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 plr-157461-05 date march ----------- legend legend decedent spouse trust trustees date date year year year year year law firm dear ------------------ ------------------------------------------------------ ----------------------------------------------------- ------------------------------------------- ------------------------------------------------------------------ ------------------ ---------------------- ------- ------- ------- ------- ------- ---------------------- this is in response to a letter dated date submitted on your behalf by your authorized representative requesting an extension of time under sec_2642 of the internal_revenue_code and sec_301_9100-3 of the procedure and administration regulations to make an election under sec_2632 with respect to the automatic allocation of generation-skipping_transfer gst_exemption to transfers made to trust the facts and representations submitted are summarized as follows on date decedent and spouse established trust an irrevocable_trust for the benefit of their five children and their children’s issue the trustees of trust are trustees trustees may distribute all or any part of the trust’s income for the health support maintenance and complete education of decedent’s and spouse’s children and their issue during each year that cash or other_property is transferred to trust by decedent or spouse or premiums with respect to life_insurance policies held by trust are paid_by pursuant to the terms of trust during the lifetimes of decedent and spouse the upon the death of the survivor of decedent and spouse the date of division the plr-157461-05 either decedent or spouse each of their children shall have the unrestricted right to demand and immediately receive from trust a share equal to the value of the property contributed and the amount of premiums_paid divided by the number of the children living on january of such year the maximum amount which a child may demand in any calendar_year is limited to dollar_figure each year on december the total amount a child may withdraw shall be reduced by the greater of dollar_figure or percent of the principal of the trust as of december principal and accumulated income of trust is to be divided into equal shares one for each living child of decedent and spouse and one for each deceased child who is survived by issue each share shall be set_aside in a separate trust the trustees shall distribute income to the child for whom the separate trust is set_aside in quarterly or other convenient installments the trustees may also distribute principal to or for the benefit of a class consisting of the child and the child’s issue for health support maintenance and complete education after the expiration of one year from the date of division a child has the right to withdraw one-third of the market_value of the trust principal after the expiration of four years from the date of division a child has the right to withdraw one-half of the market_value of the trust principal after the expiration of seven years from the date of division a child has the right to withdraw all the remaining principal of his or her trust upon withdrawal the child’s separate trust shall terminate or for the benefit of persons and organizations exclusive of the child’s creditors the child’s estate or the creditors of the child’s estate as the child shall appoint by specific reference in the child’s will however if a federal gst tax would be imposed upon the child’s death with respect to the trust property over which he or she has a power_of_appointment and if said tax would be imposed at a rate equal to or higher than the marginal federal estate_tax rate which would be imposed if the child’s trust were included in the child’s taxable_estate then the child may also exercise the power_of_appointment in favor of his or her creditors or his or her estate any unappointed trust principal shall be distributed to the child’s issue per stirpes but if the child is not represented by issue then to the issue of decedent and spouse distributed to or for the benefit of persons and organizations exclusive of the predeceased child’s creditors the child’s estate or the creditors of the child’s estate as the predeceased child shall appoint by specific reference in the child’s will however if a federal gst tax would be imposed upon the child’s death with respect to the trust property over which he or she has a power_of_appointment and if said tax would be imposed at a rate equal to or higher than the marginal federal estate_tax rate which would be imposed if the child’s trust were included in the child’s taxable_estate then the child may also exercise the power_of_appointment in favor of his or her creditors or his upon the death of a child the trustees shall distribute any remaining principal to the separate trust for a child who predeceased decedent and spouse shall be plr-157461-05 or her estate any unappointed trust principal shall be distributed to the child’s issue per stirpes during year year and year various gifts and deemed gifts were made to trust decedent and spouse elected to treat the transfers as being made one-half by each spouse under sec_2513 decedent and spouse timely filed united_states gift and generation-skipping_transfer_tax returns form sec_709 for gifts made in year year and year decedent’s and spouse’s form sec_709 were prepared by law firm the form sec_709 however did not properly reflect gifts made or deemed to be made during year year and year accordingly amended form sec_709 for year year and year were filed in year to correct certain defects in the original form sec_709 despite the filing of amended form sec_709 for year year and year an election to opt_out of the automatic allocation rules was not made on any of the form sec_709 at the time trust was created an indirect_skip and generation-skipping_trust as well as the automatic allocation rules under sec_2632 were not in effect decedent and spouse were not aware of the need to make the election under sec_2632 for transfers to trust made in and thereafter during the course of administering decedent’s estate it became apparent that a portion of decedent’s and spouse’s gst tax exemptions may have been inadvertently allocated to transfers to trust as a result of the gifts and deemed gifts made in year year and year decedent’s estate and spouse request a ruling that they each be granted an extension of time under sec_301_9100-3 to elect pursuant to sec_2632 to have the automatic allocation rules under sec_2632 not apply to decedent’s and spouse’s transfers to trust in year and for all future years sec_2601 imposes a tax on every generation-skipping_transfer gst a gst 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 applicable_rate as the product of the maximum_federal_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 defined as the excess of over the applicable_fraction the applicable_fraction as defined in sec_2642 is a fraction the numerator of which is the amount of gst_exemption 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 reduced by the sum of certain taxes and charitable deductions plr-157461-05 sec_2631 as in effect at the time of the transfers in this case provides that sec_2632 effective for transfers subject_to the gift or estate_tax after sec_2632 provides that the term indirect_skip means any transfer of for purposes of determining the inclusion_ratio every individual shall be allowed a gst_exemption of dollar_figure adjusted for inflation under sec_2631 that 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 date provides that if any individual makes an indirect_skip during such individual’s lifetime any unused portion of such individual’s gst_exemption shall be allocated to the property transferred to the extent necessary to make the inclusion_ratio for such property zero if the amount of the indirect_skip exceeds such unused portion the entire unused portion shall be allocated to the property transferred property other than a direct_skip subject_to the gift_tax made to a gst_trust sec_2632 provides in part that the term gst_trust means a_trust that could have a generation-skipping_transfer with respect to the transferor unless the trust falls within any of six enumerated exceptions under sec_2632 an individual may elect to have the automatic allocation of gst_exemption not apply to an indirect_skip sec_2632 provides that the election shall be deemed to be timely if filed on a timely filed gift_tax_return for the calendar_year in which the transfer was made or on such later date or dates as may be prescribed by the secretary regulations provides that a transferor may prevent the automatic allocation of gst_exemption elect out with respect to any transfer or transfers constituting an indirect_skip made to a_trust in the case of a transfer treated under sec_2513 as made one- half by the transferor and one-half by the transferor’s spouse each spouse shall be treated as a separate transferor who must satisfy separately the requirements of sec_26_2632-1 to elect out with respect to the transfer sec_26_2632-1 provides the manner for making an election out to elect out the transferor must attach a statement election out statement to a form_709 the election out statement must identify the trust and specifically must provide that the transferor is electing out of the automatic allocation of gst_exemption with respect to the described transfer or transfers further unless the election out is made for all transfers made to the trust in the current_year and or in all future years the current-year transfers and or future transfers to which the election out is to apply must be specifically described or otherwise identified in the election out statement sec_26_2632-1 of the generation-skipping_transfer_tax plr-157461-05 sec_26_2632-1 provides that the form_709 with the attached election out statement must be filed on or before the due_date for timely filing of the form_709 for the calendar_year in which the first transfer to be covered by the election out was made sec_2642 provides in relevant part that the secretary shall by regulation prescribe such circumstances and procedures under which extensions of time will be granted to make an election out under sec_2632 sec_2642 provides that in determining whether to grant relief 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 the time for making the election shall be treated as if not expressly prescribed by statute notice_2001_50 2001_2_cb_189 provides in relevant part that under sec_2642 the time for electing out of the automatic allocation rules is 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 election described in sec_2632 under the provisions of sec_301_9100-3 sec_301_9100-1 provides that the commissioner has discretion to grant a reasonable extension of time under the rules set forth in sec_301_9100-2 and sec_301_9100-3 to make a regulatory election or a statutory election but no more than months except in the case of a taxpayer who is abroad under all subtitles of the internal_revenue_code except subtitles e g h and i sec_301_9100-3 provides the standards used to determine whether to grant an extension of time to make an election whose due_date is prescribed by a regulation and not expressly provided by statute under sec_301_9100-1 a regulatory election includes an election whose due_date is prescribed by a notice published in the internal_revenue_bulletin in accordance with sec_2642 and notice_2001_50 taxpayers may seek an extension of time to make an election described in sec_2632 under the provisions of sec_301_9100-3 requests for relief under 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 that granting relief will not prejudice the interests of the government sec_301_9100-3 provides 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 plr-157461-05 a gst_trust is defined in sec_2632 in general as any trust that could have a generation-skipping_transfer a_trust is a gst_trust unless it meets one of the exceptions described in sec_2632 through vi where a sufficient possibility exists based on the statutory criteria that the trust corpus will not be distributed to lower generations based upon the facts submitted and the representations made none of the exceptions in sec_2632 apply to trust and accordingly trust is a gst_trust for purposes of sec_2632 based on the facts submitted and representations made we conclude that the requirements of sec_301_9100-3 have been satisfied therefore decedent’s estate and spouse are each granted an extension of time of days from the date of this letter to make the election out of the automatic allocation of gst_exemption under sec_2632 with respect to the transfers to trust in year and all future transfers the election should be made in accordance with the provisions of sec_26_2632-1 of the regulations the supplemental form_709 and election out statement are to be filed with the internal_revenue_service center cincinnati ohio a copy of this letter should be attached to the form_709 a copy is 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 taxpayer requesting it sec_6110 provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative 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 heather c maloy associate chief_counsel passthroughs special industries enclosures copy for sec_6110 purposes copy of letter-


t c memo united_states tax_court philip e lucas petitioner v commissioner of internal revenue respondent docket no filed date philip e lucas pro_se diane l worland for respondent memorandum findings_of_fact and opinion armen special_trial_judge respondent determined a deficiency in petitioner's federal_income_tax for the taxable_year in the amount of dollar_figure as well as an addition_to_tax under sec_665l1 a for failure_to_file a timely return in the amount of dollar_figure ’ after a concession by respondent ’ the issues for decision are as follows whether petitioner is liable for income_tax on his wages we hold that he is whether petitioner is liable for the addition_to_tax for failure_to_file a timely return we hold that he is findings_of_fact some of the facts have been stipulated and they are so found petitioner resided in indianapolis indiana at the time that his petition was filed with the court all section references are to the internal_revenue_code in effect for the taxable_year in issue and all rule references are to the tax_court rules_of_practice and procedure all amounts are rounded to the nearest dollar respondent concedes that during the year in issue petitioner was not an independent_contractor as determined in the notice_of_deficiency and consequently that he is not liable for self-employment_tax on his income as a result petitioner is not entitled to the mechanical adjustment for one half of the self-employment_tax allowed in the notice_of_deficiency see sec_164 although petitioner has not expressly raised the issue he appears to contend that he is not liable for any taxes including social_security and medicare taxes for we note that this court has no jurisdiction to decide whether petitioner is liable for social_security and medicare taxes in respect of his income congress has only given this court authority to decide disputes with respect to certain types of taxes the most notable example of which is the income_tax see sec_7442 74_tc_651 griffin v commissioner tcmemo_1995_246 see also 60_tc_977 petitioner performed services for a subcontractor n m custom framing n m during and initially during a portion of n m treated petitioner as an employee and withheld income and social_security or medicare taxes from his wages however for the entire year n m treated petitioner as an independent_contractor and did not withhold any federal_income_tax or other employment-related taxes from his wages for n m issued petitioner a form_1099 miscellaneous rather than a form_w-2 reflecting dollar_figure of income petitioner did not file a federal_income_tax return for the year in issue by notice_of_deficiency respondent determined that petitioner received self-employment_income in the amount of dollar_figure and that he was liable for federal_income_tax as well as self-employment_tax respondent now concedes that petitioner was an employee for the year in issue and is not liable for self- employment_tax respondent also determined that petitioner was liable for an addition_to_tax under sec_6651 for failure to timely file a return opinion a liability for income_tax petitioner contends that he is not liable for income_tax for the year in issue because his employer failed to withhold any income_tax from his wages he asserts that his employer is the party liable for such taxes he relies on irs publication pub known as circular_e employer’s tax guide you meaning the employer will be liable for social_security and medicare taxes and withheld income_tax if you do not deduct and withhold them because you treat an employee as a nonemployee see internal_revenue_code sec_3509 for details because irs publications are not authoritative sources of federal tax law see zimmerman v commissioner 71_tc_367 affd without published opinion 614_f2d_1294 2d cir 59_tc_456 we must necessarily consult sec_3509 indeed pub itself directs the reader to consult that section for details sec_3509 provides as a general_rule that an employer who fails to withhold income_tax from an employee's wages by reason of treating such employee as not being an employee for withholding purposes shall be liable for income_tax as if the amount required to be withheld were equal to percent of the wages paid to such employee however sec_3509 d specifically provides that the employee's liability for income_tax shall not be affected by the assessment or collection of any_tax determined against the employer under sec_3509 in other words the employee remains fully liable for income_tax arising from the receipt of gross wages see navarro v united_states aftr 2d w d tex see also stewart v united_states aftr 2d ustc par e d wis therefore even though n m misclassified petitioner as an independent_contractor petitioner is liable for income_tax for the year in issue cf grooms v commissioner tcmemo_1992_ it is unfortunate that n m did not ask petitioner to complete a form_w-4 for the year in issue and did not withhold income_tax from petitioner's wages if it had done so there might not have been any deficiency in income_tax in respect of such wages however n m never withheld and petitioner was paid his gross wages without any reduction for withheld income_tax as a consequence there is a deficiency in income_tax for which petitioner is liable we therefore hold for respondent on this issue b addition_to_tax for failure_to_file timely sec_6651 provides for a percent per month addition_to_tax not to exceed percent if a taxpayer fails to file timely a federal_income_tax return unless such failure is due to reasonable_cause and not due to willful neglect the taxpayer has the burden of proving that the commissioner's determination of the addition_to_tax is erroneous see bur corp v commissioner 67_tc_111 36_tc_170 cf sec_7491 effective for court proceedings arising in connection with examinations commencing after date respondent determined that petitioner is liable for an addition_to_tax under sec_665l1 a for failure to timely file his return petitioner asserts that he did not file a return for because he received a form_1099 rather than a form_w-2 from his employer he claims that given the misclassification of his employment status by his employer he did not want to file a return as a self-employed_individual misclassification of an employee however does not relieve the employee of his liability for filing a correct_tax return see grooms v commissioner supra 742_fsupp_65 be d n y affd without published opinion 930_f2d_911 2d cir there is no indication that petitioner sought the advice of a tax adviser who would have informed him that he was required to file a return under these circumstances cf moorefield v commissioner tcmemo_1996_98 affd on other issues without published opinion 133_f3d_928 9th cir petitioner therefore did not have reasonable_cause for failing to file a return for and is liable for the addition_to_tax under sec_665l1 a to reflect our disposition of the disputed issues as well as respondent's concession decision will be entered under rule


internal_revenue_service p o box cincinnati oh release number release date date date legend c county state d state x dollars amount y dollars amount dear department of the treasury employer_identification_number contact person - id number contact telephone number uil you asked for advance approval of your scholarship grant procedures under internal_revenue_code sec_4945 this approval is required because you are a private_foundation that is exempt from federal_income_tax you requested approval of your scholarship program to fund the education of certain qualifying students our determination we approved your procedures for awarding scholarships based on the information you submitted and assuming you will conduct your program as proposed we determined that your procedures for awarding scholarships meet the requirements of code sec_4945 as a result expenditures you make under these procedures won't be taxable also awards made under these procedures are scholarship or fellowship grants and are not taxable to the recipients if they use them for qualified_tuition_and_related_expenses subject_to the limitations provided in code sec_117 description of your request you will operate a scholarship program for high school students in c in order to provide for tuition books equipment and other necessary expenses related to attendance toa college or university in d you aim to encourage students graduating from c to pursue an undergraduate degree in mathematics education or the sciences to be eligible for a scholarship the student must e bea resident of c currently or planning to attend a university of college in d and pursuing a degree in math science or education letter catalog number 58263t have maintained a grade point average in high school be ranked in the top of their graduating class if currently enrolled in a college or university maintain a dollar_figure grade point average be of good character and have financial need applicants will need to submit a written request setting forth their achievements and activities this will include academic records transcripts letter s of recommendation amount of financial aid requested and any other information the applicant chooses to submit awards will be made on an objective and non-discriminatory basis your selection committee will review all applications and one of your trustees will interview the applicant you intend to allocate x dollars per year towards scholarships for qualified applicants no less than y dollars will be awarded the scholarship is eligible for renewal the recipient will submit progress reports to you after each quarter if no report is received or if the report does not show how the award furthers the student’s education no additional funds will be issued you will take any needed and reasonable steps to recover funds from the recipient and will retain all records of any awards made basis for our determination the law imposes certain excise_taxes on the taxable_expenditures of private_foundations code sec_4945 a taxable_expenditure is any amount a private_foundation pays as a grant to an individual for travel study or other similar purposes however a grant that meets all of the following requirements of code sec_4945 is not a taxable_expenditure e e e e the foundation awards the grant on an objective and nondiscriminatory basis the irs approves in advance the procedure for awarding the grant the grant is a scholarship or fellowship subject_to the provisions of code sec_117 the grant is to be used for study at an educational_organization described in code sec_170 other conditions that apply to this determination this determination only covers the grant program described above this approval will apply to succeeding grant programs only if their standards and procedures don’t differ significantly from those described in your original request this determination applies only to you it may not be cited as a precedent you cannot rely on the conclusions in this letter if the facts you provided have changed substantially you must report any significant changes to your program to the cincinnati office of exempt_organizations at e e e letter catalog number 58263t internal_revenue_service exempt_organizations determinations p o box cincinnati oh e e e you cannot award grants to your creators officers directors trustees foundation managers or members of selection committees or their relatives all funds distributed to individuals must be made on a charitable basis and further the purposes of your organization you cannot award grants for a purpose that is inconsistent with code sec_170 you should keep adequate_records and case histories so that you can substantiate your grant distributions with the irs if necessary we've sent a copy of this letter to your representative as indicated in your power_of_attorney please keep a copy of this letter in your records if you have questions please contact the person listed at the top of this letter sincerely stephen a martin director exempt_organizations rulings and agreements letter catalog number 58263t


internal_revenue_service department of the treasury number release date index number washington dc person to contact telephone number refer reply to cc intl plr-140766-02 date date corp a corp b corp c legend individual a dear this replies to your letter dated date requesting that corp a b and c hereinafter collectively referred to as taxpayer be granted an extension of time under sec_301_9100-3 to submit a request to enter into a closing_agreement pursuant to revproc_2002_42 the information submitted for consideration is substantially as set forth below the ruling contained in this letter is predicated upon facts and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party this office has not verified any of the material submitted in support of the request for a ruling verification of the factual information representations and other data may be required as a part of the audit process individual a is an employee of corp a the affidavit of individual a and the facts submitted describe the circumstances surrounding the discovery that taxpayer failed to request to enter into a closing_agreement in a timely manner pursuant to section dollar_figure of revproc_2000_42 the affidavit and facts indicate that taxpayer relied upon individual a and other tax professionals of taxpayer to comply with the requirements of revproc_2000_42 in a timely manner in re plr-140766-02 sec_301 -1 b provides that an election includes an application_for relief in respect of tax and defines a regulatory election as an election whose due_date is prescribed by a regulation a revenue_ruling revenue_procedure notice or announcement sec_301_9100-1 provides that the commissioner has discretion to grant a taxpayer a reasonable extension of time under the rules set forth in sec_301_9100-3 to make a regulatory election under all subtitles of the internal_revenue_code except subtitles e g h and i sec_301_9100-3 provides that requests for relief subject_to this section will be granted when the taxpayer provides the evidence including affidavits described in sec_301_9100-3 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 in the present situation the request to enter into a closing_agreement is a regulatory election as defined in sec_301_9100-1 therefore the commissioner has discretionary authority under sec_301_9100-1 to grant taxpayer an extension of time provided that taxpayer satisfies the rules set forth in sec_301_9100-3 based on the facts and circumstances of this case we conclude that taxpayer satisfies sec_301_9100-3 accordingly taxpayer is granted an extension of time until days from the date of this ruling letter to submit a request to enter into a closing_agreement pursuant to revproc_2002_42 the granting of an extension of time is not a determination that taxpayer is otherwise eligible to submit a request to enter into a closing_agreement sec_301_9100-1 no opinion is expressed as to the application of any other section of the regulations or code to the facts presented a copy of this ruling letter should be associated with the request to enter into a closing_agreement this ruling is directed only to the taxpayer who requested it sec_6110 provides that it may not be used or cited as precedent no ruling has been requested and none is expressed as to the application of any other section of the code or regulations to the facts presented in re plr-140766-02 pursuant to a power_of_attorney on file in this office a copy of this ruling letter is being furnished to your authorized representative sincerely ___________________________________ allen goldstein reviewer office of the associate chief_counsel international


internal_revenue_service number release date index number ----------------------- -------------------------------------------------- -------------------------- ------------------------------------ - - department of the treasury washington dc person to contact ------------------- id no ------------- telephone number --------------------- refer reply to cc psi - plr-163530-03 date date -------------------------- taxpayer -------------------------------------------------- partners -------------------------------------------------- ---------------------------------------- -------------- ------------------------- ------------------------ ------------------------- -------------- ------------------------- ----------------------- ------------------------- ------------------ ------------------------- ------------------- ------------------------- --------------------- ------------------------- --------------------------- a ---------------------------------------------------- date ---------------------- ------------- ------------------ ------------------- plr-163530-03 date state year year dear ------------ this letter responds to a letter dated date requesting relief under sec_301_9100-1 through of the procedure and administration regulations for an extension of time in which to make an election under sec_754 of the internal_revenue_code --------- facts according to the information submitted taxpayer is a general_partnership formed under the laws of state on date a a partner of taxpayer died on date complications in administering a’s estate including complex litigation prevented the administrators of the estate from requesting that an election under sec_754 be made when taxpayer filed its partnership return for year which includes date it is represented that taxpayer acted reasonably and in good_faith that granting relief will not prejudice the interests of the government and that taxpayer is not using hindsight in making the election law and analysis sec_754 provides that if a partnership files an election in accordance with the regulations prescribed by the secretary the basis of partnership property is adjusted in the case of a transfer of a partnership_interest in the manner provided in sec_743 such an election shall apply with respect to all distributions of property by the partnership and to all transfers of interests in the partnership during the taxable_year with respect to which the election was filed and all subsequent taxable years a transfer of an interest in a partnership on the death of a partner is eligible for the sec_754 election the value of the partnership_interest reported on the estate_tax_return including discounts is the value used to determine the basis of the partnership_interest and the adjustment to basis of partnership property under sec_743 and sec_754 see generally sec_1_1014-3 sec_1_754-1 of the income_tax regulations provides that an election under sec_754 is made in a written_statement filed with the partnership return for the plr-163530-03 taxable_year during which the distribution or transfer occurs for the election to be valid the return must be filed no later than the time for filing for the taxable_year including extensions 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 code except subtitles e g h and i sec_301_9100-1 defines the term regulatory election as an election whose deadline 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 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 sec_301_9100-2 and sec_301_9100-3 provide the standards the commissioner conclusion based on the information submitted and the representations made we conclude as a condition of this late election relief any allowable_depreciation deduction for that the requirements of sec_301_9100-1 and sec_301_9100-3 have been satisfied as a result taxpayer is granted an extension of time of sixty days following the date of this letter to make a sec_754 election effective year the election should be made in a written_statement filed with the applicable service_center for association with taxpayer’s partnership tax_return a copy of this letter should be attached to the statement filed a copy of this letter is enclosed for that purpose year on property held by taxpayer is to be computed using a property basis unadjusted under sec_743 because of a’s death any depreciation deduction subsequently allowable beginning in year is to be computed based on remaining useful_life and using property basis as adjusted by the greater of any depreciation deduction allowed_or_allowable in year had the sec_754 election been timely made federal_income_tax consequences of the transactions described above under any other provision of the code specifically we express no opinion as to whether taxpayer is a partnership for federal tax purposes except as specifically set forth above we express no opinion concerning the this ruling is directed only to the taxpayer requesting it sec_6110 of plr-163530-03 the code provides that it may not be used or cited as precedent letter to your two authorized representatives under a power_of_attorney on file with this office we are sending copies of this sincerely heather c maloy associate chief_counsel office of associate chief_counsel passthroughs special industries copy of this letter copy for sec_6110 purposes enclosures cc--


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 b01 plr-163789-03 date date legend debtors ------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------- ------------------------------ trust -------------------- plan ---------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------- d1 ------------------------- d2 ---------------------------- d3 ------------------ dear ---------------- this is in response to your letter dated date submitted on behalf of trust requesting a ruling regarding the classification of trust as a liquidating_trust under sec_301_7701-4 of the procedure and administration regulations facts bankruptcy court on d1 and thereafter on d2 debtors submitted to the bankruptcy court their plan on d3 plan was confirmed by the bankruptcy court debtors filed voluntary petitions under chapter of the bankruptcy code in the pursuant to the provisions of plan trust will be created to hold and pursue certain litigation claims and causes of action of debtors for the sole purpose of liquidating the assets of trust with no objective to continue or engage in the conduct of plr-163789-03 a trade_or_business the trustee of trust will liquidate and convert to cash the assets of trust and make timely distributions the trustee of trust will distribute at least annually to the holders of trust interests all net cash income plus all net cash proceeds from the liquidation of assets however trust may retain such amounts i as are reasonably necessary to meet contingent liabilities and to maintain the value of the assets of trust during liquidation ii to pay reasonable administrative expenses including any taxes imposed on trust or in respect of the assets of trust and iii to satisfy other liabilities incurred or assumed by trust in accordance with plan or the trust agreement plan provides that the right and power of the trustee of trust to invest assets transferred to trust the proceeds thereof or any income earned by trust will be generally limited to the right and power to invest in readily marketable_securities or instruments issued by a person other than debtors trust will generally terminate no later than the fifth anniversary of the effective date defined in plan plan provides that the beneficiaries of trust will be treated as the grantors and deemed owners of trust all parties will value all assets transferred to trust consistently and use such values for all federal_income_tax purposes plan provides that a reserve will be established for disputed claims all of trust’s income will be treated as subject_to tax on a current basis as described in plan plan provides that the trustee of trust shall file tax returns as a grantor_trust pursuant to sec_1_671-4 of the income_tax regulations plan consistent with the requirements set out in revproc_94_45 1994_2_cb_684 provides that the transfer of trust assets to trust will be treated for all federal tax purposes eg sec_61 sec_483 sec_1001 sec_1012 and sec_1274 of the internal_revenue_code as a deemed transfer to the beneficiary-creditors followed by a deemed transfer by the beneficiary-creditors to trust sec_671 provides that where it is specified in subpart e that the grantor or law and analysis another person shall be treated as the owner of any portion of a_trust there then shall be included in computing the taxable_income deductions and credits against tax of the trust that are attributable to that portion of the trust to the extent that such items would be taken into account under chapter of the code in computing taxable_income or credits against the tax of an individual sec_1_671-4 provides that except as provided in sec_1_671-4 and items of income deduction and credit attributable to any portion of a_trust which under the provisions of subpart e sec_671 and following part i subchapter_j chapter of the code are treated as owned by the grantor or another person should not be reported by plr-163789-03 the trust on form_1041 but should be shown on a separate statement attached to that form sec_677 provides in part that the grantor shall be treated as the owner of any portion of a_trust whether or not the grantor is treated as such owner under sec_674 whose income without the approval or consent of any adverse_party is or in the discretion of the grantor or a non-adverse party or both may be distributed to the grantor or the grantor’s spouse or held or accumulated for future distribution to the grantor or the grantor’s spouse sec_301_7701-4 provides that certain organizations which are commonly known as liquidating trusts are treated as trusts for purposes of the internal_revenue_code an organization will be considered a liquidating_trust if it is organized for the primary purpose of liquidating and distributing the assets transferred to it and if its activities are all reasonably necessary to and consistent with the accomplishment of that purpose a liquidating_trust is treated as a_trust for purposes of the code because it is formed with the objective of liquidating particular assets and not as an organization having as its purpose the carrying of a profit-making business which normally would be conducted through business organizations classified as corporations or partnerships however if the liquidation is unreasonably prolonged or if the liquidation purpose becomes so obscure by business activities that the declared purpose of liquidation can be said to be lost or abandoned the status of the organization will no longer be that of a liquidating_trust issuing advance rulings classifying certain trusts as liquidating trusts under sec_301 d conclusions revproc_94_45 states that the service will issue a ruling classifying an entity created pursuant to a bankruptcy plan under chapter of the bankruptcy code u s c sec_1101 et seq as a liquidating_trust under sec_301_7701-4 of the regulation if certain specified conditions are met based on the information submitted and the representations made we conclude that the conditions of revproc_94_45 have been satisfied we conclude that trust will be classified for federal tax purposes as a liquidating_trust under sec_301_7701-4 of the regulation trust will be a grantor_trust and the beneficiaries of trust will be treated as the owners of trust and will be taxed accordingly accordingly based on the representations made and the information submitted revproc_94_45 provides the conditions under which the service will consider except as expressly provided herein no opinion is expressed or implied this ruling is directed only to the taxpayer requesting it sec_6110 of plr-163789-03 concerning the tax consequences of the facts described under any other provision of the internal_revenue_code the code provides that it may not be used or cited as precedent s david r haglund enclosures david r haglund senior technician reviewer associate chief_counsel passthroughs and special industries sincerely copy of this letter copy for sec_6110 purposes


office_of_chief_counsel department of the treasury internal_revenue_service washington d c date number info release date cc tege eoeg et1- genin-117937-04 uilc memorandum for director internal_revenue_service center from subject cincinnati oh attn technical unit office of division counsel associate chief_counsel tax exempt and government entities cc tege eoeg et1- genin-117937-04 railroad retirement act tax status ballard terminal railroad company llc d b a meeker southern railroad from ballard terminal railroad company llc mr byron d cole general manager ballard avenue nw seattle washington in accordance with the coordination procedure established between the service and the railroad retirement board rrb the rrb has provided us with a notice announcing a name change_of a covered employer effective date for the following please take the appropriate action regarding this business cc mr wayne van dyck internal_revenue_service first street suite roanoke va _________________ janine cook


internal_revenue_service number release date index number ------------------------------ --------------------------------------------- ---------------------------------------------- ---------------------- -------------------------------------- - department of the treasury washington dc third party communication none date of communication not applicable_person to contact ------------------ id no ------------- telephone number --------------------- refer reply to cc tege eb hw plr-120638-06 date date ------------- ------------------------------- --------------------------------------------- ------------------------------------------------------------------------------------------ legend taxpayer ------------------------------------------------- trust --------------------------------------------------------------------------------------------------------- county state statute dear ------------- this is in reply to your letter dated date and subsequent correspondence in which you request various rulings on behalf of taxpayer taxpayer is a joint powers agency administered by the county superintendent of schools office created under state statute as a joint powers agency taxpayer is a political_subdivision of state taxpayer provides health benefits to retirees and their spouses and dependents of participating public schools colleges and education agencies in state taxpayer is governed by a board comprised of a minimum of thirteen members elected by the members of taxpayer and one member selected by the superintendent of ------------------------------------------ plr-120638-06 schools of county taxpayer receives income from the premiums_paid by its participating members taxpayer has an operating fund that is used to pay insurance premiums broker’s fees adjusting fees consultant fees legal fees and other administrative fees the operating fund is deposited in the county ttreasury upon termination of the joint powers agreement by all parties all remaining assets will be distributed to taxpayer’s members effective date taxpayer adopted an agreement establishing a_trust to pre-fund its participating public schools colleges and education agencies retiree medical benefits an amended trust agreement was executed on date trust is intended to be an irrevocable_trust under applicable law of state the trust agreement provides that public schools colleges and educational agencies that sign a participation_agreement in accordance with the bylaws of taxpayer may become participating employers in the medical retirement_plan provided by the trust agreement taxpayer amended the trust agreement to provide that in no case may an organization that is not a state a political_subdivision or an entity the income of which is excluded from gross_income under sec_115 of the internal_revenue_code the code become a participating employer in the trust the trust is administered by an administrator originally the trust agreement provided that the administrator was to be designated by taxpayer however taxpayer amended the trust agreement to provide that the administrator is designated by trust’s participating employers the trust funds are managed by a trustee who is appointed by and can be removed by the administrator the trustee is authorized to exercise all powers conferred upon trustees by law which it may deem necessary or proper for management and protection of the trust assets the funds are to be held disbursed and administered by the trustee for the exclusive benefit of the employees of the participating employers and cannot be used for any other purpose participating employers make all contributions to trust no contributions are made by employees or retirees trust assets will be used solely for the payment of health benefits of the retirees who participate in trust and for payment of the cost of administering trust the trust’s funds will not be used for any purpose other than the exclusive benefit of the individual participating retirees their spouses and dependents upon termination of trust trust assets will be used to pay trust obligations and distributed to the participating retirees to fulfill the obligations of the participating employers under trust any overages in the contribution of a participating employer in excess of its obligation under trust to pay for health benefits are returned to the participating employer trust provides that assets that remain dedicated to the payment to the participating retirees of the obligations of the participating employer under trust may upon termination of trust be transferred to another tax-exempt_entity taxpayer amended the trust agreement to provide that in no case will the assets be transferred to an entity that is not a state political_subdivision of a state or an entity the income of which is excluded from gross_income under sec_115 plr-120638-06 sec_115 of the code provides that gross_income does not include income derived from any public_utility or the exercise of any essential government function and accruing to a state or any political_subdivision thereof in revrul_77_261 1977_2_cb_45 income from an investment fund established under a written declaration of trust by a state for the temporary investment of cash balances of the state and its participating political subdivisions was excludable from gross_income for federal_income_tax purposes under sec_115 the ruling indicated that the statutory exclusion was intended to extend not to the income of a state or municipality resulting from its own participation in activities but rather to the income of a corporation or other entity engaged in the operation of a public_utility or the performance of some governmental function that accrued to either a state or municipality the ruling points out that it may be assumed that congress did not desire in any way to restrict a state’s participation in enterprises that might be useful in carrying out projects that are desirable from the standpoint of a state government and which are within the ambit of a sovereign to properly conduct in addition pursuant to sec_6012 and the underlying regulations the investment fund being classified as a corporation that is subject_to taxation under subtitle a of the code was required to file a federal_income_tax return each year in revrul_90_74 1990_2_cb_34 the service determined that the income of an organization formed funded and operated by political subdivisions to pool various risks casualty public liability workers’ compensation and employees’ health is excludable from gross_income under sec_115 of the code in revrul_90_74 private interests neither materially participate in the organization nor benefit more than incidentally from the organization by helping the public school districts and other public employers that participate in trust to provide health benefits for their retirees trust performs an essential_governmental_function within the meaning of sec_115 of the code the income of trust accrues to the participating employers that adopt the program provided by trust all participants in the program are states political subdivisions of state or entities the income of which is excluded from gross_income under sec_115 of the code no private interests participate in or benefit from the operation of trust other than as providers of goods or services any benefit to the employees of participating employers is incidental to the public benefit see revrul_90_74 sec_61 of the code provides that except as otherwise provided gross_income includes all income from whatever source derived including compensation_for services sec_106 of the code provides that gross_income of an employee does not include employer-provided coverage under an accident_or_health_plan plr-120638-06 sec_1_106-1 of the income_tax regulations provides that the gross_income of an employee does not include contributions which his employer makes to an accident_or_health_plan for compensation through insurance or otherwise to the employee for personal injuries pr sickness incurred by him his spouse or his dependents as defined in sec_152 the employer may contribute to an accident_or_health_plan either by paying the premium or a portion of the premium on a policy of accident_or_health_insurance covering one or more of his employees or by contributing to a separate trust or fund including a fund referred to in sec_105 which provides accident and health benefits directly or through insurance to one or more of his employees coverage provided under an accident_and_health_plan to former employees and their spouses and dependents is excludable from gross_income under sec_106 see revrul_62_199 1962_2_cb_32 revrul_82_196 1982_2_cb_53 based on the information submitted and representation made and contingent upon taxpayer filing the amended trust agreement dated date with the state we conclude as follows the income of trust is excludable from gross_income under sec_115 employer contributions paid to trust and payments made from trust which are used exclusively to pay for the accident or health coverage of retired employees their spouses and dependents are excludable from the gross_income of retired employees and retired employees’ spouses and dependents under sec_106 of the code no opinion is expressed concerning the federal tax consequences of trust under any other provision of the code other than those specifically cited above this ruling is directed only to the taxpayer requesting it sec_6110 of the code provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative sincerely harry beker branch chief health and welfare branch office of associate chief_counsel division counsel tax exempt and government entities plr-120638-06 cc -------------------------- ---------------------------------------------- ---------------------------- ------------------------------- ---------------------------------- ----------------------------- ------------------------ ----------------------------------


ee y department of the treasury internal_revenue_service p o box irs cincinnati oh release number release date uil code date date employer id number contact person id number contact telephone number form you must file tax years all 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 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 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 letter rev catalog number 47635z sincerely stephen a martin director exempt_organizations rulings and agreements enclosures notice redacted letter proposed adverse determination under sec_501 a other than c redacted letter final adverse determination under sec_501 other than c - no protest letter rev catalog number 47635z department of the treasury internal_revenue_service rs p o box i cincinnati oh legend t state u date v name w dollars amounts x percent number dear date date employer id number contact person id number contact telephone number contact fax number uil we considered your application_for recognition of exemption from federal_income_tax under internal_revenue_code irc sec_501 we determined that you don’t qualify for exemption under sec_501 this letter explains the reasons for our conclusion please keep it for your records issues do you qualify for exemption under sec_501 of the code no for the reasons stated below facts you were incorporated in the state of t on u per your articles of incorporation you were formed to serve members engaged in the accounting profession and its related disciplines you are a membership_organization consisting of any organization engaged in providing accounting services one of your activities is the provision of management consulting services to your member accounting businesses the consulting services will focus on owners of small accounting business and will consist of a one -time free consultation which includes access to your web-based tools after the initial consultation you will charge fees beginning in the range of w dollars per quarter per full time equivalent employee the services will be tailored to the specific needs of each accounting business letter rev catalog number 47628k emma your revenue is derived from fees from management consulting services and membership fees furthermore over x percent of your revenue is from these fees the only expenses you listed are for salaries and payroll_taxes incurred from your provision of these management consulting services your form_1024 application lists v as your only governing body member your articles of incorporation state the number of your directors shall be one which may be increased pursuant to your bylaws they further state that v is the director who shall act until the first meeting or until the successor is duly chosen and qualified finally you indicated that you will engage in non-exempt activities such as providing accounting consulting services as a means to train and foster development law sec_501 of the internal_revenue_code_of_1986 provides exemption from federal_income_tax for business_leagues not organized for profit and no part of the net_earnings of which inure to the benefit of any private_shareholder_or_individual sec_1_501_c_6_-1 states that a business league is an association of persons having some common business_interest the purpose of which is to promote such common interest and not to engage ina it is an organization of the same general class as a regular business of a kind ordinarily carried on for profit chamber of commerce or board_of trade thus its activities should be directed to the improvement of business conditions of one or more lines of business as distinguished from the performance of particular services for individual persons an organization whose purpose is to engage in a regular business of a kind ordinarily carried on for profit even though the business is conducted on a cooperative basis or produces only sufficient income to be self-sustaining is not a business league in 136_f2d_435 the court denied exemption as a business league the organization was an apartment owners’ association which regularly carried on a business of a kind ordinarily conducted for profit and performed particular services for individual persons these services consisted of acting as a clearing house for information about tenants including the operation of apartment houses and about the legislation affecting the business gave council and advice to its members and did what it could to promote their welfare secured information about prices for necessary goods for the apartments and represented its members in labor disputes and negotiations the court held the organizations primary activity was one of a business regularly carried on for profit and the organization performs particular services for individual persons there is no showing that business done or the activities described were merely incidental to the organization’s total activities application of law you are not described in sec_501 of the code for example you are primarily providing management consulting services to your small_business members tailored toward their particular business for a fee your revenue is primarily derived from these fees and your expenses are primarily incurred through the provision of these consulting services this shows you are providing particular services for members and consequently precludes you from exemption under sec_501 of the code you are also not described in sec_1 c you state that that you will engage in non- exempt_activities which consists of offering tailored accounting consulting services for a fee as a means to train and foster development however the facts that over x percent of your revenue is derived from these fees and letter rev catalog number 47628k the only expenses described are for the provision of these services indicate you are engaging in a regular business this disqualifies you from qualifying under sec_501 of the code like this organization you provide management consulting services tailored to members for a fee these you are like the organization in 136_f2d_435 services are also characteristic of a business ordinarily carried on for profit therefore you are not promoting the general business conditions of the industry as a whole and fail to qualify under sec_501 of the code conclusion your activities are not directed to the improvement of business conditions of one or more lines of businesses or any other purpose defined in sec_501 of the code rather your activities consist of rendering particular services to members and have characteristics of a business ordinarily carried on for profit therefore you fail to qualify under sec_501 of the code 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 if you don't agree you have a right to protest if you don’t agree with our proposed adverse determination to do so send us a protest within days of the date of this letter you must include your name address employer_identification_number ein and a daytime phone number a statement of the facts law and arguments supporting your position a statement indicating whether you are requesting an appeals_office conference the signature of an officer director trustee or other official who is authorized to sign for the organization or your authorized representative the following declaration for an officer director trustee or other official who is authorized to sign for the organization under penalties of perjury i declare that i have examined this request or this modification to the request including accompanying documents and to the best of my knowledge and belief the request or the modification contains all relevant facts relating to the request 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 they haven’t already done so you can find more information about representation in publication practice_before_the_irs and power_of_attorney letter rev catalog number 47628k we'll review your protest statement and decide if you gave us a basis to reconsider our determination if so we’ll continue to process your case considering the information you provided if you haven’t given us a basis for reconsideration we'll send your case to the appeals_office and notify you you can find more information 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 later because the law requires that you use the irc administrative process first sec_7428 where to send your protest send your protest form_2848 if applicable and any supporting documents to the applicable address u s mail street address for delivery service internal_revenue_service eo determinations quality assurance mail stop p o box cincinnati oh internal_revenue_service eo determinations quality assurance main street mail stop cincinnati oh you can also fax your protest 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 they received it you can get the forms and publications mentioned in this letter by visiting our website at www irs gov forms- pubs or by calling 800-tax-form if you have questions you can contact the person listed at the top of this letter contacting the taxpayer_advocate_service the taxpayer_advocate_service tas is an independent organization within the irs that can help protect your taxpayer rights tas can offer you help if your tax problem is causing a hardship or if you’ve tried but haven’t been able to resolve your problem with the irs if you qualify for tas assistance which is always free tas will do everything possible to help you visit www taxpayeradvocate irs gov or call sincerely stephen a martin director exempt_organizations rulings and agreements letter rev catalog number 47628k


internal_revenue_service department of the treasury index number washington dc number release date person to contact telephone number refer reply to cc dom p si plr-119503-98 date date company shareholders corporation property a b c d e f g plr-119503-98 i dear this letter responds to your letter dated date as well as subsequent correspondence submitted on behalf of company requesting a ruling that the rental income received by company from the property is not passive_investment_income within the meaning of sec_1362 company represents the following facts company was incorporated on a to construct own and operate property a residential apartment complex company and shareholders intend to elect under sec_1362 to be an s_corporation company has b employees in addition it retains corporation a related property management company with c employees to provide some of the managerial and administrative services through the employees of these two firms as well as a variety of independent contractors company provides various services in its real_estate leasing and management business these services include but are not limited to regular property inspection property maintenance and repair janitorial services grounds care and landscaping snow and rubbish removal and hour emergency services in addition to the services provided to tenants company mainly through its managing agent handles the usual marketing leasing and administrative functions involved in leasing and managing real_estate no unit is rented on a net_lease basis company received or accrued d in rents and paid_or_incurred e in relevant expenses on property for f the comparable figures for g are h and i except as provided in sec_1362 sec_1362 provides that a small_business_corporation may elect in accordance with the provisions of sec_1362 to be an s_corporation plr-119503-98 sec_1362 provides that an election under sec_1362 terminates whenever the corporation i has accumulated_earnings_and_profits at the close of each of three consecutive tax years and ii has gross_receipts for each of such tax years more than percent of which are passive_investment_income except as otherwise provided in subparagraph c sec_1362 provides that the term passive_investment_income means gross_receipts derived from royalties rents dividends interest annuities and sales or exchanges of stock_or_securities sec_1_1362-2 of the income_tax regulations provides that rents means amounts received for_the_use_of or the right to use property whether real or personal of the corporation sec_1_1362-2 provides that rents does not include rents derived in the active trade_or_business of renting property rents received by a corporation are derived in an active trade_or_business of renting property only if based on all the facts and circumstances the corporation provides significant services or incurs substantial costs in the rental business generally significant services are not rendered and substantial costs are not incurred in connection with net leases whether significant services are performed or substantial costs are incurred in the rental business is determined based upon all the facts and circumstances including but not limited to the number of persons employed to provide the services and the types and amounts of costs and expenses_incurred other than depreciation based solely on the facts as presented in this ruling_request and viewed in light of the applicable law and regulations we conclude that the rents company receives from the property are not passive_investment_income under sec_1362 except for the specific ruling above no opinion is expressed or implied concerning the federal tax consequences of the facts of this case under any other provision of the code specifically no opinion is expressed regarding company's eligibility under sec_1361 to be an s_corporation further the passive_investment_income rules of sec_1362 are completely independent of the passive_activity rules of sec_469 unless an exception under sec_469 applies the rental_activity remains passive for purposes of sec_469 plr-119503-98 in accordance with the power_of_attorney on file with this office we are sending you the original of this letter and a copy to company this ruling is directed only to the taxpayer who requested it according to sec_6110 this ruling may not be used or cited as precedent sincerely donna m young senior technician reviewer branch office of the assistant chief_counsel passthroughs and special industries encl copy for sec_6110 purposes


internal_revenue_service department of the treasury index number washington dc number release date person to contact telephone number refer reply to cc dom p si br 7-plr-114760-98 date oct re request_for_ruling under sec_1362 of the internal_revenue_code legend x d1 dear we received a letter dated written on behalf of x requesting a ruling that x's s_corporation status will be effective as of d1 this letter is in reply to that request facts x incorporated on d1 x's shareholder intended that x be a subchapter_s_corporation from its inception however the s_corporation_election under sec_1362 was not filed timely x requests a ruling that it will be recognized as a subchapter_s_corporation effective d1 pursuant to sec_1362 of the internal_revenue_code law and analysis sec_1362 provides that a small_business_corporation may elect to be an s_corporation sec_1362 provides the rule on when an s election will be effective if an s election is made within the first two and one-half months of a corporation's taxable_year then that corporation will be treated as an s_corporation for the year in which the cc dom p si br 7-plr-114760-98 election is made if an s election is made after the first two and one-half months of a corporation’s taxable_year then that corporation will not be treated as an s_corporation until the taxable_year after the year in which the s election is made sec_1362 provides that if no sec_1362 election is made for any taxable_year and the secretary determines that there was reasonable_cause for the failure to timely make such election then the secretary may treat such an election as timely made for such taxable_year and effective as of the first day of its tax_year x's s_corporation_election was not filed timely for the election to be effective as of its tax_year beginning on d1 nevertheless x has established reasonable_cause for not making a timely election and is entitled to relief under sec_1362 conclusions based solely on the facts submitted and representations made and assuming that x otherwise qualifies as a subchapter_s_corporation as of d1 and x's shareholder makes any adjustments to his personal federal_income_tax returns necessary to comply with this ruling we conclude that x will be recognized as an s_corporation effective d1 x should file a completed form_2553 reflecting its election of subchapter_s_corporation status as of d1 with the applicable service_center within days after issuance of this letter x should attach a copy of this ruling with the form_2553 filed with the applicable service_center 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 except as specifically set forth above no opinion is expressed or implied concerning the federal tax consequences of the facts described above under any other provision of the code specifically no opinion is expressed or implied concerning whether x otherwise satisfies the s_corporation eligibility requirements temporary or final regulations pertaining to one or more of the issues addressed in this ruling have not yet been adopted therefore this ruling will be modified or revoked if the adopted temporary or final regulations are inconsistent with any conclusion in the ruling see section dollar_figure of revproc_98_1 1998_1_irb_7 however when the criteria in section dollar_figure of revproc_98_1 are satisfied a ruling is not revoked or modified retroactively except in rare or unusual circumstances this ruling is directed only to the taxpayer who requested it sec_6110 provides that it may not be used or cited as precedent cc dom p si br 7-plr-114760-98 in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative a copy of this letter must be attached to any income_tax return to which it is relevant sincerely yours joseph h makurath joseph h makurath senior technician reviewer office of the assistant chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes


internal_revenue_service number release date index number ------------------------ --------------------------------- ------------------- -------------------------------- legend department of the treasury washington dc third party communication none date of communication not applicable_person to contact --------------------------- id no ---------------- telephone number ---------------------- refer reply to cc psi b01 plr-106433-17 date july x --------------------------------------------------------- --------------------------------------------------- ------------------------ ----------------------------------- ---------------- --------------------------- ------------------------------------------------- ---------------- -------------------------- ---------------------- -------------------- -------------------------- y a b_trust state date date date date dear ------------- this letter responds to a letter dated date submitted on behalf of x requesting relief under sec_1362 of the internal_revenue_code code plr-106433-17 facts according to the information submitted x was incorporated under laws of state on date and made an election to be treated as an s_corporation effective date the information submitted states that the form_2553 that x filed was not signed by a the income_beneficiary of trust which was a qualified_subchapter_s_trust qsst within the meaning of sec_1361 therefore x's s_corporation_election was ineffective on date a died upon the death of a the x stock was distributed to individuals who were eligible shareholders of x b was the executor of a’s estate and has been appointed as a special administrator with regard to a’s estate to resolve x’s ineffective s_corporation_election on date incident to what was intended to qualify as a reorganization under sec_368 x’s shareholders contributed all of their stock in x to y in exchange for shares in y effective immediately afterwards y made an election to treat x as a qualified_subchapter_s_subsidiary qsub x represents that there was no tax_avoidance or retroactive tax planning involved in the failure of trust to properly execute x's form_2553 x further represents that x and all its shareholders have filed consistently with x having a valid s_corporation as of date x and its shareholders have agreed to make any adjustment that the commissioner may require consistent with the treatment of x as an s_corporation 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 for purposes of subchapter_s the term small_business_corporation means a domestic_corporation which is not an ineligible_corporation and which does not 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 for purposes of sec_1361 a_trust all of which is treated under subpart e of part i of subchapter_j of chapter of the code as owned by an individual who is a citizen or resident_of_the_united_states may be a shareholder plr-106433-17 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 described in sec_1361 and for purposes of sec_678 the beneficiary of such trust shall be 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 may elect to have sec_1361 apply sec_1362 provides that except as provided in sec_1362 a small_business_corporation may elect in accordance with the provisions of sec_1362 to be an s_corporation sec_1362 provides that an s_corporation_election shall be valid only if all persons who are shareholders in such corporation on the day on which such election is made consent to such election sec_1_1362-6 provides that in the case of a_trust described in sec_1361 including a_trust treated under sec_1361 as a_trust described in sec_1361 and excepting an electing small_business trusts described in sec_1361 only the person treated as the shareholder for purposes of sec_1361 must consent to the election sec_1362 provides that if an election under sec_1362 or sec_1361 by any corporation i 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 ii was terminated under sec_1362 or or sec_1361 the secretary determines that the circumstances resulting in such ineffectiveness or termination were inadvertent no later than a reasonable period of time after discovery of the circumstances resulting in such ineffectiveness or termination steps were taken so that the corporation for which the election was made or the termination occurred is a small_business_corporation or a qsub as the case may be or to acquire the required shareholder consents and the corporation for which the election was made or the termination occurred and each person who was a shareholder of the corporation at any time during the period specified pursuant to sec_1362 agree to make the adjustments consistent with the treatment of the corporation as an s_corporation or a qsub as the case may be as may be required by the secretary with respect to this period then notwithstanding the circumstances resulting in such ineffectiveness or termination the corporation shall be treated as an s_corporation or a qsub as the case may be during the period specified by the secretary conclusion based solely on the facts submitted and the representations made we conclude that x's s_corporation_election was ineffective on date we further conclude that the plr-106433-17 ineffectiveness of x's s_corporation_election constituted an inadvertent invalid election within the meaning of f consequently under f we rule that x will be treated as an s_corporation from date through date when x became a qsub provided that x's s election was otherwise valid and not otherwise terminated under d this relief is contingent upon b the executor of a’s estate signing a written_statement as described in b consenting to x's s_corporation_election effective date the written_statement must be filed with the appropriate service_center within days from the date of this letter indicating that the statement is to be associated with x's originally filed form_2553 except as specifically ruled above we express or imply no opinion as to the federal_income_tax consequences of the facts described above under any other provision of the code including whether x was otherwise a valid s_corporation in addition we express or imply no opinion on whether the transactions on date qualified as an f reorganization within the meaning of sec_368 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_ruling will be sent to x's authorized representatives sincerely faith p colson faith p colson senior counsel branch office of associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes cc


department of the treasury washington dc third party communication none date of communication not applicable_person to contact ---------------------- id no ------------ telephone number -------------------- refer reply to cc ita b05 plr-126580-11 date date internal_revenue_service number release date index number -------------------------- ---------------------- ------------------------------------------- ----------------------- --------------------------------- taxpayers ---------------------------- -------------------------------- ein ---------------- year ------- dear ---------------- this ruling is in reference to taxpayers’ request that their form_1128 application to adopt change or retain a tax_year be considered timely filed under the authority in sec_301_9100-3 of the procedures and administration regulations taxpayers’ filed a late form_1128 to change their accounting_period for federal_income_tax purposes from a taxable_year ending november to a taxable_year ending december effective december year revproc_2006_45 2006_2_cb_851 as modified and clarified by revproc_2007_64 2007_2_cb_818 provides procedures for certain corporations to obtain automatic approval to change their annual_accounting_period under sec_442 of the internal_revenue_code a corporation complying with all the applicable provisions of this revenue_procedure will be deemed to have obtained the approval of the commissioner of the internal_revenue_service to change its annual_accounting_period section a of revproc_2006_45 provides that a form_1128 filed pursuant to the revenue_procedure will be considered timely filed for purposes of sec_1_442-1 of the income_tax regulations only if it is filed on or before the time including extensions for filing the return for the short_period required to effect such change the information furnished indicates that taxpayers did not file their form_1128 by the due_date of the return for the short_period required to effect such change and did not request an extension of time to file their return however taxpayers filed their form_1128 under sec_301_9100-3 soon thereafter plr-126580-11 sec_301_9100-3 provides that requests for extensions of time for regulatory elections that do not meet the requirements of sec_301_9100-2 automatic extensions such as the instant case must be made under the rules of sec_301_9100-3 request for relief subject_to 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 the granting of relief will not prejudice the interest of the government based on the facts and information submitted and the representations made we conclude that taxpayers have acted reasonably and in good_faith and that the granting of relief will not prejudice the interest of the government accordingly taxpayers have satisfied the requirements of the regulations for the granting of relief and taxpayers’ late-filed form_1128 requesting to change to a taxable_year ending december effective december year is considered timely filed because a change in period under revproc_2006_45 is under the jurisdiction of the director internal_revenue_service center where taxpayers’ returns are filed we have forwarded the application to the --------------------- utah service_center any further communication regarding this matter should be directed to the service_center this ruling is based upon facts and representations submitted by taxpayers and accompanied by a penalty of perjury statement executed by an appropriate party this office has not verified any of the material submitted in support of the request for a ruling however as part of an examination process the service may verify the factual information representations and other data submitted this ruling addresses the granting of sec_301_9100-3 relief only we express no opinion regarding the tax treatment of the instant transaction under the provisions of any other section of the code or the regulations that may be applicable or regarding the tax treatment of any conditions existing at the time of or effects resulting from the instant transaction specifically we express no opinion as to whether taxpayers are permitted under the code and applicable regulations to change to the tax_year requested in the form_1128 or whether the change may be effected under revproc_2006_45 a copy of this letter must be attached to any income_tax return to which it is relevant alternatively taxpayers filing their returns electronically may satisfy this requirement by attaching a statement to their return that provides the date and control number of the letter_ruling plr-126580-11 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 enclosed is a copy of the letter_ruling showing the deletions proposed to be made when it is disclosed under sec_6110 sincerely william a jackson branch chief branch income_tax accounting office_of_chief_counsel cc


yy internal_revenue_service index number department of the treasury washington dc info person to contact elliot rogers id no telephone number refer reply to cc tege eoeg et1-- plr-116478-04 date n4 o4 dear this letter is in response to your date ruling_request concerning the tax treatment of various expense reimbursements under sec_62 and a a of the internal_revenue_code after reviewing the information submitted mr rogers a member of my office contacted your taxpayer_representative and advised him that we will not be able to issue a ruling in this matter for the following reasons on april the internal_revenue_service has discretionary authority to issue letter rulings when appropriate in the interest of sound tax_administration see revproc_2004_3 sec_2 revproc_2004_1 sec additionally sec_5 of revproc_2004_3 r b provides several areas under extensive study in which rulings or determination letters will not be issued until the service resolves the issue through publication of a revenue_ruling revenue_procedure regulations or otherwise one of these areas of extensive study involves reimbursement arrangements section dollar_figure provides that whether amounts related to a salary reduction and paid under a purported reimbursement or other expense allowance arrangement will be treated as paid under an accountable_plan in accordance with sec_1_62-2 of the income_tax regulations after careful consideration we have determined that your request comes within this area of extensive study accordingly we decline to rule on your request and will refund the user_fee submitted with your request we have submitted a user_fee refund request to our communications records and user_fee unit cru unit the cru unit separately processes this refund we regret any inconvenience our inability to rule in this matter may cause plr- if you have any further questions please feel free to contact mr rogers or me at sincerely joseph w spires assistant branch chief employment_tax branch office of division counsel associate chief_counsel tax exempt government entities cc