internal_revenue_service number release date index number -------------------------------- ---------------------------------------------------------- ------------------------------------ ------------------------------- in re -------------- 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 b09 plr-127389-04 date date legend trust trust trust trust trust trust trust trust trust trust trust trust trust trust ------------------------------------------------------------------------------------------ ----------------------- ------------------------------------------------------------------------------------------ ----------------------- ------------------------------------------------------------------------------------------ ----------------------- 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------------------------------------------------------------------------------------------ ----------------------- ------------------------------------------------------------------------------------------ ----------------------- ------------------------------------------------------------------------------------------ ----------------------- grantor ------------------------------- ------------------ ----------------------------------------------- plr-127389-04 date foundation beneficiary ---------------------- beneficiary ----------------------- beneficiary ---------------------- beneficiary -------------------------- beneficiary -------------------- beneficiary ------------------------- beneficiary ---------------------- beneficiary ----------------------------- beneficiary ------------------------ beneficiary ------------------------------------------ beneficiary -------------------------------------------------- beneficiary -------------------------------- beneficiary ---------------------------- beneficiary ------------------------------------ trustee date court state date county dear ---- requesting rulings relating to the estate gift and generation-skipping_transfer_tax consequences of modifying trust trust trust trust trust trust trust trust trust trust trust trust trust and trust collectively the series vi trusts grantor created the series vi trusts irrevocable trusts on date for the benefit of foundation certain employees of grantor and then grantor’s grandchildren date is prior to date trust is for the benefit of beneficiary trust is for the benefit of beneficiary trust is for the benefit of beneficiary trust is for the benefit of beneficiary trust is for the benefit of beneficiary trust is for the benefit of beneficiary trust is for the benefit of beneficiary trust is for the benefit of beneficiary trust is for the benefit of beneficiary trust is for the benefit of beneficiary trust is for the benefit of beneficiary trust is for the benefit of beneficiary trust is for the benefit of beneficiary trust is for the benefit of beneficiary trustee is a corporation and currently serves as the trustee of the series vi trusts the series vi trusts each have the same operating provisions -------------------------------- ------------------- ----------------------------------------------------------- -------- ------------------- ---------------------------- this letter responds to your letter dated date and prior correspondence article iv paragraph of the series vi trust agreement provides that one day article iv paragraph of the series vi trust agreement provides that after the plr-127389-04 article ii paragraph of the series vi trust agreement provides that the trustees shall distribute an annuity from all the trusts to foundation annually until grantor’s death grantor is deceased article iii of the series vi trust agreement provides that on grantor’s death the trustees shall distribute monthly payments to certain named employees of grantor until the death of the last of the named employees all named employees are deceased death of the last of grantor’s named employees the trustees shall divide the trust property into equal shares one share for each grandchild of grantor living and one share for the then living descendants of each deceased grandchild article iv paragraph of the series vi trust agreement provides that after the division the distribution trustee shall in its sole discretion distribute income or principal from each trust to or apply for the benefit of the named beneficiary of a_trust or any of that beneficiary’s descendants all discretion to be exercised in making distributions from the trusts shall be vested solely in the distribution corporate trustee less than twenty-one years after the death of the last to survive of grantor’s descendants and named employees who were living on date all of the trusts in existence under the series vi trust agreement shall terminate and the corporate trustee shall distribute all of the then remaining income and principal of each trust outright to the beneficiary for whom such trust property is then being held in trust death of a beneficiary prior to the termination of all of the trusts as provided in paragraph the undistributed_income and principal of such deceased beneficiary’s trust shall be divided into portions for such beneficiary’s then living descendants per stirpes to be administered and distributed in the same manner as the other series vi trusts should a beneficiary leave no descendant surviving at his or her death then his or her trust assets shall be distributed to the series vi trusts for each then living grandchildren of the grantor in equal shares and for the descendants of deceased grandchildren per stirpes grantor’s children acting jointly or the survivor of them acting alone may remove any corporate trustee with or without cause and name a successor trustee there shall always be a corporate trustee serving under the series vi trust agreement either jointly with an individual trustee or serving alone as sole trustee a corporate trustee shall have a combined capital and surplus of at least dollar_figure a trust’s beneficiaries to remove and replace trustees and modify the capital article iv paragraph of the series vi trust agreement provides that upon the on date trustee petitioned court to modify the series vi trusts to allow article vi paragraph of the series vi trust agreement provides that the article z paragraph z will provide that notwithstanding any provision to the paragraph z will provide that any successor corporate trustee appointed must plr-127389-04 requirements for successor corporate fiduciaries the modification will insert a new article z court approved the modifications as follows under state law on date the date court order provides that the judgment shall become effective as of the date that the internal_revenue_service issues a favorable ruling holding that the modifications made under the judgment will not result in the loss of the series vi trusts’ exemption from the generation-skipping_transfer_tax will not otherwise subject the trusts to the generation-skipping_transfer_tax and will not cause any trust_beneficiary to have a general_power_of_appointment pursuant to sec_2041 or sec_2514 of the internal_revenue_code contrary in the event grantor’s children have either died resigned or shall have ceased to serve for any reason those persons who are then living and competent who have attained the age of thirty-five years of age and who are entitled to receive income or principal distributions the powerholders shall have the power to remove any corporate trustee with or without cause be created or organized in the united_states or under the law of the united_states or any state any successor trustee must be a bank with trust powers either state or national or a_trust company with a combined capital and surplus of at least dollar_figure at the time of its appointment the powerholders of a_trust may petition a court having jurisdiction in county to seek the appointment by such court of a bank with trust powers either state or national or a_trust company having at least the minimum capital and surplus required by applicable state or federal_law for that type of entity if such a petition is filed prior to the time the entity to be named as successor trustee has obtained the necessary approvals of the appropriate regulatory agency under state or federal_law any order appointing such entity as a successor trustee shall be contingent upon obtaining such regulatory approvals any such petition must seek the appointment of a guardian ad litem to represent those beneficiaries of a_trust who are unknown or who are under a legal disability any powerholder within the meaning of sec_672 of the internal_revenue_code article z to appoint a successor trustee shall be exercised by a majority of all such persons whether or not one or more of such persons declines to exercise such powers when there are only two such persons such powers must be exercised jointly and if only one such person qualifies such person shall exercise such powers alone paragraph z will provide that if the power to remove and replace a trustee is exercised by the powerholder with respect to any trust created under article v then in no event may such power be exercised again for such trust for a five year period paragraph z will provide that any trustee must not be related or subordinate to paragraph z will provide that the powers granted to the powerholders under paragraph z will provide in relevant part that any removal notice must be by paragraph z will provide that the power to remove and replace a trustee may you have requested a ruling that the proposed modifications to the terms of the paragraph z will provide that the powers vested in the powerholder shall not be plr-127389-04 beginning from the date of the exercise of such power as evidenced by the effective date of the required writing acknowledged instrument signed by all of the powerholders exercising the removal and replacement powers provided for in article z must be actually delivered to the trustee being removed must contain the acceptance of the successor trustee endorsed on it and must include the effective date of such removal and acceptance only be exercised by a person who then qualifies as a powerholder and may not be exercised by an assignee guardian attorney-in-fact or any other agent of the powerholder deemed to be so vested in a fiduciary capacity trusts will not cause the trusts to lose their generation-skipping_transfer_tax exempt status or otherwise become subject_to the generation-skipping_transfer_tax in addition you have requested a ruling that the proposed modifications to the terms of the trusts will not result in the trusts’ beneficiaries possessing a general_power_of_appointment for the trusts taxable_distribution taxable_termination and a direct_skip each of the series vi trusts is a generation-skipping_transfer_trust because the trust provisions allow for distributions to one or more generation of beneficiaries below the grantor’s generation each of the series vi trusts was irrevocable on date the trustees represent that there have been no additions actual or constructive to these trusts after date under b a of the tax_reform_act_of_1986 and sec_26_2601-1 of the generation-skipping_transfer_tax regulations the generation-skipping_transfer_tax provisions do not apply to any generation-skipping_transfer under a_trust as defined in sec_2652 that was irrevocable on date but only to the extent that the transfer is not made out of corpus added to the trust after date or out of income attributable to corpus so added sec_26_2601-1 provides that any trust in existence on date is considered an irrevocable_trust except as provided in sec_26_2601-1 or c that relate to property includible in a grantor’s gross_estate under sec_2038 and sec_2611 defines the term ageneration-skipping transfer to include a sec_2601 imposes a tax on every generation-skipping_transfer sec_26_2601-1 provides rules for determining when a modification sec_26_2601-1 provides that a modification of the governing plr-127389-04 in the present case the series vi trusts are considered to have been irrevocable on date because neither sec_2038 nor sec_2042 applies judicial construction settlement agreement or trustee action with respect to a_trust that is exempt from the generation-skipping_transfer_tax under sec_26_2601-1 or hereinafter referred to as an exempt trust will not cause the trust to lose its exempt status in general unless specifically provided for otherwise the rules contained in sec_26_2601-1 are applicable only for purposes of determining whether an exempt trust retains its exempt status for generation-skipping_transfer_tax purposes unless specifically noted the rules do not apply in determining for example whether the transaction results in a gift subject_to gift_tax or may cause the trust to be included in the gross_estate of a beneficiary or may result in the realization of capital_gain for purposes of sec_1001 instrument of an exempt trust by judicial reformation or nonjudicial reformation that is valid under applicable state law will not cause an exempt trust to be subject_to the provisions of chapter if the modification does not shift a beneficial_interest in the trust to any beneficiary who occupies a lower generation as defined in sec_2651 than the person or persons who held the beneficial_interest prior to the modification and the modification does not extend the time for vesting of any beneficial_interest in the trust beyond the period provided in the original trust furthermore a modification that is administrative in nature that only indirectly increases the amount transferred for example by lowering administrative costs or income taxes will not be considered a shift in a beneficial_interest in a_trust and will not be considered a shift in a beneficial_interest in a_trust under sec_26_2601-1 therefore the series vi trusts will not lose their status as exempt from the generation-skipping_transfer_tax under sec_26_2601-1 accordingly based on the facts submitted and the representations made future distributions from or terminations of a series vi trust will not be subject_to the generation-skipping_transfer_tax sec_2041 provides that the value of the gross_estate shall include the value of all property to the extent of any property with respect to which the decedent has at the time of his death a general_power_of_appointment created after date or with respect to which the decedent has at any time exercised or released a power_of_appointment by a disposition that is of such nature that if it were a transfer of property owned by the decedent the property would be includible in the decedent’s gross_estate under sec_2035 to inclusive for purposes of sec_2041 the power_of_appointment shall be considered to exist on the date of the decedent’s death even though the exercise of the power is subject_to a precedent giving of notice or even though the exercise of the power takes effect only on the expiration of the proposed modifications to the series vi trusts are administrative changes plr-127389-04 a stated period after its exercise whether or not on or before the date of the decedent’s death notice has been given or the power has been exercised sec_2041 provides that a general_power_of_appointment is a power that is exercisable in favor of the decedent the decedent’s estate the decedent’s creditors or the creditors of the decedent’s estate however a power to consume invade or appropriate property for the benefit of the decedent that is limited by an ascertainable_standard relating to the health education support or maintenance of the decedent shall not be deemed a general_power_of_appointment sec_20_2041-1 of the estate_tax regulations provides in part that a donee may have a power_of_appointment if he has the power remove or discharge a trustee and appoint himself for example if under the terms of the instrument the trustee or his successor has the power to appoint the principal of the trust for the benefit of individuals including himself and the decedent has the unrestricted power to remove or discharge the trustee at any time and appoint any other person including himself the decedent is considered as having a power_of_appointment however the mere power of management investment custody of assets or the power to allocate receipts and disbursements as between income and principal exercisable in a fiduciary capacity whereby the holder has no power to enlarge or shift any of the beneficial interests therein except as an incidental consequence of the discharge of the fiduciary duties is not a power_of_appointment appointment created after date shall be deemed a transfer of property by the individual possession such power sec_2514 provides that a general_power_of_appointment is a power that is exercisable in favor of the individual possessing the power the possessor his estate his creditors or the creditors of his estate however a power to consume invade or appropriate property for the benefit of the posessor that is limited by an ascertainable_standard relating to the health education support or maintenance of the decedent shall not be deemed a general_power_of_appointment donee may have a power_of_appointment if he has the power remove or discharge a trustee and appoint himself for example if under the terms of the instrument the trustee or his successor has the power to appoint the principal of the trust for the benefit of individuals including himself and the decedent has the unrestricted power to remove or discharge the trustee at any time and appoint any other person including himself the decedent is considered as having a power_of_appointment however the mere power of management investment custody of assets or the power to allocate receipts and disbursements as between income and principal exercisable in a fiduciary capacity whereby the holder has no power to enlarge or shift any of the beneficial interests sec_2514 provides that the exercise or release of a general power of sec_25_2514-1 of the gift_tax regulations provides in part that a sec_672 defines the term related_or_subordinate_party to mean any revrul_95_58 1995_2_cb_191 holds that a decedent grantor’s reservation of plr-127389-04 therein except as an incidental consequence of the discharge of the fiduciary duties is not a power_of_appointment an unqualified power to remove a trustee and to appoint an individual or corporate successor trustee that is not related or subordinate to the decedent within the meaning of sec_672 is not considered a reservation of the trustee’s discretionary powers of distribution over the property transferred by the decedent grantor to the trust accordingly the trust corpus is not included in the decedent’s gross_estate under sec_2036 or sec_2038 the ruling notes that the eighth circuit in 973_f2d_1409 8th cir concluded that the decedent had not retained dominion and control_over assets transferred to a_trust by reason of his power to remove and replace the trustee with a party that was not related or subordinate to the decedent accordingly the court held that under sec_25_2511-2 the decedent made a completed_gift when he created the trust and transferred assets to it nonadverse_party who is the grantor’s spouse if living with the grantor or any one of the following the grantor’s father mother issue brother or sister an employee of the grantor a corporation or any employee of a corporation in which the stock holdings of the grantor and the trust are significant from the viewpoint of voting control a subordinate employee of a corporation in which the grantor is an executive children the individual beneficiaries of the series vi trusts as powerholders will have an unqualified power either alone or in conjuction with the other beneficiaries to remove a trustee and to appoint a successor corporate trustee the article z modifications restrict any appointment to a successor corporate trustee that is not related or subordinate to any powerholder within the meaning of sec_672 the article z power granted to the series vi trust beneficiaries is not the equivalent of the power referenced in the examples in sec_20_2041-1 and sec_25_2514-1 where an individual may remove a trustee and appoint himself instead the article z power granted to the series vi trust beneficiaries is the equivalent of the power referenced in revrul_95_58 where a replacement trustee may not be related or subordinate to the powerholder within the meaning of sec_672 accordingly based on the facts submitted and the representations made the proposed modifications will not cause any trust_beneficiary to have a general_power_of_appointment under sec_2041 or sec_2514 concerning the federal tax consequences of any aspect of any transaction or item discussed or referenced in this letter 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 after the proposed modifications and the death or resignations of grantor’s except as expressly provided herein no opinion is expressed or implied the rulings contained in this letter are based upon information and plr-127389-04 material submitted in support of the request for rulings it is subject_to verification on examination being sent to your attorney provides that it may not be used or cited as precedent this ruling is directed only to the taxpayer s requesting it sec_6110 pursuant to the power_of_attorney on file with this office a copy of this letter is sincerely james f hogan senior technician reviewer branch passthroughs special industries enclosure copy of this letter for sec_6110 purposes


internal_revenue_service number release date index numbers ----------------------------------------------- --------------------------------- -------------------- ---------------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ---------------------- id no ------------- telephone number --------------------- refer reply to cc psi b03 plr-124837-09 date date company ------------------------------------------------------------------------------------------------- ----------------------- legend legend a b_trust state date date date date date ---------------------------------- ------------------------------------------------------------------------------------------------- ------------------------ ------------------------------------------------------------------------------------------------- ----------------------- -------- ------------------ -------------------------- ------------------------- ----------------------- ----------------------- dear ------------------ this letter responds to a letter dated date submitted on behalf of company requesting inadvertent termination relief pursuant to sec_1362 of the internal_revenue_code plr-124837-09 facts company was incorporated under the laws of state on date company elected to be treated as an s_corporation effective date a was a shareholder of company on date a died pursuant to the terms of a’s will shares of company stock were transferred from a’s estate to the trust a testamentary_trust on date under the terms of the trust the sole beneficiary was a’s spouse b company represents that at all times the trust satisfied the requirements to be treated as a qualified_subchapter_s_trust qsst under sec_1361 however an election under sec_1361 to treat trust as a qsst was not timely filed therefore company’s s election terminated two years after date on date b’s federal_income_tax returns were filed consistent with trust having a valid qsst election in effect on date company represents that company and its shareholders have reported their income consistent with company being an s_corporation company also represents that the failure_to_file timely a qsst election for trust was inadvertent and not motivated by tax_avoidance or retroactive tax planning company further represents that other than the failure_to_file a qsst election for trust company has met the definition of a small_business_corporation since date company and all of its shareholders consent and agree to make any adjustments consistent with the treatment of company as an s_corporation as may be required by the secretary under sec_1362 law and analysis sec_1361 provides that the term s_corporation means with respect to any taxable_year a small_business_corporation for which an election under sec_1362 is in effect for such year sec_1361 provides that a small_business_corporation cannot have as a shareholder a person other than an estate a_trust described in sec_1361 or an organization described in sec_1361 who is not an individual sec_1361 provides that a_trust all of which is treated under subpart e of part i of subchapter_j of chapter as owned by an individual who is a citizen or resident_of_the_united_states is a permitted shareholder of a small_business_corporation sec_1361 provides that a_trust with respect to stock transferred to it pursuant to the terms of a will is a permitted shareholder but only for the 2-year period beginning on the day on which the stock is transferred to it sec_1361 provides that in the case of a qsst with respect to which a beneficiary makes an election under sec_1361 the trust is treated as a_trust plr-124837-09 described in sec_1361 and for purposes of sec_678 the beneficiary of the trust is treated as the owner of that portion of the trust which consists of stock in an s_corporation with respect to which the election under sec_1361 is made sec_1361 provides that a beneficiary of a qsst or his legal_representative may elect to have sec_1361 apply sec_1361 provides that for purposes of sec_1361 the term qualified_subchapter_s_trust means a_trust a the terms of which require that - i during the life of the current income_beneficiary there shall be only income_beneficiary of the trust ii any corpus distributed during the life of the current income_beneficiary may be distributed only to such beneficiary iii the income_interest of the current income_beneficiary in the trust terminates on the earlier of the beneficiary’s death or the termination of the trust and iv upon the termination of the trust during the life of the current income_beneficiary the trust distributes all of its assets to that beneficiary and b all of the income within the meaning of sec_643 of which is distributed or required to be distributed currently to individual who is a citizen or resident_of_the_united_states sec_1362 provides in part that a small_business_corporation may elect to be an s_corporation sec_1362 provides that an election under sec_1362 shall be terminated whenever at any time on or after the 1st day of the 1st taxable_year for which the corporation is an s_corporation such corporation ceases to be a small_business_corporation sec_1362 provides in part that if an election under sec_1362 by any corporation was terminated under sec_1362 the secretary determines that the circumstances resulting in such termination were inadvertent no later than a reasonable period of time after discovery of the circumstances resulting in such termination steps were taken so that the corporation is a small_business_corporation and the corporation for which the termination occurred and each person who was a shareholder in the corporation at any time during the period specified pursuant to sec_1362 agrees to make such adjustments consistent with the treatment of the corporation as an s_corporation as may be required by the secretary with respect to such termination period then notwithstanding the circumstances resulting in the termination the corporation shall be treated as an s_corporation during the period specified by the secretary conclusion based on the information submitted and representations made we conclude that company’s s_corporation_election terminated on date when trust became an plr-124837-09 ineligible shareholder we further conclude that the termination was inadvertent within the meaning of sec_1362 under sec_1362 company will be treated as if it were an s_corporation from date and thereafter provided the beneficiary b files a qsst election with an effective date of date with the appropriate service_center within days from the date of this letter and company’s s_corporation_election was otherwise valid and not otherwise terminated under sec_1362 accordingly company’s shareholders in determining their respective income_tax liabilities during the termination period and thereafter must include their pro_rata share of the separately and non-separately computed items of company as provided in sec_1366 make any adjustments to stock basis as provided in sec_1367 and take into account any distributions made by company as provided by sec_1368 if company or any of the shareholders fail to treat company as described above this ruling shall be void a copy of this letter should be attached to the qsst election 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 specifically no opinion is expressed or implied concerning whether company was and is an s_corporation for federal tax purposes furthermore no opinion is expressed or implied concerning whether trust meets the requirements of a qsst under sec_1361 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 pursuant to a power_of_attorney on file with this office we are sending a copy of this letter to your authorized representative plr-124837-09 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 s leslie h finlow senior technician reviewer branch office of the associate chief_counsel passthroughs special industries 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 psi b01 plr-105618-16 date june legend x -------------------------------------------------- --------------------------------- country d --------------- -------------------- dear ------------------ this responds to a letter dated date and subsequent correspondence submitted on behalf of x requesting an extension of time under sec_301_9100-3 of the procedure and administration regulations to file an election under sec_301_7701-3 to be treated as a disregarded_entity for federal tax purposes facts according to the information submitted x was organized under the laws of country on d x represents that it is a foreign_entity eligible to elect to be classified as a disregarded effective d x failed to timely file form_8832 entity classification election to be treated as a disregarded_entity for federal tax purposes effective d x represents that it acted reasonably and in good_faith x also represents that granting the relief requested will not prejudice the interests of the government law and analysis sec_301_7701-3 provides in part that a business_entity that is not classified as a corporation under sec_301_7701-2 or an eligible_entity plr-105618-16 can elect its classification for federal tax purposes an eligible_entity with at least two members can elect to be classified as either an association or a partnership and an eligible_entity with a single owner can elect to be classified as an association or to be disregarded as an entity separate from its owner sec_301_7701-3 provides guidance on the classification of a foreign eligible_entity for federal tax purposes generally a foreign eligible_entity is treated as an association if all members have limited_liability unless the entity makes an election to be treated otherwise a foreign eligible_entity with a single member having limited_liability may elect to be treated as a disregarded_entity pursuant to the rules of sec_301_7701-3 sec_301_7701-3 provides that an entity classification election must be filed on form_8832 and can be effective up to days prior to the date the form is filed or up to months after the date the form is filed under sec_301_9100-1 the commissioner may grant a reasonable extension of time to make a regulatory election or a statutory election but no more than six months except in the case of a taxpayer who is abroad under all subtitles of the internal_revenue_code except subtitles e g h and i sec_301_9100-1 defines the term regulatory election as including an election whose due_date is prescribed by a regulation published in the federal_register sec_301_9100-1 through provide the standards 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 requests for relief under sec_301_9100-3 will be granted when the taxpayer provides evidence to establish that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government conclusion based solely on the facts submitted and the representations made we conclude that the requirements of sec_301_9100-3 have been satisfied as a result x is granted an extension of time of days from the date of this letter to make an election to be treated as a disregarded_entity for federal tax purposes effective d x should make the election by filing a properly executed form_8832 with the appropriate service_center a copy of this letter should be attached to the form this ruling is contingent on the owner of x filing within days of this letter all required returns including amended returns for all open years consistent with the requested relief these returns may include but are not limited to the following forms i forms information_return of u s persons with respect to certain foreign_corporations ii forms return of u s persons with respect to certain foreign plr-105618-16 partnerships and iii forms information_return of u s persons with respect to disregarded entities such that these forms reflect the consequences of the relief granted in this letter a copy of this letter should be attached to any such returns except as specifically set forth above we express no opinion concerning the federal tax consequences of the facts described above under any other provision of the internal_revenue_code this ruling is directed only to the taxpayer requesting it sec_6110 of the code provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to x’s authorized representative sincerely associate chief_counsel passthroughs special industries by laura c fields laura c fields senior technician reviewer branch office of associate chief_counsel passthroughs special industries enclosures copy of this letter copy of this letter 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 psi b03 plr-114593-13 date date legend x ------------------------------------------------------------ --------------------- state y ------------------- --------------------- trust ---------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------- ------------------------------------------------------------ -------------------------------------------------------------------------------- beneficiaries -------------------------------------------------------------- ----------------------- --------------------------------------------------------- -------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------ --------------------------------------------------------------------------------------------------------- ---------------------------------------------------- ------------------------------------------------------------ d1 d2 d3 ----------------------- ------------------------ ------------------- plr-114593-13 d4 d5 ------------------- ------------------------ dear --------------- this letter responds to a letter dated date submitted on behalf of x requesting a ruling under sec_1362 of the internal_revenue_code code facts the information submitted states that x was incorporated under the laws of state x subsequently made an election to be treated as a subchapter_s_corporation effective on d1 on d2 individual shareholder y transferred her stock in x to trust a grantor_trust described in sec_1361 of which y was the deemed owner y died on d3 trust qualified under sec_1361 as an eligible shareholder for two years from y’s date of death however trust continued to hold the x stock after the two-year period as a result x’s s_corporation_election terminated on d4 the day after the two-year period following y’s death after discovering the terminating event the trustee of trust distributed the x stock held by trust to trust’s beneficiaries eligible s_corporation shareholders on d5 x represents that the circumstances resulting in the termination of x’s s_corporation_election were inadvertent and were not motivated by tax_avoidance or retroactive tax planning x and its shareholders have agreed to make such adjustments consistent with the treatment of x as an s_corporation as may be required by the service law and analysis sec_1361 provides that for purposes of sec_1361 a_trust which was described in sec_1361 immediately before the death of the deemed owner and which continues in existence after such death may be a shareholder but only for the 2-year period beginning on the day of the deemed owner’s death sec_1362 provides that an election under sec_1362 shall be terminated whenever at any time on or after the first day of the first taxable_year for which the corporation is an s_corporation such corporation ceases to be a small_business_corporation sec_1362 provides that any termination shall be effective on and after the date of cessation plr-114593-13 sec_1362 provides that if an election under sec_1362 by any corporation a was not effective for the taxable_year for which made determined without regard to sec_1362 by reason of a failure to meet the requirements of sec_1361 or to obtain shareholder consents or b was terminated under sec_1362 or the secretary determines that the circumstances resulting in the ineffectiveness or termination were inadvertent no later than a reasonable period of time after discovery of the circumstances resulting in the ineffectiveness or termination steps were taken a so that the corporation is a small_business_corporation or b to acquire the shareholder consents and the corporation and each person who was a shareholder of the corporation at any time during the period specified pursuant to sec_1362 agrees to make such adjustments consistent with the treatment of the corporation as an s_corporation as may be required by the secretary with respect to such period then notwithstanding the circumstances resulting in the ineffectiveness or termination the corporation will be treated as an s_corporation during the period specified by the secretary conclusion based solely on the facts submitted and representations made we conclude that x’s election to be treated as an s_corporation terminated on d4 after the two-year period following y’s death we also conclude that the termination constituted an inadvertent termination within the meaning of sec_1362 accordingly x will be treated as continuing to be an s_corporation from d4 and thereafter provided that x’s s_corporation_election was otherwise valid and was not otherwise terminated under sec_1362 this ruling is contingent on x and all its shareholders treating x as having been an s_corporation for the period beginning on d4 and thereafter accordingly x’s shareholders must include their pro_rata share of the separately_stated and nonseparately computed items of x as provided in sec_1366 make any adjustments to basis as provided in sec_1367 and take into account any distributions made by x as provided in sec_1368 if x or its shareholders fail to treat themselves as described above this ruling shall be null and void except as expressly provided herein we express or imply no opinion concerning the federal tax consequences of any aspect of any transaction or item discussed or referenced in this letter specifically we express or imply no opinion regarding whether x is otherwise eligible to be treated as an s_corporation plr-114593-13 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 as precedent pursuant to a power_of_attorney on file with this office we are sending a copy of this letter to x’s authorized representatives sincerely s mary beth carchia acting branch chief branch office of the associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes


internal_revenue_service department of the treasury number release date index number washington dc person to contact telephone number refer reply to cc psi b1-plr-155786-01 date date legend x y z j t country date this letter responds to a letter dated date and subsequent correspondence submitted on behalf of x requesting a ruling that it be granted an extension of time pursuant to sec_301_9100-3 of the procedure and administration regulations in which to elect to be treated as a partnership for federal tax purposes under sec_301_7701-3 facts according to the information submitted x was validly formed as a limited_liability_company under the law of country on date y a domestic limited_liability_company has been a j shareholder of x since date the remaining t is held by z a us citizen and resident x and x’s shareholders intended from inception to elect to classify x as a partnership for federal tax purposes however x failed to file the election timely it has been represented that under sec_301_7701-3 x is a foreign_entity that is not required to be classified as a corporation for federal tax purposes and plr-155786-01 at all times since its organization x has had at least two members each of whom has limited_liability as defined in sec_301_7701-3 law and analysis sec_301_7701-3 provides that unless a foreign eligible_entity elects otherwise the entity is a a partnership if it has two or more members and at least one member does not have limited_liability b an association if all members have limited_liability or c disregarded as an entity separate from its owners if it has a single owner that does not have limited_liability sec_301_7701-3 provides that for purposes of b i a member of a foreign eligible_entity has limited_liability if the member has no personal liability for the debts of or claims against the entity by reason of being a member sec_301_7701-3 allows an entity to elect to change its classification by filing form_8832 entity classification election with the service_center designated on that form sec_301_7701-3 provides that all such elections become effective on the date specified by the entity on form_8832 or on the date filed if no effective date is specified the specified effective date must not be earlier than days prior to the filing_date of form_8832 nor later than twelve months after that filing_date sec_301_9100-1 gives the commissioner discretion to grant reasonable extensions of time to make regulatory elections under the rules of sec_301_9100-2 and sec_301_9100-3 under sec_301_9100-1 a regulatory election includes an election whose due_date is prescribed by a regulation published in the federal_register or a notice published in the internal_revenue_bulletin sec_301_9100-3 sets forth the standards which the commissioner uses to determine whether to grant a discretionary time extension under sec_301_9100-3 a request for relief will be granted when the taxpayer provides evidence proving 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 conclusion based solely on the facts submitted and the representations made we conclude that x has satisfied the requirements of sec_301_9100-1 and sec_301_9100-3 accordingly x is granted an extension of time of days from the date of this letter to file form_8832 effective date with the appropriate service_center a copy of this letter should be attached to that form a copy is enclosed for that 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 plr-155786-01 this ruling is directed only to the taxpayer requesting it sec_6110 of the internal_revenue_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 the taxpayer’s representative sincerely paul f kugler 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 ------------------------ number release date conex-128309-15 uil 5000a the honorable cory gardner united_states senator 8th street suite 140a greeley co attention dear senator gardner i am responding to your inquiry dated date on behalf of your constituent --- ------------------- responsibility payment computation specifically ---- ----------- under an individual market health plan that did not provide minimum_essential_coverage under sec_5000a of the internal_revenue_code code and ------------- ----------- understood that ---- minimum_essential_coverage for ----- only on essential coverage under sec_5000a of the code for each month beginning in date an individual must have qualifying health care coverage known as minimum_essential_coverage have an exemption or make a shared responsibility payment with the individual's federal_income_tax return for any_tax year the amount of the shared responsibility payment depends in part on the taxpayer's household_income under the applicable law the household_income is the sum of the taxpayer's and if the taxpayer files a joint_return with the spouse the spouse's modified_adjusted_gross_income and the modified_adjusted_gross_income of every individual whom the taxpayer had minimum_essential_coverage for all months of was liable for the shared responsibility payment because however shared responsibility payment not own income but also that of the other family members who had minimum you asked for our review and response to ----------- ------------------ ----------- ---- ---- ---- needed clarification on how shared responsibility payment are calculated should be required to base the amount of did not have did not agree that explained that in tax_year issues with the shared were covered ------------------ ---------------- and one of and ---- ---- ---- ---- - -- conex-128309-15 ---- ----------- for ----------------------- files a joint_return household_income must own household_income must ---- properly claims as a dependent and who is required to file his or her own federal_income_tax return a dependent’s income is not included if the dependent is not required to file a tax_return but does so for other reasons such as to claim a refund if ---- include their modified_adjusted_gross_income in addition include the modified_adjusted_gross_income of any dependent required to file tax_return household_income includes the modified_adjusted_gross_income of all these individuals regardless of whether they have minimum_essential_coverage legislation would be necessary to change this requirement the irs does not have authority to change the statutory requirement the applicable law provides exemptions for certain individuals without minimum_essential_coverage from the shared responsibility payment_liability we list and explain these exemptions including the exemption for individuals for whom minimum_essential_coverage is considered unaffordable on our website at www irs gov affordable-care- act individuals-and-families aca-individual-shared-responsibility-provision- exemptions we encourage to review the information on the webpage and in the instructions for form_8965 health coverage exemptions available at www irs gov and consider whether i hope this information is helpful if you have questions please contact me or ------------- ----- are eligible for any of the exemptions identification_number -------------------- ---------------- ----------- ----------- and at ---- sincerely william a jackson chief branch office of associate chief_counsel income_tax and accounting


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 b05 plr-129922-11 date november legend parent holding purchaser old parent target ty ----------------------- ty ----------------------- ------------------- ----------------------- -------------------------------- ----------------------- ----------------------- --------------------------------- ---------------------------------------------- ----------------------- -------------------------------------------------------------------------------------- ----------------------- ----------------------- --------------------------------- ---------------------------------------- ------------ ------------------------------------------------------------------------------- country a ----------- date date date ---------------------- -------------------------- ------------------ plr-129922-11 date date date --------------------------- -------------------------- ----------------------- company official ------------------- ------------------- --------------------------------------------------------------------------- dear -------------- this letter responds to a letter dated date submitted on behalf of parent successor_in_interest of old parent the common parent of the consolidated_group that included holding the united_states_shareholder of purchaser the foreign purchasing_corporation requesting an extension of time under sec_301_9100-3 of the procedure and administration regulations to file an election parent is requesting an extension to file a sec_338 election under sec_338 of the internal_revenue_code the code with respect to purchaser’s acquisition of the stock of target sometimes hereinafter referred to as the election on date citations in this letter are to the regulations in effect on date additional information was received in letters dated date date and date the material information is summarized below old parent was the common parent of an affiliated_group_of_corporations filing consolidated_returns which included holding a wholly owned subsidiary purchaser a country a corporation was a wholly owned subsidiary of holding purchaser acquired all the stock of target a country a corporation for cash through a series of transactions ending on date the transactions on date target and purchaser amalgamated under country a law with purchaser continuing as the amalgamated company on date parent purchased all of the stock of old parent on date old parent merged into parent with parent surviving and becoming the direct parent of holding on date holding and purchaser adopted a plan_of_liquidation to begin the process of liquidating purchaser under country a law parent has represented that purchaser’s acquisition of the stock of target qualified as a qualified_stock_purchase as defined in sec_338 parent has also represented that no person filed a united_states tax_return treating the transactions constituting the qualified_stock_purchase in a manner that is inconsistent with the tax consequences that would have resulted from the election for which extension is sought plr-129922-11 target was not a controlled_foreign_corporation a passive foreign investment corporation or a foreign_personal_holding_company at any time during the portion of its taxable_year that ended on the acquisition_date as defined in sec_338 purchaser was a controlled_foreign_corporation as defined in sec_957 and was not required under sec_1_6012-2 other than sec_1_6012-2 to file a united_states income_tax return for its taxable_year that includes the acquisition_date the sec_338 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 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 of the code sec_338 permits certain stock purchases to be treated as asset acquisitions if the purchasing_corporation makes or is treated as having made a sec_338 election or a sec_338 election and the acquisition is a qualified_stock_purchase 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 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 sec_301_9100-2 provides automatic extensions of time for making certain elections 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 in this case the time for filing the election is fixed by regulations ie sec_1_338-1 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 shows 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 interest of the government information affidavits and representations submitted by parent and company official 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 to advise parent to make the election and that the request for relief was filed before the failure to make the election was discovered by the internal_revenue_service see sec_301_9100-3 and v plr-129922-11 based on the facts and information submitted including 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 an extension of time is granted under sec_301_9100-3 until days from the date of this letter for parent to file an election with respect to the acquisition of the stock of target within days of the date on this letter parent must file the election on form_8023 in accordance with sec_1_338-1 and g and the instructions to the form a copy of this letter must be attached to form_8023 within days of the date on this letter all relevant parties having filed their returns consistent with the election having been made must amend any_tax return to which it is relevant by attaching a copy of this letter and a copy of form_8023 or form_8883 if appropriate alternatively taxpayers filing their returns electronically may satisfy the requirement of attaching a copy of this letter by attaching a statement to their return that provides the date and control number plr-129922-11 of the letter_ruling the above extension of time is conditioned on parent’s consolidated group’s and target’s tax_liability if any being not 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 no opinion is expressed as to the taxpayers’ tax_liability for the years involved a determination thereof will be made by the applicable director’s office upon audit of the federal_income_tax returns involved we express no opinion as to whether the acquisition of the target stock qualifies as a qualified_stock_purchase under sec_338 or any other tax consequence arising from the election in addition we express no opinion as to the tax consequences of filing the election late under the provisions of any other section of the code and 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 the above rulings for purposes of granting relief under sec_301_9100-3 we relied on certain statements and representations made by the parent and company official however the director should verify all essential facts in addition notwithstanding that an extension is granted under sec_301_9100-3 to file the election penalties and interest that would otherwise be applicable if any continue to apply this letter is directed only to the taxpayer who requested it sec_6110 provides that it may not be used or cited as precedent plr-129922-11 pursuant to the power_of_attorney on file in this office a copy of this letter is being sent to your authorized representatives sincerely _ken cohen__________________ ken cohen senior technician reviewer branch office of associate chief_counsel corporate cc


department of the treasury gai internal_revenue_service p o box irs cincinnati oh release number release date uil code zor re ro date date employer id number contact person ld number contact telephone number form you must file tax years dear this letter is our final_determination that you don’t qualify for tax-exempt status under sec_501 of the internal_revenue_code the code recently we sent you a proposed adverse determination in response to your application the proposed adverse determination explained the facts law and basis for our conclusion and it gave you days to file a protest because we didn’t receive a protest within the required days the proposed determination is now final because you don’t qualify as a tax-exempt_organization under sec_501 of the code donors can’t deduct contributions to you under sec_170 of the code you must file federal_income_tax returns for the tax years listed at the top of this letter using the required form also listed at the top of this letter within days of this letter unless you request an extension of time to file we'll make this final adverse determination_letter and the proposed adverse determination_letter available for public inspection as required under sec_6110 of the code after deleting certain identifying information please read the enclosed notice notice of intention to disclose and review the two attached letters that show our proposed deletions if you disagree with our proposed deletions follow the instructions in the notice on how to notify us if you agree with our deletions you don’t need to take any further action we’ll also notify the appropriate state officials of our determination by sending them a copy of this final letter and the proposed determination_letter under sec_6104 of the code you should contact your state officials if you have questions about how this determination will affect your state responsibilities and requirements letter rev catalog number 47632s if you have questions about this letter you can contact the person listed at the top of this letter if you have questions about your federal_income_tax status and responsibilities call our customer service number pincite-829-1040 tty for deaf or hard of hearing or customer service for businesses pincite-829-4933 sincerely jeffrey i cooper director exempt_organizations rulings and agreements enclosures notice redacted letter proposed adverse determination under sec_501 redacted letter final adverse determination under sec_501 - no protest letter rev catalog number 47632s date date un empioyer id number contact person id number contact telephone number contact fax number uil department of the treasury internal_revenue_service irs p o box cincinnati oh legend c website phrase d program name f organization name g website phrase h website phrase j website phrase k website phrase l website phrase m website phrase n website phrase p website phrase q website phrase r website phrase s website phrase t website phrase v organization name w city x date y date z state dear we considered your application_for recognition of exemption from federal_income_tax under sec_501 of the internal_revenue_code the code based on the information provided we determined that you don’t qualify letter rev catalog number 47630w for exemption under sec_501 of the code this letter explains the basis for our conclusion please keep it for your records issues do you meet the organizational_test under sec_501 of the code no for the reasons stated below do you meet the operational_test under sec_501 of the code no for the reasons stated below facts you are currently exempt under sec_501 of the code you submitted form 1023-ez streamline application_for recognition of exemption under sec_501 of the internal_revenue_code on x you attested that you were incorporated on y in z you also attested that you have the necessary organizing document that your organizing document limits your purposes to one or more exempt purposes within the meaning of sec_501 that your organizing document does not expressly empower you to engage otherwise than as an insubstantial part of your activities that in themselves are not in furtherance of one or more exempt purposes that your organizing document contains the dissolution provision required under sec_501 and that your organizing document contains the provisions required by sec_508 or that your organizing document does not need to include the provisions required by sec_508 because you rely on the operation of state law in your particular state to meet the requirements of sec_508 you attested that you are organized and operated exclusively to further charitable purposes and that you have not conducted and will not conduct prohibited activities under sec_501 specifically you attested that you will e refrain from supporting or opposing candidates in political campaigns in any way ensure that your net_earnings do not inure in whole or in part to the benefit of private shareholders or individuals not further non-exempt purposes such as purposes that benefit private interests more than insubstantially not be organized or operated for the primary purpose of conducting a trade_or_business that is not related to your exempt_purpose s not devote more than an insubstantial part of your activities attempting to influence legislation or if you made a sec_501 election not normally make expenditures in excess of expenditure limitations outlined in sec_501 not provide commercial-type_insurance as a substantial part of your activities detailed information was requested from you supplemental to the above attestations the additional information showed that you were indeed incorporated on y in z your organizing document was amended on x to limit your purpose to exclusively charitable in nature your organizing document did not contain language dedicating your assets to an exempt_purpose you are made up of a team of volunteer board members who coordinate approximately events each year as well as teams for sports leagues your events connect members to opportunities and resources that increase their level of engagement and contribution to the w community the events are held at various locations throughout letter rev catalog number 47630w the greater w area with the heaviest concentration being in and around downtown events are open to the public but your target demographic is individuals age most participants fall into this age range you do not charge a fee for membership however participants pay a fee when activities require a fee from a partnering organization or business you hold meetings of the board_of directors each year the meetings provide hands on experience to directors in participating on a non-profit board you explain this will serve the community through your directors’ future involvement on other non-profit boards your board meetings and steering committee meetings take up a substantial amount of time and support your activities your website states that you are a young professional organization that t around w that are it states r young w with q the website also states whether you’re looking to p w better w n is a m and has l you hold free monthly social events or gatherings for young professionals to meet and network at local establishments where a local non-profit organization is highlighted and has the opportunity to inform your members of their work and provide your members with information on how they can get more involved per your website the events k while providing a j in a way that is h your website listed many social events including outings at a dance studio karaoke and several restaurants hotels and brewing companies the events typically spotlighted a local non-profit organization as well as a local business you also conduct an annual charitable fundraiser gala that does require a fee to attend and benefits a different local charity each year you stated that approximately of your time and resources are spent on social events you host professional development events that are generally free educational seminars workshops or other gatherings aimed at developing identified professional skill sets and connecting members to resources that will help them grow and succeed professionally your website states g is an important part of v you encourage members to become more involved in the community through serving non-profit organizations as volunteer board members or in other leadership capacities your website shows that topics at your past professional development events include good design and seo optics and w’s future leadership development program bringing joy to the workplace and find your purpose you also conduct an annual professional development event where local entrepreneurs are invited to showcase their businesses share their experiences and help foster a sense of connectedness and support with the entrepreneurial community of w the event involves a strong focus on student learning and real world exposure to entrepreneurism select events require a fee to attend you indicated that approximately of your time and resources are dedicated to professional development activities you hold community development events which are generally free gatherings at local destinations with community value such as non-profit organizations historic landmarks or other cultural and or artistic assets such as museums live theatre and musical performances these events aim to educate and generate interest in work being done in the community and the historic resources that make the city great some of the events benefit a charitable_organization with fundraising through voluntary donations select events require a fee to attend you indicated that approximately of your time and resources are dedicated to these activities you have volunteering events that provide opportunities for individuals to give back to the community by participating in a team of volunteers to implement events organized by other non-profit organizations throughout the year these events are free to participate in and they often include free admission to the event so volunteers are able to enjoy the event when they are done volunteering your website provided information about a volunteer opportunity with an auction benefiting a women’s foundation and listed past volunteer events letter rev catalog number 47630w that included a music festival a f event walks and galas you indicated that approximately of your time and resources are dedicated to providing volunteering events you hold outdoor recreation events that consist of gatherings at local destinations that highlight the community’s natural_resources and recreational opportunities the events promote an active lifestyle as well as education and appreciation the region’s unique geographical features and ecosystems these events are aimed at exposing members to new and different aspects of the w area that will increase their quality of life and knowledge of the region some of the events require a fee to participate your website contains information on various past and upcoming outdoor recreation events including rock climbing d a kayak adventure a wilderness survival class an outing at a fun center ice skating and a guided hike you indicated that you spend approximately of your time and resources conducting outdoor recreation events in addition to the outdoor recreation events you also have sports events to give your members the opportunity to participate in various sports leagues throughout the city you website states c with v sports members are also able to connect while attending local professional sports competitions as spectators the sports events listed on your website included a march madness bracket challenge a nerf battle a volleyball league a dart league a golf night event and a gathering at a reserved party deck at a hockey game for members to socialize network and watch the game you indicate that these events promote a healthy active lifestyle and allow your members to connect over their love of sports there are usually fees charged to participate in team sports and to attend the spectator sports you indicated that you spend approximately of your time and resources on these events you have a perks program that is designed to support the local economy by promoting locally owned businesses among your membership the program offers special incentives to your members to frequent participating businesses through this program you hosted a restaurant week where participating restaurants provided a special menu to entice people to enjoy the local restaurant scene while there was no fee for businesses to participate in restaurant week that will likely change in the future so that you can use funds received to promote the event there is no charge to members to participate in the perks program beyond the cost of the product or service being offered by participating businesses you stated that approximately of your time and resources are dedicated to providing a perks program to members law sec_501 of the internal_revenue_code provides in part for the exemption from federal_income_tax of organizations organized and operated exclusively for charitable religious or educational_purposes no part of the net_earnings of which inures to the benefit of any private_shareholder_or_individual sec_1_501_c_3_-1 states that in order to qualify under sec_501 of the code an organization must be both organized and operated exclusively for one or more exempt purposes if an organization fails to meet either the organizational or operational_test it is not exempt sec_1_501_c_3_-1 states than an organization is not organized exclusively for one or more exempt purposes unless its assets are dedicated to an exempt_purpose an organization's assets will be considered dedicated to an exempt_purpose if upon dissolution such assets would by reason of a provision in the organization's articles of organization or by operation of law be distributed for one or more exempt purposes or to the federal government or to a state_or_local_government for a public purpose or would be distributed by a court to another organization to be used in such manner as in the judgment of the court will best accomplish the general purposes for which the dissolved organization was organized letter rev catalog number 47630w sec_1_501_c_3_-1 states that an organization will be regarded as operated exclusively for one or more exempt purposes only if it engages primarily in activities which accomplish one or more of such exempt purposes specified in sec_501 of the code an organization will not be so regarded if more than an insubstantial part of its activities is not in furtherance of an exempt_purpose sec_1_501_c_3_-1g i states that an organization is not operated exclusively for one or more exempt purposes unless it serves a public rather than a private interest revrul_69_175 1969_1_cb_149 provides that a nonprofit organization formed by parents of pupils attending a private school that provides school_bus transportation for its members’ children services a private rather than a public interest and does not qualify for exemption under sec_501 of the code revrul_70_4 1970_1_cb_126 provides that an organization whose activities consisted primarily of the promotion and regulation of a sport for amateurs is not exempt as a sec_501 educational_organization because the promotion and regulation of a sport for amateurs as described neither improve nor develop the capabilities of the individual nor instruct the public on subjects useful to the individual and beneficial to the community revrul_77_365 1977_2_cb_192 states that an organization that conducts clinics workshops lessons and seminars at municipal parks and recreational areas to instruct and educate individuals in a particular sport is operated exclusively for educational_purposes and qualifies for exemption under sec_501 of the code rev_rul 1977_2_cb_192 describes an organization that arranges and conducts winter-time ocean cruises during which activities to further religious and educational_purposes are provided in addition to extensive social and recreational activities the organization did not qualify for exemption under sec_501 of the code because it was not operated exclusively for exempt purposes under sec_501 of the code revrul_77_430 1977_2_cb_194 describes an organization that conducts weekend religious retreats open to individuals of diverse christian denominations at a rural lakeshore site at which the participants may enjoy the recreational facilities in their limited amount of free time and that charges no fees qualifies for exemption under sec_501 of the code as an organization operated exclusively for religious purposes in spanish american cultural association of bergenfield vy commissioner tcmemo_1994_510 wl555882 the u s tax_court held that the spanish american cultural association of bergenfield did not qualify as an organization described in code sec_501 because its charitable activities were insubstantial compared to its social activities in the 76_tc_380 an organization operating a religious retreat facility did not qualify for exemption under sec_501 because it failed to show that the retreat facility was operated exclusively for religious purposes although the organization’s mountain lodge offered guests religious recreational and social activities however none were regularly scheduled or required the court concluded that the organization had not met its burden_of_proof to show that the lodge was operated primarily for an exempt religious purpose and that the recreational and social activities at the lodge were only incidental to a religious purpose letter rev catalog number 47630w in 326_us_279 the supreme court determined that the presence of a single non-exempt purpose if substantial in nature will destroy exemption under sec_501 regardless of the number or importance of any other exempt purposes application of law you are not described under sec_501 of the code or sec_1_501_c_3_-1 because you do not meet the organizational or operational tests if an organization fails either the organizational or operational_test it cannot qualify as an exempt_organization under sec_501 of the code organizational_test your organizational document does not dedicate your assets to an exempt_purpose as required by sec_1_501_c_3_-1 as a result you do not satisfy the organizational_test requirement in sec_1_501_c_3_-1 to be recognized as exempt under sec_501 of the code operational_test your website states that you are a young professional organization that t around w that are s although some of your activities are charitable and educational in nature many of your activities serve substantial social purposes further your perks program provides direct benefits to members and participating businesses your nonexempt activities are more than insubstantial in nature for this reason you are not operating exclusively for exempt purposes sec_1_501_c_3_-1 as a result you do not satisfy the operational_test requirement to be recognized as exempt under sec_501 of the code and you are not as described in sec_501 of the code your sports and outdoor recreation events are not similar to those in revrul_77_365 your events are not geared toward educating individuals in a particular sport while there might be a minor educational aspect to some events they are similar to the organization in revrul_70_4 in that they geared toward promoting the health of the public your sports and outdoor recreation events are mainly social and recreational in nature your website states c with v sports your sports events include gatherings at sporting events that allow members to socialize network and watch games you are distinguished from the organization described in revrul_77_430 because you are not operated exclusively exempt purposes a substantial portion of your activities consists of providing networking social and recreational activities for your members your social events are similar to those in revrul_77_377 in that they are social in nature not charitable or educational while you may highlight a non-profit organization at the events that is not the purpose of the event your website states the events k while j in a way that is h the activities of networking socializing and developing friendships do not fulfill c purposes additionally at many of the events you spotlight a local business which results in private benefit to the business and does not fulfill a c purpose your annual professional development event also results in private benefit to the businesses that are showcased you are similar to the organization in revrul_69_175 in that you have a perks program that results in private benefit rather than public benefit you promote locally owned businesses among your membership the program offers special incentives to your members to frequent participating businesses you are therefore not operated exclusively for one or more exempt purposes because your perks program results in private benefit to your members as well as the businesses rather than public benefit sec_1 c -1 gd like the organizations in the schoger foundation v commissioner and spanish american cultural association letter rev catalog number 47630w of bergenfield v commissioner you have failed to show that you are operated exclusively for exempt purposes you conduct various activities that fulfill social and recreational purposes such as social activities networking activities outdoor recreational activities and participate in sporting events you are not operated exclusively for exempt purposes because you do not primarily engage in activities which accomplish one or more exempt purposes and more than an insubstantial part of your activities is not in furtherance of an exempt_purpose sec_1_501_c_3_-1 the supreme court held in better business bureau of washington d c v united_states that a single nonexempt purpose if substantial in nature would preclude an organization from qualifying under sec_501 no matter the number or importance of truly exempt purposes despite some of the charitable and educational activities that you conduct you have substantial social and recreational activities for your members and you provide members with business perks all of which serve a non-exempt purpose and preclude you from exemption under sec_501 of the code conclusion based on the above facts and analysis you do not qualify for exemption under sec_501 of the code you do not satisfy the organizational_test requirement to be recognized as exempt under sec_501 of the code and you are not operated exclusively for a c purpose you organizing document does not dedicate your assets to an exempt_purpose and a more than insubstantial portion of your activities do not serve exempt purposes therefore you do not qualify for exemption under sec_501 of the code you remain exempt under sec_501 of the code if you don’t agree you have a right to file a protest if you don’t agree with our proposed adverse determination to do so you must send a statement to us within days of the date of this letter the statement must include e e e your name address employer_identification_number ein and a daytime phone number acopy of this letter highlighting the findings you disagree with anexplanation of why you disagree including any supporting documents the law or authority if any you are relying on the signature of an officer director trustee or other official who is authorized to sign for the organization or your authorized representative e one of the following declarations for an officer director trustee or other official who is authorized to sign for the organization under penalties of perjury i declare that i examined this protest statement including accompanying documents and to the best of my knowledge and belief the statement contains all relevant facts and such facts are true correct and complete letter rev catalog number 47630w for authorized representatives under penalties of perjury i declare that i prepared this protest statement including accompanying documents and to the best of my knowledge and belief the statement contains all relevant facts and such facts are true correct and complete your representative attorney certified_public_accountant or other individual enrolled to practice_before_the_irs must file a form_2848 power_of_attorney and declaration of representative with us if he or she hasn’t already done so you can find more information about representation in publication practice_before_the_irs and power_of_attorney we’ ll review your protest statement and decide if you provided a basis for us to reconsider our determination if so we'll continue to process your case considering the information you provided if you haven’t provided a basis for reconsideration we’ll forward your case to the office of appeals and notify you you can find more information about the role of the appeals_office in publication how to appeal an irs decision on tax- exempt status if you don’t file a protest within days you can’t seek a declaratory_judgment in court at a later date because the law requires that you use the irs administrative process first sec_7428 of the code where to send your protest please send your protest statement form_2848 if needed and any supporting documents to the applicable address u s mail street address for delivery service internal_revenue_service eo determinations quality assurance - room p o box cincinnati oh internal_revenue_service eo determinations quality assurance main street room cincinnati oh you can also fax your statement and supporting documents to the fax number listed at the top of this letter if you fax your statement please contact the person listed at the top of this letter to confirm that he or she received it if you agree if you agree with our proposed adverse determination you don’t need to do anything if we don’t hear from you within days we’ll issue a final adverse determination_letter that letter will provide information on your income_tax filing_requirements you can find all forms and publications mentioned in this letter on our website at www irs gov formspubs if you have questions you can contact the person listed at the top of this letter letter rev catalog number 47630w sincerely jeffrey i cooper director exempt_organizations rulings and agreements enclosure publication letter rev catalog number 47630ww