i sec_30 unless reduced by treaty nonresident_alien individuals ie individuals who are neither u s citizens nor resident aliens who perform services in the united_states are generally subject_to federal_income_tax on the compensation attributable to the services unless they perform their services for a foreign_employer are not present in the united_states for more than days during the taxable_year and do not receive compensation of more than dollar_figure if a particular individual is eligible for benefits under an income_tax treaty to which the united_states is a party the individual may be exempt from federal_income_tax under the treaty if he or she is here temporarily eg fewer than days in a 12-month_period and certain other requirements are satisfied the rules vary by treaty and depend on whether the individual is an employee or an independent_contractor in the case of athletes and entertainers treaties typically allow the united_states to tax the individual’s services income once it exceeds a specified dollar amount without regard to how long the individual is in the united_states in all cases the individual may be subject_to a gross_basis_withholding tax on certain u s -source income eg dividends or royalties that is not attributable to services performed in the united_states the irs has a central_withholding_agreement cwa program that allows nonresident_alien entertainers and certain athletes who participate in athletic events in the united_states to enter into advance agreements with the irs and with a designated_withholding_agent as to how much tax will be withheld from their income a cwa is for a specific series of events and takes into account projected expenses this letter has called your attention to certain general principles of the current law it is intended for informational purposes only and does not constitute a ruling see revproc_2010_1 sec_2 2010_1_irb_7 date if you have any additional questions please contact ---------------------------or ---------------- ------------ at -------------------- sincerely ______________________________ theodore d setzer deputy associate chief_counsel international for the texts of most u s income_tax treaties currently in force see http www irs treas gov businesses international article id html


uniform issue list number internal_revenue_service department of the treasury xxxxxxxx xxxxxxxx xxxxxxxx attn xxxxxxx legend church a congregation b washington dc person to contact xxxxxxxkxxx telephone number xxxxxxxxxxxxxxk refer reply to op e ep t date may xxxxxxxxkx xxxxxxxxxxxk xxxxxxxxxxx xxxxxxxxxxkxx organization c xxxxxxxxxxxxxxx xxxxxxxxxxxxxxxx directory p state k committee d subcommittee e plan x xxxxxxxxx xxxxxxxxxx xxxxxxxxxxx xxxxxxxxx xxxxxxxxxx xxxxxxxxxxxx xxxxxxxxxxxx xxxxxxxxxxxx plan y xxxxxxxxxxx ladies and gentlemen this letter is in response to your request for a private_letter_ruling submitted on your behalf by your authorized representative dated june correspondence dated february concerning whether plan x and plan y are church plans within the as supplemented by and date -meaning of sec_414 the code of the internal_revenue_code oe pe in support of your ruling the following statements information and representations have been submitted is a religious congregation of church a congregation b congregation b established in of two hundred sixty professed congregants listed in directory p the internal_revenue_service has determined that any organization listed or appearing in directory p exempt from tax under sec_501 and sponsored by organization c is an organization described in code sec_501 congregation b congregation b is founded and is an institute consisting is is organization c was formed for the purpose of acquiring maintaining and operating educational facilities and in general doing any and all things that may be necessary advisable or customary in connection with the conduct of higher learning managed and operated in traditions theology and religious laws of church a and consistent with the sponsorship of congregation b a manner consistent with the teachings under its bylaws organization c an institute of is to be organization c was incorporated under state k's non-profit corporation law on educational comprehensive institution_of_higher_education and is listed in directory p described in code sec_501 and exempt from tax under code sec_501 is therefore an organization organization c a co- it is organization c is organized as a membership corporation the provincial council is the governing body of the members of organization c are the and three other members of under the law of state k provincial council of congregation b congregation b who are appointed by congregation b's provincial director congregation b congregation b elected by congregation b and is responsible for the exercise of the director spiritual leadership in governing congregation b acts as the official representative of congregation b promotes interaction with local churches administers congregation b exercises responsibility for the ministries of congregation b and assigns congregants to do various works members of the provincial council are elected by the provincial director the director is the general business affairs of organization c are managed by its board_of trustees however certain powers and duties are reserved to congregation b include among others the power to powers reserved to congregation b a require compliance with off as consistent with the ongoing by congregation b church a's religious law sponsorship of organization c amendments to the mission and purpose of organization c disapprove any_action by the board_of trustees regarding amendments to organization c's articles of incorporation and in congregation b's opinion such action could bylaws if negatively affect the mission and purpose of organization c d reject a nomination to the board_of trustees or for the office of president of organization c b approve c and a candidate organization c's board_of trustees is required to no fewer than nor more than trustees it be comprised of currently ha sec_38 members of congregation b and is board_of trustees a clergyman with church a of the members eight are members one member is the president of organization c he reports directly to the organization c established plan x in plan x was merged with several other welfare plans a welfare_benefit_plan for its employees and their beneficiaries effective date maintained by organization c organization c also established plan y b its employees and their beneficiaries a tax-deferred annuity program described in section of the code effective january for the penefit of and committee d prior to date organization c's director of human of organization c had oversight resources was in charge of the day-to-day administration of plans x and y authority regarding administration and funding of plans x and y was a principal function of committee d effective date committee d subcommittee e exclusive function is the funding and administration of plans xx and y will meet separately from committee d issues concerning plans x and y a separate benefits subcommittee whose sole and to exercise oversight authority regarding of organization c established to deal specifically with this oversight subcommittee e the members of committee d are appointed by organization c's the executive vice president of board_of trustees the president of organization c organization c trustees who are members of congregation b resources the assistant director of human resources and one faculty_member the current members of committee d include a member of congregation b the director of human two other who is members of subcommittee e include among others the chairperson of committee d organization c organization c appointed and controlled by organization c's board_of trustees and the director of human resources of membership in subcommittee e consists of persons the executive vice president of based on the facts and representations described above your authorized representative requests a ruling that plan x and plan y are church plans within the meaning of sec_414 code plan effective as church_plan effective as january further you request a ruling that plans x and that plan y of november a church of the is is a sec_414 of the code defines a church_plan as plan established and maintained for its employees or their beneficiaries by a church or by a convention or association of churches which is exempt from tax under sec_501 of the code a code sec_414 a provides that a plan otherwise a church_plan if qualified will qualify as an organization whether a civil law corporation or otherwise the principal purpose or function of which is the administration or funding of benefits or welfare benefits or both church or organization is controlled by or associated with a church_or_convention_or_association_of_churches a plan or program for the provision of retirement a convention or association of churches if such for the employees of is maintained by it a a sec_414 b of the code defines the term employee to include a duly ordained commissioned or licensed minister of a church in the exercise of of his or her compensation and an employee of whether a civil law corporation or otherwise which is exempt from tax under sec_501 associated with a church or churches and which is controlled by or a convention or association of a ministry regardless of the source an organization sec_414 of the code provides that a church or a convention or association of churches which is exempt from tax under sec_501 shall be deemed the employer of any individual included as an employee under sec_414 b sec_414 of the code provides that an organization whether a civil law corporation or otherwise is associated with a church or churches if that church_or_convention_or_association_of_churches it shares common religious bonds and convictions with a convention or association of sec_414 a of the code provides in pertinent a plan intended to be part that if one or more of the church_plan requirements and corrects its failure within the correction_period then that plan shall be deemed to meet the requirements of this section for the year in which the correction was made and for all prior years sec_414 c provides in pertinent part a church_plan that the term fails to meet lv correction_period means the period ending days after the date of mailing by the secretary of respect to the plan's failure to meet one or more of the church_plan requirements a notice of default with in order for an organization that is not itself a church_or_convention_or_association_of_churches to have a church_plan under of the code that organization must establish that sec_414 its employees are employees or deemed employees of the church_or_convention_or_association_of_churches under sec_414 b of the code by virtue of the organization's affiliation with the church_or_convention_or_association_of_churches any organization maintaining a plan are considered to be church employees if the organization sec_501 of the code a church_or_convention_or_association_of_churches and provides for administration or funding or both an organization described in sec_414 a of the code is exempt from tax under or associated with is controlled by of the plan by employees of in this case congregation b is an organization founded is a manner consistent with the teachings the members of organization c consist of a not-for-profit organization chartered under congregation b has founded and under the auspices of church a sponsored organization c to further the religious teachings and tenets of church a by providing comprehensive co-educational higher education in traditions theology and religious law of church a organization c the laws of state k the members of congregation b's provincial council plus three additional members of congregation b congregation b reserve the authority to approve or disapprove numerous actions taken by organization c's board_of trustees these powers are designed to assure that organization c operating in church a and the continued sponsorship of congregation b numerous members of congregation b also are members of the organization c board_of trustees and organization c are listed in directory p directory of church a service has determined that an organization listed or appearing in directory p c of the code and exempt from tax under sec_501 any organization that is listed in directory p of church a also and is therefore shares common religious bonds with church a associated with a church_or_convention_or_association_of_churches within the meaning of sec_414 of the code a manner consistent with the teachings and tenets of an organization described under section finally both congregation b in the united_states the internal revenue the members of the official is is accordingly for all the reasons given above it is concluded under the rules of sec_414 of the code that the employees of organization c are employees of an o2 fo organization that is associated with a church_or_convention_or_association_of_churches and are deemed to be employees of that in this case church_or_convention_or_association_of_churches the employees of organization c are deemed to be employees of church a for purposes of the church_plan rules under the rules of sec_414 church a to be the employer of organization c's employees is considered conversely having established that the employees of organization c are deemed to be church a employees it still must be established an organization the that plan x and plan y are maintained by principal purpose or function of which is the administration or funding a plan pursuant to sec_414 a of the code in furtherance of established plans x and y including medical insurance life and accidental death and dismemberment insurance dental insurance and a retirement pian for its employees and their dependents its educational ministry organization c to provide certain employee_benefits plan x and plan y are administered by subcommittee e of organization c of the code as required under section subcommittee e will report to the subcommittee e's sole and exclusive members of subcommittee e include among others to exercise oversight authority regarding the funding subcommittee e was established by committee d to exercise oversight authority over the administration and funding of plans x and function is and administration of plans x and y e a board_of trustees of organization c through the medium of committee d the chairperson of committee d organization c organization c appointed and controlled by organization c's board_of trustees an organization associated with in this case subcommittee e church a through congregation b organization c under the rules of code sec_414 purpose or function is the administration of plans x and y the provision of welfare benefits and retirement benefits respectively for individuals and their dependents who are deemed to and the director of human resources of membership in subcommittee e consists of persons a subcommittee e's for the executive vice president of be church a employees and committee d is accordingly invoking the rule_of sec_414 a a church_plan is deemed to be of we rule that plan x the code within the meaning of sec_414 we rule that plan y sec_414 e of january as is a church_plan within the meaning of as of date and we are not ruling directly or indirectly on whether plan x of constitutes a cafeteria_plan within the meaning of sec_125 the code this ruling shall not be construed as approving any of the plans referred to herein under sec_125 or any other provision of the code except sec_414 this ruling expresses no opinion on the status of plan y under sec_403 status of plans x and y under sec_414 of the code this ruling is limited to the a copy of this letter has been sent to your authorized representative in accordance with a power_of_attorney on file in this office sincerely yours tohm gwied john swieca chief employees plans technical branch enclosures copy of this letter deleted copy of this letter notice cc of


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 ----------------------------------------------------- ------------------ telephone number ---------------------- refer reply to cc psi b04 plr-107876-14 date date donor donor trust year year accountant -------------------------------- ------------------------- --------------------------- --------------------------------------------------------------------------------- ------- ------- dear ---------------------------- this responds to your submission dated date requesting an extension of time pursuant to sec_2642 of the internal_revenue_code and sec_301_9100-3 of the procedure and administration regulations to allocate generation-skipping_transfer gst tax exemption in year donor and donor created and funded trust for the benefit of their issue donor and donor 2’s form sec_709 united_states gift and generation-skipping_transfer_tax returns were prepared by accountant the returns failed to allocate donor and donor 2’s gst_exemption to the transfers to trust the failure was discovered in year it is represented that in the meantime there have been no generation-skipping transfers from trust and that donor and donor have had at all relevant times sufficient gst_exemption to allocate to the transfers sec_2601 imposes a tax on every generation-skipping_transfer a generation-skipping_transfer is defined under sec_2611 as a taxable_distribution a taxable_termination and a direct_skip sec_2602 provides that the amount of the tax is the taxable_amount multiplied by the applicable_rate sec_2641 defines the applicable_rate as the product of the maximum estate_tax rate and the inclusion_ratio with respect to the transfer under sec_2642 the inclusion_ratio with respect to any property transferred in a generation-skipping_transfer is generally defined as the excess of over the applicable plr-107876-14 fraction the applicable_fraction as defined in sec_2642 is a fraction the numerator of which is the amount of gst_exemption under sec_2631 allocated to the trust or to property transferred in a direct_skip and the denominator of which is the value of the property transferred to the trust or involved in the direct_skip sec_2631 provides that for purposes of determining the inclusion_ratio every individual shall be allowed a gst_exemption equal to the applicable_exclusion_amount under sec_2010 for such calendar_year which may be allocated by such individual or his executor to any property with respect to which such individual is the transferor sec_2631 provides that any allocation under sec_2631 once made shall be irrevocable sec_2632 provides that any allocation by an individual of his or her gst_exemption under sec_2631 may be made at any time on or before the date prescribed for filing the estate_tax_return for such individual’s estate determined with regard to extensions regardless of whether such a return is required to be filed sec_26_2632-1 of the generation-skipping_transfer_tax regulations provides that an allocation of gst_exemption to property transferred during the transferor’s lifetime other than in a direct_skip is made on form_709 sec_2642 provides in relevant part that if the allocation of the gst_exemption to any transfers of property is made on a timely filed gift_tax_return or is deemed to be made under sec_2632 or c the value of such property for purposes of determining the inclusion_ratio shall be its value as finally determined for gift_tax purposes and such allocation shall be effective on and after the date of such transfer sec_2642 provides generally that the secretary shall by regulation prescribe such circumstances and procedures under which extensions of time will be granted to make an allocation of gst_exemption described in sec_2642 or and an election under sec_2632 or c such regulations shall include procedures for requesting comparable relief with respect to transfers made before the date of the enactment of this paragraph sec_2642 provides that in determining whether to grant relief under this paragraph the secretary shall take into account all relevant circumstances including evidence of intent contained in the trust instrument or instrument of transfer and such other factors as the secretary deems relevant for purposes of determining whether to grant relief under this paragraph the time for making the allocation or election shall be treated as if not expressly prescribed by statute notice_2001_50 2001_2_cb_189 provides that under sec_2642 the time for allocating the gst_exemption to lifetime transfers and transfers at death the time for electing out of the automatic allocation rules and the time for electing to treat any trust plr-107876-14 as a gst_trust are to be treated as if not expressly prescribed by statute the notice further provides that taxpayers may seek an extension of time to make an allocation described in sec_2642 or or an election described in sec_2632 or c under the provisions of sec_301_9100-3 sec_301_9100-3 provides in part that requests for relief subject_to sec_301_9100-3 will be granted when the taxpayer provides the 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 part except as provided in sec_301_9100-3 through iii that a taxpayer is deemed to have acted reasonably and in good_faith if the taxpayer reasonably relied on a qualified_tax professional including a tax professional employed by the taxpayer and the tax professional failed to make or advise the taxpayer to make the election based on the facts submitted and the representations made we conclude that the requirements of sec_301_9100-3 have been satisfied accordingly an extension of time of days from the date of this letter is granted in which to allocate donor and donor 2’s available gst_exemption to the transfers to trust the allocations will be effective as of the date of the transfers to trust the allocations should be made on supplemental form sec_709 for year and filed with the internal_revenue_service center cincinnati ohio a copy of this letter should be attached to each supplemental form_709 two copies are enclosed for this purpose 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 taxpayers 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 plr-107876-14 the rulings contained in this letter are based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in support of the request for rulings it is subject_to verification on examination sincerely _______________________ leslie h finlow senior technician reviewer branch office of the associate chief_counsel passthroughs special industries enclosure copy for sec_6110 purposes copy of this letter


cc dom fi p - plr-109463-99 date date internal_revenue_service index nos number release date legend trust fund a fund b date date date date date date accountant dear this is in reply to a letter dated date and subsequent correspondence submitted on behalf of fund a and fund b funds requesting an extension of time for each fund to make an election under sec_851 of the internal_revenue_code to be treated as a regulated_investment_company ric beginning with its initial taxable_year each fund requests that its election be considered timely filed pursuant to sec_301_9100-1 and -3 of the procedure and administration regulations facts trust is registered with the securities_and_exchange_commission as an investment_company under the investment_company act of u s c sec_80a-1 et seq fund a and fund b are each organized as a separate series of trust each is treated as a separate corporation for federal tax purposes under sec_851 each fund seeks to qualify annually as a ric as defined in sec_851 beginning with its initial taxable_year for each fund to qualify as a ric it must so elect by computing its taxable_income as a ric on form 1120-ric for its first taxable_year for which it seeks to be treated as a ric plr-109463-99 funds commenced operations on date funds’ first taxable_year ended on date each fund’s federal_income_tax return for its first taxable_year ended on date was due_date funds asked accountant to prepare and file a form_7004 application_for automatic_extension of time to file corporation income_tax return on behalf of each fund on or before date accountant finished preparing extension requests on behalf of the funds with the intention that the extensions would be filed no later than date on date each extension was placed in an envelope that was properly addressed to the internal_revenue_service each envelope was prepared to be sent by certified mail with a return receipt then pursuant to established procedures regarding the handling of outgoing mail by accountant the envelopes were sent to the mailroom with instructions that they had to be mailed that day mailroom personnel affixed postage to the envelopes and mailed them that day nine days later on date the envelopes containing funds’ extensions were returned to accountant’s mailroom by the united_states postal service indicating that insufficient postage had been affixed to the envelopes mailroom personnel immediately informed appropriate persons at accountant that the envelopes had been returned as soon as the error was discovered accountant began to prepare a tax_return for each fund the funds’ tax returns for the tax_year ended date were mailed to the internal_revenue_service on date law sec_851 provides that a corporation shall not be considered a ric for any taxable_year unless it files with its return for the taxable_year an election to be a ric or has made such election for a previous taxable_year sec_1_851-2 of the income_tax regulation provides that the taxpayer shall make its election to be treated as a ric by computing taxable_income as a ric in its federal_income_tax return for the first taxable_year for which the election is applicable sec_301_9100-1 provides in part 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 plr-109463-99 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 set forth rules that the internal_revenue_service generally will use to determine whether under the 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 provided and the representations made we hold that each fund has demonstrated good cause for the granting of a reasonable extension of time under sec_301_9100-1 and -3 therefore each fund will be treated as having made a timely election under sec_851 on its federal_income_tax return filed for the tax_year that ended on date no opinion is expressed as to whether each fund’s tax_liability is not lower in the aggregate for the year to which the regulatory election applies than its 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 district director’s office will determine each fund’s tax_liability for the year involved if the district director’s office determines a fund’s liability is lower that office will determine the federal_income_tax effect except as specifically ruled upon herein no opinion is expressed or implied as to any federal_income_tax consequences regarding funds in particular no opinion is expressed or implied whether either fund qualifies as a ric that is taxable under subchapter_m part of the code this ruling is directed only to the taxpayers who requested it sec_6110 of the code provides that it may not be used or cited as precedent plr-109463-99 sincerely yours assistant chief_counsel financial institutions products enclosures copy of this letter sec_6110 copy