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 intl b06 plr-151271-11 date date ty ------- ty ------- legend ---------------------------------------------- ------------ ---------------------------- -------------------------------------- ------------------ ------------------------- --------------------------- ----------------------- ---------------------- taxpayer state accounting firm company individual date date date month dear ---------------- this responds to a letter dated date submitted by accounting firm requesting that the internal_revenue_service service grant taxpayer an extension of time under sec_301_9100-1 and sec_301_9100-3 to file form 4876-a election to be treated as an interest_charge_disc for taxpayer’s first taxable_year the rulings contained in this letter are based upon information and representations submitted by taxpayer and accounting firm and accompanied by penalty of perjury statements executed by appropriate parties this office has not verified any of the materials submitted in support of the request for rulings verification of the information representations and other data may be required as part of the audit process in month accounting firm approached individual an officer of company to discuss the potential benefits of establishing an interest charge domestic international sales facts plr-151271-11 corporation ic-disc as a result of accounting firm’s advice company formed taxpayer on date in state as a calendar_year taxpayer with the intention of electing treatment as an ic-disc taxpayer relied on accounting firm as a long term provider of tax services with the necessary experience to provide ic-disc advice to perform all necessary steps to qualify taxpayer as an ic-disc and file the necessary forms believing all the requirements to conduct business and be treated as an ic-disc for its first taxable_year were satisfied taxpayer began acting as an ic-disc as of its date of formation on date accounting firm filed form 1120-ic-disc on or about date taxpayer received notification from the service of the failure_to_file form 4876-a taxpayer has requested a ruling that grants an extension of time of days from the date of the ruling letter to file form 4876-a and that such filing will be treated as a timely election to be treated as an ic-disc for taxpayer’s first taxable_year law and analysis sec_992 provides that an election by a corporation to be treated as a disc1 shall be made by such corporation for a taxable_year at any time during the 90-day period immediately preceding the beginning of the taxable_year except that the secretary may give his consent to the making of an election at such other times as he may designate temp sec_1_921-1t provides in part that a corporation electing ic- disc status must file form 4876-a a corporation electing to be treated as an ic-disc for its first taxable_year shall make its election within days after the beginning of that year sec_301_9100-1 provides in part that the commissioner in exercising the commissioner's discretion may 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 under all subtitles of the code except subtitles e g h and i sec_301_9100-1 provides that a regulatory election is an election whose due_date is prescribed by a regulation published in the federal_register or a revenue_ruling revenue_procedure notice or announcement published in the internal_revenue_bulletin for this purpose an election includes an application_for relief in respect of tax 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 as used in this letter the terms ic-disc and disc have the same meaning plr-151271-11 extensions must be made under the rules of sec_301_9100-3 requests for relief subject_to sec_301_9100-3 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 that the grant of relief will not prejudice the interests of the government in the present situation the election described in temp sec_1_921-1t 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 standards for relief set forth in sec_301_9100-3 based on the facts and representations submitted with taxpayer's ruling_request we conclude that taxpayer satisfies sec_301_9100-3 accordingly taxpayer is granted an extension of time of days from the date of this ruling letter to file form 4876-a as required by temp sec_1_921-1t such filing will be treated as a timely election to be treated as an ic-disc for taxpayer's first taxable_year the granting of an extension in this ruling letter is not a determination that taxpayer is otherwise eligible to make the election or to claim ic-disc status or benefits see sec_301_9100-1 a copy of this letter_ruling should be filed with the form 4876-a this ruling is directed only to the taxpayer that requested it sec_6110 of the code provides that written determinations may not be used or cited as precedent except as expressly provided herein this ruling neither expresses nor implies any opinion concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this ruling letter 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 ___________________________ christopher j bello branch chief branch office of associate chief_counsel international cc


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 intl plr-100003-07 date date ----------------------------------------- ------------------------------------------ ------------------------------------------ ------------------------------------------ ------------------------------------------------ taxpayer ----------------------------------------------------------------------------- entity year year year year year country a cpa firm --------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------- dear ------------- this is in response to a letter dated date requesting an extension of time under sec_301_9100-3 to file elections under sec_1 g i or sec_1_1503-2t g i as applicable elections and annual ------------------------------------------ ------------------------------------------ ----------- in re plr-100003-07 certifications under sec_1_1503-2 or sec_1 2t g vi b as applicable annual certifications for year sec_1 through with respect to dual consolidated losses attributable to taxpayer’s interest in entity incurred in year sec_1 through 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 the interest in entity is a hybrid_entity_separate_unit as described in sec_1_1503-2 dual consolidated losses attributable to the interest in entity were incurred in year sec_1 through taxpayer has a limited tax staff with limited u s international tax expertise and no international tax director or manager parent engaged cpa firm to provide u s federal_income_tax advice in connection with the acquisition and financing of its country a operations cpa firm provided such advice which included a discussion of the elections and annual certification statements required in addition for each of taxpayer’s tax_year sec_1 through taxpayer prepared and engaged cpa firm to review its u s federal consolidated_income_tax_return the scope of taxpayer’s engagement with cpa firm specifically covered the identification of any necessary elections and statements required in connection with taxpayer’s international activities cpa firm failed to discover that taxpayer inadvertently omitted the elections for the losses_incurred in year sec_1 through and annual certifications that should have been filed with respect to those losses in year sec_2 through sec_301_9100-1 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 in re plr-100003-07 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 elections and annual certifications are regulatory elections 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 to make these filings provided that taxpayer satisfies the rules set forth in sec_301_9100-3 based on the facts and information submitted we conclude that taxpayer satisfies sec_301_9100-3 accordingly taxpayer is granted an extension of time of days from the date of this ruling letter to file the elections with respect to the dual consolidated losses attributable to the interest in entity incurred in year sec_1 through and an extension of time to file the corresponding for annual certifications for year sec_2 through the granting of an extension of time is not a determination that taxpayer is otherwise eligible to file the elections and annual certifications sec_301_9100-1 a copy of this ruling letter should be associated with the elections and annual certifications that are the subject of this ruling 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 pursuant to a power_of_attorney on file in this office a copy of this ruling letter is being furnished to taxpayer’s authorized representatives enclosure _______________ john j merrick special counsel office_of_chief_counsel international sincerely


office_of_chief_counsel internal_revenue_service memorandum number release date cc intl b7 mjlew pocat-137199-04 uilc date december to mary moore senior associate advocate philadelphia irs campus from ricardo a cadenas branch chief br associate chief_counsel international subject american samoa -- social_security withholding in re -------------- this chief_counsel_advice responds to your request for assistance this advice may not be used or cited as precedent legend taxpayer -------------- issue sec_1 under what provision s of the internal_revenue_code should the taxpayer’s social_security_benefits be taxed whether the social_security administration should withhold tax at the rate of percent on the taxpayer’s social_security_benefits is the taxpayer entitled to a refund of the percent tax withheld pocat-137199-04 conclusions as a preliminary matter the responses to issue sec_1 and above depend on whether or not the taxpayer is a bona_fide_resident of american samoa under sec_931 if the taxpayer is a bona_fide_resident of american samoa then his social_security income would be taxed under sec_86 in accordance with sec_1 and on the other hand if he is not a bona_fide_resident of american samoa and is not a u s citizen or a u s national then he would be taxed as a nonresident_alien under sec_871 if the taxpayer is a nonresident_alien for purposes of sec_1441 regardless of whether or not he is a bona_fide_resident of american samoa his social_security_benefits would be subject_to_withholding under sec_1441 and the regulations thereunder since the taxpayer is a citizen of western samoa and not a citizen_of_the_united_states or a u s national of american samoa the social_security administration properly withheld tax on the taxpayer’s social_security payments at the rate of percent in accordance with sec_1441 if the taxpayer is a bona_fide_resident of american samoa filing a return with the irs he would be entitled to a refund of the percent tax withheld provided he does not have other income that makes his benefits taxable under sec_86 if he is not a bona_fide_resident of american samoa then he would be considered a nonresident_alien for purposes of sec_871 and he would not be entitled to a refund of the percent tax withheld since the tax on the social_security_benefits of a nonresident_alien would likely equal the amount withheld of percent under sec_871 unless he had offsetting deductions facts this refers to your request for our advice regarding how to process a return filed by the taxpayer who is a citizen of western samoa claiming to be a bona_fide_resident of american samoa the taxpayer is seeking a refund for taxes withheld at the percent rate by the social_security administration ssa on his social_security_benefits the facts provided to our office are as follows the taxpayer is a citizen of western samoa but claims that he is a bona_fide_resident of american samoa he is retired and is receiving social_security_benefits the ssa has been withholding percent tax on his social_security income as a nonresident_alien under sec_1441 the taxpayer has filed a return with the irs reporting all his social_security income and claiming a refund of the percent tax withheld you requested our opinion as to whether the irs should allow the refund sec_931 was amended by the american job creations act of p l which added sec_937 residence and source_rules relating to united_states_possessions sec_937 is effective for taxable years beginning and sec_937 is effective for taxable years beginning pocat-137199-04 law and analysis issue the provision s of the internal_revenue_code under which the social_security_benefits are taxed with regard to nonresident_aliens sec_871 is the applicable_section of the internal_revenue_code under which social_security_benefits received by such individuals are taxed sec_871 contains specific provisions on taxation of social_security_benefits and that subsection refers to sec_1441 which provides for percent withholding on income of nonresident_alien individuals sec_871 provides as follows taxation of social_security_benefits -for purposes of this section taxation of nonresident_aliens and sec_1441 withholding of tax on nonresident_aliens - a percent of any social_security_benefit as defined in sec_86 shall be included in gross_income and b sec_86 shall not apply the facts presented to our office however indicate that the taxpayer claims to be a bona_fide_resident of american samoa if the taxpayer is in fact a bona_fide_resident of american samoa then his social_security_benefits would be taxed under sec_1 and in accordance with sec_876 sec_876 provides as follows general_rule -this subpart tax on nonresident_aliens shall not apply to any alien individual who is a bona_fide_resident_of_puerto_rico guam american samoa or the northern mariana islands during the entire taxable_year and such alien shall be subject_to the tax imposed by sec_1 sec_1 provides for the imposition of tax on income at graduated rates sec_86 contains specific provisions on taxation of social_security_benefits sec_86 provides that gross_income includes social_security_benefits and the taxable_portion is discussed in detail in that section therefore with respect to an individual who is a bona_fide_resident of american samoa the applicable internal_revenue_code sections under which his social_security_benefits will be taxed are sec_1 and and not sec_871 sec_876 is applicable to american samoa but not to guam or the northern mariana islands until an implementing agreement as contemplated by the tax_reform_act_of_1986 p l is in effect between the united_states and those two possessions pocat-137199-04 issue withholding of the taxpayer’s social_security_benefits at the percent rate under sec_1441 the ssa withheld tax on the taxpayer’s social_security_benefits at the rate of percent this would be appropriate under sec_1441 if the taxpayer is considered to be a nonresident_alien for purposes of sec_1441 it is likely that the ssa withheld tax at the rate of percent for the taxpayer because he is a citizen of western samoa and not a citizen_of_the_united_states or a u s national of american samoa sec_1_1441-1 defines a nonresident_alien_individual as including an alien individual who is a resident of puerto rico guam the commonwealth of northern mariana islands the u s virgin islands or american samoa as determined under sec b -1 d of this chapter sec_301_7701_b_-1 refers to sec_931 and the regulations thereunder for the determination of whether an individual is a bona_fide_resident of american samoa thus the regulations under sec_1441 appear to treat a bona_fide_resident of american samoa as a nonresident_alien for purposes of sec_1441 if he is not a u s citizen or a u s national even though he is not subject_to tax_liability under sec_871 consequently the taxpayer’s social_security_benefits are subject_to_withholding at the rate of percent under sec_1441 issue whether the taxpayer is entitled to a refund of the percent tax withheld as discussed above if the taxpayer is a bona_fide_resident of american samoa during the entire taxable_year his social_security_benefits are taxable under sec_1 and and there would be no substantive tax_liability under sec_871 the taxpayer must file a return with the irs as social_security_benefits are considered to be u s source income under sec_861 even if none of the services were performed in the u s consequently in the case of a bona_fide_resident of american samoa the social_security_benefits would not be excludable from gross_income under sec_931 and the benefits would be subject_to tax under sec_86 the taxpayer as a bona_fide_resident of american samoa would be entitled to a refund of the percent tax withheld provided he does not have other income that makes his benefits taxable under sec_86 if he is not a bona_fide_resident of american samoa and therefore considered as a nonresident_alien for purposes of sec_871 then he would not be entitled to a refund of the percent tax withheld since the tax on his social_security_benefits under sec_871 would likely equal the amount withheld of percent unless he had otherwise offsetting deductions case development hazards and other considerations --------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- pocat-137199-04 --------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- 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unauthorized disclosure of this writing may undermine our ability to protect the privileged information if disclosure is determined to be necessary please contact this office for our views please call --------------------- if you have any further questions


t c summary opinion united_states tax_court marilyn stringham a k a marilyn olsen petitioner and forrest bird intervenor v commissioner of internal revenue respondent docket no 22346-03s filed date marilyn stringham pro_se forrest bird pro_se inga c plucinski for respondent couvillion special_trial_judge this case was heard pursuant to sec_7463 in effect when the petition was filed 1unless otherwise indicated subsequent section references are to the internal_revenue_code in effect for the year at issue and all rule references are to the tax_court rules_of_practice and procedure the decision to be entered is not reviewable by any other court and this opinion should not be cited as authority respondent determined a deficiency of dollar_figure in petitioner’s federal_income_tax for the year petitioner does not challenge the deficiency this case arises from petitioner’s election to seek relief from joint_and_several_liability for federal_income_tax for the year under sec_6015 c and f respondent determined that petitioner is not entitled to relief the sole issue for decision is whether petitioner is entitled to relief under sec_6015 c and f some of the facts were stipulated those facts with the exhibits annexed thereto are so found and made part hereof petitioner’s legal residence at the time the petition was filed was altamont utah during the year at issue petitioner was married to forrest bird intervenor petitioner and intervenor were married in each had been married previously petitioner has three sons from her prior marriage and intervenor has one son and one daughter from his prior marriage all the children were grown and living outside their parent’s home during the year at issue petitioner and intervenor separated in date and their divorce was finalized on date petitioner is a licensed practical nurse lpn she received her training at weaver state college and is currently an administrative assistant at uintah basin medical center in roosevelt utah the record does not reflect whether petitioner was an administrative assistant during the year at issue however she testified that she has been continually employed in the medical field since she received her lpn degree in during intervenor was employed by the county as a truck driver from until intervenor was employed as a crude_oil transport driver with chevron however he exercised an early retirement option in when chevron was in the process of a cost reduction in its activities petitioner and intervenor filed their joint federal_income_tax return timely they failed to include as income on that return several withdrawals totaling dollar_figure from intervenor’s merrill lynch individual_retirement_account ira on date separate notices of deficiency were issued to petitioner and intervenor in which respondent determined a deficiency of dollar_figure in federal_income_tax for the year based on the failure of petitioner and intervenor to include the ira withdrawals in income petitioner thereafter filed a timely petition in this court after the petition was filed petitioner filed form_8857 request for innocent spouse relief on date that request was subsequently denied petitioner’s sole position is that she is entitled to relief from joint liability under sec_6015 respondent pursuant to rule and 115_tc_118 served notice of this proceeding on intervenor intervenor filed a notice of intervention on date and he testified at the trial to object to the relief sought by petitioner intervenor has conceded the deficiency determination in his intervention and at trial intervenor testified that petitioner knew of the ira withdrawals during the year at issue because they were deposited in their joint bank account and used for home improvements debts and a downpayment on a car for petitioner except as otherwise provided in sec_6015 petitioner bears the burden_of_proof rule a 119_tc_306 affd 101_fedappx_34 6th cir generally spouses filing joint federal_income_tax returns are jointly and severally liable for the taxes due thereon sec_6013 under certain circumstances however sec_6015 provides relief from this general_rule sec_6015 applies to any liability for tax arising after date and to any liability for tax arising on or before date but remaining unpaid as of such date internal_revenue_service sec_6015 was enacted as part of the internal_revenue_service restructuring and reform act of rra publaw_105_206 112_stat_734 prior to the enactment of sec_6015 relief from the imposition of joint_and_several_liability for spouses filing joint returns was available under sec_6013 restructuring and reform act of publaw_105_206 112_stat_740 sec_6015 provides three avenues for relief to a taxpayer who has filed a joint_return sec_6015 allows relief for understatements of tax attributable to certain erroneous items on the return sec_6015 provides relief for a portion of an understatement_of_tax for taxpayers who are separated or divorced and sec_6015 more broadly confers on the secretary discretion to grant equitable relief for taxpayers who otherwise do not qualify under sec_6015 or c the first avenue for relief is sec_6015 under sec_6015 the court may grant a taxpayer full or apportioned relief from joint_and_several_liability for an understatement_of_tax on a joint_return if among other requirements the taxpayer establishes that he did not know and had no reason to know that the other spouse understated that spouse’s tax_liability on the return sec_6015 b intervenor had a merrill lynch account with chevron but transferred the balance into a separate ira when he left chevron 3neither respondent nor intervenor dispute that in this case the requirements of subparagraphs a b and e of sec_6015 have been satisfied the dispute is whether petitioner meets the requirements of subparagraphs c and d of sec_6015 intervenor testified that he made several withdrawals from this ira throughout the year at issue he used these withdrawals for various purchases including remodeling the home where he and petitioner resided the home had been acquired by petitioner prior to her marriage with intervenor and both wanted to make some changes and make it our own intervenor also testified he used part of one withdrawal for a downpayment on a car for petitioner and gave a few cash gifts to his individual children totaling approximately dollar_figure he also paid some of their bills intervenor further testified that petitioner knew of the withdrawals because they discussed them together and he deposited the money into their joint bank account whenever he made a new withdrawal records from petitioner and intervenor’s joint bank account show several almost weekly deposits ranging from dollar_figure to dollar_figure throughout the year in question finally at trial petitioner admitted she was aware of at least some of intervenor’s ira withdrawals when asked at trial if she was aware of where intervenor deposited the money he withdrew from his ira petitioner stated he put some money in our checking account for remodeling our home and things like that i was aware of that part in fact petitioner’s testimony establishes knowledge on her part that intervenor was withdrawing money from his ira regularly acknowledging i just assumed the money came from merrill lynch her testimony leads the court to believe that her reasoning for requesting relief was solely because intervenor would sometimes withdraw money from his ira and give it directly to his individual children without consulting her or informing petitioner although petitioner may not have known the exact amount intervenor withdrew from his ira during the year at issue she readily admitted she knew that withdrawals were made and deposited into their joint bank account petitioner and intervenor testified that their federal_income_tax return was prepared by a commercial tax preparation service h_r block both parties signed the return therefore petitioner had reason to know that the return she signed contained a substantial_understatement thus petitioner is not entitled to relief under sec_6015 the second avenue for relief is sec_6015 sec_6015 affords proportionate relief to the requesting spouse through allocation to the responsible_party generally this avenue of relief allows a spouse to elect to be treated as if a separate_return had been filed rowe v commissioner tcmemo_2001_325 to be eligible for relief under sec_6015 the requesting spouse must no longer be married to or must be legally_separated from the individual with whom the tax_return was filed and must have elected the applicability of sec_6015 not later than years after the date on which collection activity began sec_6015 furthermore relief under sec_6015 is not available to a taxpayer if it is shown that the taxpayer had actual knowledge when signing the return of any item giving rise to a deficiency sec_6015 as previously discussed petitioner is divorced from intervenor and the divorce was finalized before she requested relief from joint_and_several_liability also she filed a timely form_8857 to request relief therefore the remaining requirement petitioner is required to meet to be eligible for relief under sec_6015 is to prove she had no actual knowledge of the income item leading to the underpayment the court has held that petitioner not only had reason to know of the understatement but also she had actual knowledge of at least part of the item intervenor’s early ira withdrawals giving rise to the understatement because petitioner had actual knowledge of intervenor’s ira withdrawals she is precluded from claiming relief under sec_6015 because petitioner is not eligible for relief under sec_6015 and c she falls under the equitable relief provision of sec_6015 sec_6015 provides in part that a taxpayer may be relieved from joint_and_several_liability if it is determined that taking into account all the facts and circumstances it is inequitable to hold the taxpayer liable for the unpaid tax and relief is not available under sec_6015 or c to prevail petitioner must prove that respondent’s denial of equitable relief from joint liability under sec_6015 was an abuse_of_discretion 118_tc_106 affd 353_f3d_1181 10th cir 115_tc_183 affd 282_f3d_326 5th cir 114_tc_276 sec_6015 provides sec_6015 equitable relief --under procedures prescribed by the secretary if-- taking into account all the facts and circumstances it is inequitable to hold the individual liable for any unpaid tax or any deficiency or any portion of either and relief is not available to such individual under subsection b or c the secretary may relieve such individual of such liability as directed by sec_6015 the commissioner has prescribed guidelines in revproc_2003_61 2003_2_cb_296 modifying revproc_2000_15 2000_1_cb_447 that are to be used in determining whether it is inequitable to hold a requesting spouse liable for all or part of the liability for any unpaid tax or deficiency the requesting spouse must satisfy 4rev proc 2000_1_cb_447 was superseded by revproc_2003_61 2003_2_cb_296 and is effective as to requests for relief filed on or after date and also is effective continued seven conditions threshold conditions before the commissioner will consider a request for relief under sec_6015 revproc_2003_61 supra respondent agrees that petitioner has satisfied those threshold conditions where as here the requesting spouse satisfies the threshold conditions revproc_2003_61 sec_4 c b pincite lists factors to be considered in determining whether to grant equitable relief therefore the court considers the factors in revproc_2003_61 sec_4 a and b in determining whether respondent abused his discretion in denying equitable relief under sec_6015 in this case petitioner satisfies only one of the factors listed in the revenue_procedure petitioner divorced intervenor in therefore she satisfies the first factor with respect to the second factor petitioner must show that she would be unable to pay basic reasonable living_expenses if relief were not granted monsour v commissioner tcmemo_2004_190 being unable to pay basic reasonable living_expenses would amount to economic hardship sec_301_6343-1 proced admin continued for requests for relief pending on date as to which no preliminary determination_letter had been issued as of that date petitioner’s application_for relief was filed after date on date 5the court need not consider revproc_2003_61 sec_4 c b pincite since that section relates to underpayments regs petitioner has not alleged that denial of her request for relief would result in economic hardship she is gainfully_employed and has no dependents to support the court fails to see and petitioner has not established that she would suffer economic hardship if her request for relief from joint liability were denied as to the third factor as discussed earlier petitioner had actual knowledge that intervenor was making early ira withdrawals therefore petitioner knew when she signed her joint_return for the year at issue that there was an understatement_of_tax since these withdrawals were not included as income revproc_2003_61 specifically states that actual knowledge by the requesting spouse of the item giving rise to the deficiency is a strong factor weighing against relief this strong factor may only be overcome if the factors in favor of equitable relief are particularly compelling the fourth and sixth factors are neutral there was no legal_obligation on either party to pay for the liability for the year at issue and there is no evidence that petitioner either failed to comply with or fully complied with tax obligations 6in determining whether petitioner complied or failed to comply with tax obligations the court notes that petitioner did not allege she suffered any abuse mental or physical from intervenor in addition petitioner presented no evidence that she was in poor mental or physical health either when she signed the return or when she filed her request for relief petitioner also fails to satisfy the fifth factor because although the early ira withdrawals from which the liability arises are directly attributable to intervenor petitioner received a significant benefit from the items giving rise to the deficiency this benefit goes beyond that of normal support at least a portion of the money intervenor withdrew from his ira was deposited into their joint bank account although intervenor testified that he used at least dollar_figure of the money he withdrew to assist his son with purchasing a home he also testified that part of the money was used to remodel his and petitioner’s home also intervenor withdrew dollar_figure from his ira for a downpayment on a new car for petitioner the failure of petitioner to satisfy all but one of the factors in revproc_2003_61 is determinative on these facts and circumstances the court holds that there was no abuse_of_discretion by respondent in denying relief to petitioner under sec_6015 the court therefore sustains that denial reviewed and adopted as the report of the small_tax_case division decision will be entered for respondent


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 b03 plr-148544-08 date date internal_revenue_service number release date index number ---------------------------- ------------ ------------------------------ ------------------------------- ------------------------------------- ---------------------------------- ty ------- ty ------- legend ------------------------------ ------------- ------------- ------------------------------------------------------------------------------------------ taxpayer state1 state property ------------------------------------------------------------------------------------------------------------ project_area authority act city corporation subsidiary x y fund ---------------------- ----------------------------------- ---------------------------- ------------------- ----------------------------------------------------------------- --------------------------------------------------------- ----- -- ---------------------------------- dear -------------- this responds to your request of -------------------------- for a private_letter_ruling that certain payments in_lieu_of_taxes pilot are deductible under sec_164 of the internal_revenue_code as real_property_taxes under the circumstances described below facts the facts are represented to be as follows taxpayer is a limited_liability_company created and existing under the laws of state for the purpose of constructing a mixed-use building on the property the authority is a public benefit corporation plr-148544-08 created by the legislature of state the authority was created for the purposes of financing constructing and operating a planned community development in the project_area the legislative purpose was set forth in the act as follows t he creation in such area in cooperation with the city and the private sector of a mixed commercial and residential community with adequate utilities systems and civic and public facilities such as schools open public spaces recreational and cultural facilities is necessary for the prosperity and welfare of the people of the city and of state as a whole and is a public use and public purpose for which tax exemptions may be granted t he creation of the authority and the carrying out of its corporate purposes is in all respects for the benefit of the people of and is a public purpose and the authority shall be regarded as performing a governmental function in the exercise of the powers conferred upon it and shall be required to pay no taxes upon any of the properties acquired by it or under its jurisdiction or control or supervision or upon its activities thus under the authority’s founding legislation the authority is exempt from real_property_taxes on property in the project_area the project_area was originally owned by city which leased the project_area to the authority this master lease incorporates a master_plan which governs the development of the project_area corporation is an agency of state in order to expedite development of the project_area corporation exercised its power of eminent_domain to acquire fee simple absolute title to the project_area subject_to the lease above subsequently corporation conveyed title to subsidiary subject_to the master lease the subsidiary then conveyed fee simple absolute title to the authority however pursuant to the terms of the deed and the master lease there was no merger of the fee estate in the project_area and the leasehold estate created by the master lease even though the authority became both landlord and tenant under the master lease at the time of the original acquisition of the project_area by the corporation city was granted the right to reacquire for a nominal sum all rights of corporation subsidiary and the authority in the project_area as well as the net assets of the authority once the authority or city repays all indebtedness incurred in respect of the project_area the act provides that each sublease of a parcel in the project_area that is to be improved with housing shall provide for the payment to the authority of the applicable_amount of tax equivalency payments these tax equivalency payments are required by the act that created the authority which provides plr-148544-08 if the underlying parcel is exempt from real_property_taxes the residential lease for such underlying parcel shall provide for the payment by the owner of such residential lease to the authority of annual or other periodic amounts equal to the amount of real_property_taxes that otherwise would be paid or payable with respect to such underlying parcel after giving effect to any real_property tax abatements and exemptions if any which would be applicable thereto if statutory provisions exempting the property from real_property_taxes were not applicable to such underlying parcel if the city reacquires the project_area it will be required to impose tax equivalency payment obligations the tax equivalency payments that apply to the type of housing that taxpayer is constructing in the project_area is the amount equal to the product of the assessed value of the parcel and any improvements thereon multiplied by the applicable real_property tax_rate in city less the amount of any_tax exemptions or abatements that would be available if the fee were not owned by a tax exempt entity the authority leases land in the project_area the property to taxpayer under a site lease for a period coterminous with the master lease the site lease requires taxpayer to construct a building containing approximately x residential units and y commercial units on the property taxpayer intends to subject its leasehold estate in the property to condominium ownership under state law and to assign to condominium purchasers leasehold interests in the apartment units and proportionate individual leasehold interests in the common elements of the building under the condominium laws of state once any part of the project_area becomes subject_to condominium ownership the unit owners are deemed to be the owners of the parcel the property in which such units are included and the unit owners are personally liable for taxes assessed against such parcel the law requires common expenses to be charged to the unit owners according to their respective common interests the master lease provides that the sublease of the property which is to be improved with housing shall provide for the payment to the authority of a specified rent plus the applicable_amount of tax equivalency payments the site lease provides that the common charges include a rental payment part of which is pilot the amount of pilot is equal to the tax equivalency payments as defined and adjusted in the site lease after the property is converted to condominium ownership a board_of managers designated or elected by unit owners will administer the affairs of the condominium including the determination of common charges the common charges will be payable by each unit owner to the board_of managers the board_of managers in turn is required to pay the rent due under the site lease to the authority plr-148544-08 the master lease and the site lease thus provide the collection vehicles for the tax equivalency payment and corresponding pilot obligations which are however authorized and imposed under specific statutory authority authority will commingle pilot with other monies it receives from the project_area authority may disburse the funds for the following purposes a to meet the debt service on bonds issued by the authority the proceeds of which have been and will be used to construct the above described municipal facilities and services in the project_area b to maintain the various reserves and sinking funds to be maintained under the authority’s bond resolution and c to pay the authority’s operating and administrative expenses any remaining funds will be transferred to the fund the fund was established solely for the purpose of paying city the rent required under the original lease between the city and the authority as part of a settlement agreement city and corporation assigned to the authority all their rights to receive payments from the fund accordingly although the master lease requires a tenant to pay the landlord as additional rent the excess of all revenues derived by the authority from the project_area over all obligations incurred with respect to the project_area for the preceding fiscal_year notwithstanding the present capacity of the authority as both landlord and tenant under the master lease the assignment to the authority of the right to receive payment from the fund results in all revenue from the project_area remaining with the authority in its capacity as tenant under the master lease under the master lease the authority as tenant may not use the funds derived from the project_area for any purposes except as contemplated by the master lease or with respect to the project_area accordingly all of the authority's revenues including the tax equivalency payments must be used in furtherance of the authority's statutorily declared public purpose rulings requested that the pilot payments that pursuant to the site lease are to be made to the authority or to city should it reacquire the project_area will constitute real_property_taxes allowable as a deduction to the payor under sec_164 of the code that following taxpayer’s submission of the leasehold estate in the property to condominium ownership the unit owners will be entitled to deduct as real_property_taxes under sec_164 of the code that portion of the common charges paid_by them plr-148544-08 to the board_of managers as applied by the board_of managers towards the pilot obligations a taxpayer may not rely on a private_letter_ruling that has been issued to another taxpayer section dollar_figure of revproc_2009_1 2009_1_irb_47 therefore a private_letter_ruling addresses only the tax_liability of taxpayers who are party to the ruling_request however taxpayer will be the owner of all units in the condominium from the time its interest in the property is submitted to condominium ownership until the units are sold and as such will be liable for pilot until the units are sold we consider taxpayer’s second ruling_request in that context law and analysis sec_164 of the code allows as a deduction the state local and foreign real_property_taxes paid_or_accrued in the taxable_year sec_1_164-3 of the income_tax regulations defines real_property_taxes as taxes imposed on interests_in_real_property that are levied for the general_public welfare assessments for local benefits are not treated as real_property_taxes see sec_1_164-4 the regulations whether a particular charge is a tax within the meaning of sec_164 depends on its true nature as determined under federal_law the designation given by local law is not determinative a charge will constitute a tax if it is an enforced contribution exacted pursuant to legislative authority in the exercise of the taxing power and imposed and collected for the purpose of raising revenues to be used for public or governmental purposes revrul_71_49 1971_1_cb_103 revrul_61_152 1961_2_cb_42 revrul_71_49 involved tax equivalency payments to the new york city educational construction fund a public benefit corporation by a cooperative_housing_corporation the payments were applied to debt service on obligations funding public school construction the ruling holds that the cooperative_housing_corporation may deduct the payments as real_property_taxes under sec_164 because the payments are measured by and are equal to the amounts imposed by the regular taxing statutes the payments are imposed by a specific state statute even though the vehicle of a lease agreement is used and the proceeds are designated for a public purpose rather than for some privilege service or regulatory function or for some other local benefit tending to increase the value of the property upon which the payments are made accordingly each tenant-stockholder of the cooperative_housing_corporation may deduct the payments in the amount of the stockholder's proportionate share the pilot obligations in this case also satisfy the three-prong test of rev_rul pilot are imposed at the same general rate at which real_property_taxes are imposed pilot are imposed by state statute although the law uses the vehicle of leasing agreements and pilot may only be used by the authority for public plr-148544-08 purposes including debt service of bonds issued to construct municipal facilities and services and payment of operating and administrative expenses accordingly we hold as follows the pilot payments to be made pursuant to the site lease to the authority or to city should it reacquire the project_area constitute real_property_taxes allowable as a deduction to the payor under sec_164 of the code following the submission of the leasehold estate in the property to condominium ownership the taxpayer as the unit owner will be entitled to deduct as real_property_taxes under sec_164 of the code that portion of the common charges paid_by it to the board_of managers as applied by the board_of managers towards the pilot obligations except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter this ruling is directed only to the taxpayer requesting it sec_6110 of the code provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representatives 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-148544-08 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 christopher f kane branch branch chief income_tax accounting


department of the treasuryz0012109031 internal_revenue_service washington d c contact person id number contact number ted by uil nos date apr legend c f m s dear sir or madam this is in reply to your letters of january and date requesting approval of your scholarship grant procedures under sec_4945 of the internal_revenue_code you f are exempt from federal_income_tax under sec_501 of the code and are a private_foundation under sec_509 of the code your scholarship program s provides scholarship grants for children of employees of company c mm the administrator of your scholarship program is an organization exempt from federal_income_tax under sec_501 of the code which is not a private_foundation under sec_509 of the code your scholarship program will not be used as an inducement to serve the employer c or the private your grantees will be selected by persons totally independent except for participation on foundation f this selection committee of the private_foundation its organizer and the employer concerned eligible applicants to be considered by the independent selection committee will be persons who meet the standards for such grant and can reasonably be expected to use the grant if selected eligibility is conditioned upon at least one year of employment grantees will be selected by objective standards that are unrelated to the employer's business renewal of a grant will not be denied because any person is no longer employed with the employer grantees will not be limited to courses that serve to benefit the employer or the foundation the grants are for enabling the recipients to obtain an education in their individual capacities solely for their personal benefit and will not include any understandings suggesting that the studies are for the benefit of any purpose of the employer or foundation the annual number of grants to these children of employees will not exceed percent of the number of employees’ children who were eligible were applicants for such grants and were considered by the selection committee in that year alternatively the annual number of grants will not exceed percent of the number of employees‘ children who can be shown to be eligible for such grants in that year whether or not they submitted an application_for purposes of these percentage tests renewals of grants awarded in prior years are not considered in determining the number of grants awarded in a current_year you will ensure compliance with the percentage tests under revproc_76_47 described below in the aggregate with respect to your other scholarship programs if any available to the same individuals your scholarship grant checks will be endorsed by both the grantee and the grantee's educational_organization sec_501 of the code provides in pertinent part for the exemption from federal_income_tax of nonprofit_organizations organized and operated for charitable and or educational_purposes sec_509 of the code provides that an organization exempt under sec_501 is further is not a financially publicly supported is not a supporting_organization classified as a private_foundation under sec_509 if organization as described in sec_509 or sec_509 and if described in sec_509 it it sec_4945 of the code imposes in pertinent part an excise_tax upon any private foundation's making of a taxable_expenditure as defined by sec_4945 of the code sec_4945 of the code provides that a taxable_expenditure includes any grant made by a private_foundation to an individual for study if the private_foundation has not obtained from the service advance approval of its procedures for making such grant under sec_4945 of the code sec_4945 of the code provides that a taxable_expenditure under sec_4945 of the code does not include a grant to an individual for study if the grant is made under a procedure approved in advance by the internal_revenue_service constitutes a scholarship under sec_117 of the code as in effect on the day before the tax reform act of date and is to be used for study at an educational_organization under sec_170 of the code sec_170 of the code refers to an educational_organization which normally maintains a regular faculty and curriculum and normally has a regularly enrolled body of pupils or students in attendance at the place where its educational activities are regularly carried on sec_170 of the code describes exclusively charitable and educational_purposes sec_53_4945-4 of the foundation and similar excise_taxes regulations requires that grantees under sec_4945 of the code must be selected on an objective and non-discriminatory basis the group of eligible grantees must be broad enough to enable the giving of the grants to achieve an exempt_purpose the criteria for selection of grantees must be related to the exempt_purpose of the grant the persons selecting the grantees must not be in a position to derive a private benefit directly or indirectly if certain potential grantees are selected over others sec_53_4945-4 of the regulations provides that at least once per year the private_foundation must obtain a reporting verified by the educational_institution on the grantee's progress for each academic period f sec_53_4945-4 of the regulations provides that if grantee reports submitted or other information including failure to submit reports indicate that any part of a grant is not being used for purposes of the grant the grantor foundation is under a duty to investigate and while conducting its investigation must withhold further payments the grantor's reasonable steps to recover misused grant funds must include legal action where appropriate unless legal action would not in all probability result in satisfaction of execution on the judgment sec_53_4945-4 of the regulations provides that the annual report under sec_53_4945-4 and the duty to investigate under sec_53_4945-4 of the regulations can also be met if the grantor pays the scholarship grant under sec_4945 of the code to the grantee's educational_institution which agrees to use the grant funds only if the grantee is enrolled at such educational_institution and the grantee's standing is consistent with the purposes and conditions of the grant sec_53_4945-4 of the regulations provides that the grantor private_foundation must retain adequate_records on all of its grants to individuals for study or similar purposes under sec_4945 of the code such records include all information which the foundation secures to evaluate the qualifications of potential grantees identification of all grantees including any relationship of a grantee to the grantor foundation sufficient to assure that such grantee is not a disqualified_person under sec_4946 of the code specification of the amount and purpose of each grant and the follow-up information which the grantor obtains from the grantees under sec_53_4945-4 and sec_53_4945-4 of the regulations cited above sec_53_4945-4 of the regulations provides that if by the 45th day after a request for approval of grant procedures has been properly submitted to the internal_revenue_service the private_foundation has not been notified that its grant-making procedures are not acceptable its grant-making procedures shall be considered as approved from the date of submission of its request for approval until receipt of actual notice from the intemal revenue service that such procedures do not meet the requirements of sec_4945 of the code revproc_76_47 1976_2_cb_670 provides eight guidelines to assure that a private foundation's employer-related scholarship program is operated to meet sec_4945 and sec_117 of the code the scholarship program must not be used to serve the ‘employer or the private foundation for example as an employment or recruitment inducement grant recipients must be selected by persons who are totally independent except for participation on this selection committee of the private_foundation its organizer and the employer concerned the number of grantees may not be increased from the number recommended by the selection committee under revproc_81_65 1981_2_cb_690 any announcement of grantees in an employer newsletter must make it clear that the grants are awarded by the foundation not the employer eligible applicants to be considered by the independent selection committee must be persons who meet the standards for the grants and who can reasonably be expected to use the grant if selected eligibility for a grant cannot be conditioned on any more than three years of employment business grantees must be selected by objective standards unrelated to the employer's renewal of a grant must not be denied because any person is no longer employed with the employer grantees must not be limited to courses that serve to benefit the employer or the foundation the grants must be consistent with enabling the recipients to obtain an education in their individual capacities solely for their personal benefit and must not include any understandings suggesting that the studies are for the benefit of any purpose of the employer or foundation under the percentage_test for grants to children of employees the annual number of grants must not exceed percent of the number of employees’ children who were eligible were applicants for such grants and were considered by the selection committee in that year under later revproc_94_78 1994_2_cb_833 rounding may be used where this percentage_test results in a quotient of or more plus a fraction of or more so that for example in the cases of or applicants divided by the percent test the resulting quotients of and dollar_figure can be rounded up to allowable grantees rather than only alternatively the annual number of grants must not exceed percent of the number of employees’ children who can be shown to be eligible for such grants in that year whether or not they submitted an application under revproc_85_51 1985_2_cb_717 this test requires an actual questionnaire or survey to determine eligible children rather than any statistical inference as the number of eligible children of employees for purposes of these percentage tests renewals of grants awarded in prior years are not considered in determining the number of grants awarded in a current_year compliance with the percentage tests must be in the aggregate with respect to any other scholarship programs made available by the empioyer or foundation to the same eligible individuals ol in your case you have specifically represented that you will meet all of the guidelines of revproc_76_47 based upon the information you submitted and assuming your program will be conducted as proposed with a view to providing objectivity and nondiscrimination in the awarding of grants we rule that your procedures in the awarding of scholarship grants comply with the requirements of sec_4945 of the code expenditures made in accordance with these procedures will not constitute taxable_expenditures within the meaning of sec_4945 of the code and as such are eligible for the exclusion from income provided under sec_117 of the code to the extent that such grants are actually used for qualified_tuition_and_related_expenses within the meaning of sec_117 of the code this ruling is conditioned on the understanding that there will be no material_change in the facts upon which it is based it is further conditioned on the premise that no grants will be awarded to your organization's creators officers directors trustees or members of the selection committee or for a purpose that is inconsistent with the purposes described in sec_170 of the code this approval of your grant-making procedures is a one-time approval of your system of standards and procedures for selecting recipients of grants that meet the requirements of sec_4945 of the code thus approval will apply to succeeding grant programs only as long as the standards and procedures under which they are conducted do not differ materially from those described in this request because this ruling letter could help to resolve any questions about your status you should keep it in your permanent records this ruling letter is directed only to the organizations that requested it code provides that it may not be used or cited as precedent sec_6110 of the sincerely m terre manager exempt_organizations berkovsky technical group ls


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 intl b06 plr-103961-11 date date legend ty ------- taxpayer law firm accounting firm shareholder date date --------------------------------------------- ------------------------------------------------------ ---------------------------------- ------------------------ ---------------------- -------------------------- dear --------------- this responds to a letter dated date supplemented by letters dated date and date submitted by law firm requesting that the internal_revenue_service service grant taxpayer an extension of time under sec_301_9100-1 and sec_301_9100-3 to file form 4876-a election to be treated as an interest_charge_disc for taxpayer’s first taxable_year the rulings contained in this letter are based upon information and representations submitted by taxpayer law firm and accounting firm and accompanied by penalty of perjury statements executed by appropriate parties this office has not verified any of the material submitted in support of the request for rulings it is subject_to verification on examination facts taxpayer is a domestic_corporation wholly owned by shareholder with a calendar taxable_year at shareholder’s request law firm incorporated taxpayer effective as of date shareholder intended that taxpayer would elect to be treated as an interest charge plr-103961-11 domestic_international_sales_corporation ic-disc as of date based on previous discussions among shareholder law firm and accounting firm shareholder relied on law firm and accounting firm to provide tax_advice and prepare all documentation necessary for taxpayer to be treated as an ic-disc shortly after taxpayer was incorporated both law firm and accounting firm assured shareholder that no further actions were required in order for taxpayer to be treated as an ic-disc as of date law firm had requested accounting firm to prepare and file the form 4876-a and assumed accounting firm would do so however accounting firm neither filed nor advised taxpayer to file form 4876-a within days of date because it had assumed that law firm would be responsible for timely filing this form on date shareholder contacted law firm and accounting firm to set up a telephone conference to discuss taxpayer’s year-end matters and the filing of taxpayer’s income_tax return for its first taxable_year at this time law firm and accounting firm discovered that form 4876-a had not been filed after discussions with shareholder and law firm accounting firm prepared and filed form 4876-a on behalf of taxpayer law firm then prepared and submitted this ruling_request to the service for an extension of time to file form 4876-a for taxpayer’s first taxable_year at the time of this request the service had not discovered that form 4876-a was not filed within days of date law and analysis sec_992 provides that an election by a corporation to be treated as a disc shall be made by such corporation for a taxable_year at any time during the 90-day period immediately preceding the beginning of the taxable_year except that the secretary may give his consent to the making of an election at such other times as he may designate sec_992 provides that such election shall be made in such manner as the secretary shall prescribe and shall be valid only if all persons who are shareholders in such corporation on such first day of the first taxable_year for which such election is effective consent to such election temporary sec_1_921-1t provides in part that a corporation electing ic-disc status must file form 4876-a and that a corporation electing to be treated as a ic-disc for its first taxable_year shall make its election within days after the beginning of that year sec_301_9100-1 provides in part that the commissioner in exercising the commissioner’s discretion may 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 under all subtitles of the code except subtitles e g h and i plr-103961-11 treasury regulation b provides that a regulatory election is an election whose due_date is prescribed by a regulation published in the federal_register or a revenue_ruling revenue_procedure notice or announcement published in the internal_revenue_bulletin for this purpose an election includes an application_for relief in respect of tax 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 must be made under the rules of sec_301_9100-3 requests for relief subject_to sec_301_9100-3 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 that the grant of relief will not prejudice the interests of the government based on the facts and representations submitted with taxpayer’s ruling_request we conclude that taxpayer satisfies sec_301_9100-3 accordingly taxpayer is granted an extension of time of days from the date of this ruling letter to file form 4876-a such filing will be treated as a timely election to be treated as an ic-disc for taxpayer’s first taxable_year beginning date the granting of an extension in this ruling letter is not a determination that taxpayer is otherwise eligible to make the election or to claim ic-disc status or benefits see sec_301_9100-1 a copy of this letter_ruling should be attached to the federal_income_tax return for any taxable_year to which the ruling applies 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 except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative sincerely _____________________________________ jason m osborn senior technical reviewer branch office of associate chief_counsel international


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-105600-02 date date legend x y state d state dear this letter responds to your letter dated date and related correspondence written on behalf of x requesting an extension of time under sec_301_9100-1 through of the procedure and administration regulations to file an election to treat its wholly owned subsidiary y as a qualified_subchapter_s_subsidiary qsub under sec_1361 of the internal_revenue_code facts x was incorporated under the laws of state1 x is an s_corporation for federal tax purposes on d x purchased all of the stock of y y was incorporated under the laws of state2 x represents that it intended to elect to treat y as a qsub but failed to timely make the election x requests a ruling that it be granted an extension of time to make the qsub election for y effective as of d plr-105600-02 law and analysis sec_1361 of the internal_revenue_code defines a qsub as a domestic_corporation that is not an ineligible_corporation if percent of the stock of the corporation is owned by an s_corporation and the s_corporation elects to treat the corporation as a qsub a taxpayer makes a qsub election with respect to a subsidiary by filing a form_8869 qualified_subchapter_s_subsidiary election with the appropriate service_center sec_1_1361-3 of the income_tax regulations provides that the election will be effective on the date specified on the election form or on the date the election is filed if no date is specified the effective date specified on the election cannot be more than two months and days prior to the date of filing and cannot be more than months after the date of filing 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_9100-3 to make a regulatory election sec_301_9100-1 defines a regulatory election to mean an election whose due_date is prescribed by a regulation published in the federal_register or a revenue_ruling revenue_procedure notice or announcement published in the internal_revenue_bulletin 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_9100-3 conclusion based solely on the facts submitted and 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 sixty days from the date of this letter to elect to treat y as a qsub effective as of d the election should be made by filing form_8869 with the appropriate service_center a copy of this letter should be attached to the election except as specifically set forth above no opinion is expressed concerning the federal tax consequences of the facts described above under any other provision of the code specifically no opinion is expressed concerning whether x is a valid s_corporation or whether y is a valid qsub this ruling is directed only to the taxpayer requesting it sec_6110 provides that it may not be used or cited as precedent plr-105600-02 in accordance with the power_of_attorney on file with this office a copy of this letter is being mailed to your authorized representatives sincerely paul f kugler associate chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes cc