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 te_ge eo2 plr-100875-06 date date ----------------------------- ---------------------------------------- ------------------------------------------------- legend corporation city city council city commission state dear -------------- income of corporation is excludible from gross_income under sec_115 of the internal_revenue_code and that corporation is not required to file an annual federal_income_tax return this is in reply to a letter dated date requesting rulings that the ----------------------------------------------- -------------------- facts corporation is a nonprofit public benefit corporation created for the purpose of furthering the economic development of city and reducing unemployment in the area to accomplish this purpose corporation proposes to develop a variety of new business and technology parks and sell land within the parks to private industry in this way it intends to increase the inventory of prepared commercial sites available in city with an corporation is governed by a board_of directors three directors are elected by plr-100875-06 emphasis on sites suitable for companies with increased levels of engineering and scientific content city council and three are elected by city commission corporation represents it will amend its bylaws to provide that the seventh director will be jointly elected by city council and city commission directors can be removed with or without cause by the body or bodies that elected them city commission is a political_subdivision of state under state statute corporation is required to submit an annual financial report to city and city commission corporation’s initial funds will come from city and city commission it is anticipated that in the future corporation will qualify for state and federal grants in addition corporation will receive proceeds from the sale of land within the business and technology parks to private industry the properties to be sold to private industry are properties originally purchased by corporation with funds contributed by city and city commission profits from the sale of land at the business parks will accrue to corporation to be used for further development no part of corporation’s income will be distributed to a private party other than as payment for goods or reasonable_compensation for services rendered corporation’s bylaws provide that all of its property is irrevocably committed to public purposes corporation represents that it will amend its articles of incorporation and bylaws to provide that upon dissolution its assets will be distributed to state a political_subdivision of state or an entity the income of which is excluded from gross_income under sec_115 of the code law and analysis in revrul_77_261 1977_2_cb_45 income from an investment fund 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 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 by developing prepared sites for sale to private companies corporation will help plr-100875-06 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 to attract new companies involved in technological enterprises to city thereby promoting economic growth and reducing unemployment stimulating economic growth and reducing unemployment are essential governmental functions for purposes of sec_115 development of city no part of corporation’s income will be distributed to a private party other than as payment for goods or reasonable_compensation for services rendered corporation represents it will amend its articles of incorporation and bylaws to provide that upon dissolution corporation’s assets shall be distributed to state a political_subdivision of state or another organization the income of which is excluded from gross_income under sec_115 of the code based on the information and representations submitted by corporation and provided that the proposed amendments described above are made to its articles of incorporation and bylaws we hold that the income of corporation is derived from an essential_governmental_function and accrues to a state a political_subdivision of a state or to an entity the income of which is excludible from gross_income under sec_115 of the code the income of corporation is to be used solely to promote the economic conclusions sec_6012 and sec_1_6012-2 provide in general that every the income of corporation is excludible from gross_income under sec_115 of the code corporation as defined in sec_7701 subject_to taxation under subtitle a is required to file an income_tax return regardless of whether it has taxable_income or regardless of its gross_income see revrul_77_261 accordingly corporation will be required to file an income_tax return pursuant to sec_6012 corporation’s articles of incorporation and by-laws are adopted this ruling letter is effective as of the date the proposed amendments to except as specifically provided otherwise no opinion is expressed on the federal this ruling is directed only to the taxpayer who requested it sec_6110 plr-100875-06 tax consequences of any particular transaction provides that this ruling may not be used or cited as precedent _______________________ enclosures copy of this letter copy for sec_6110 purposes sincerely david marshall chief exempt_organizations branch division counsel associate chief_counsel tax exempt and government entities


internal_revenue_service number release date index number ----------------- ------------------------------ ---------------------------------------- ----------------------------------------------------- ------------------ -------------------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ----------------------------- id no ------------- ----------------- telephone number --------------------- refer reply to cc corp b04 plr-146798-14 date date legend distributing ------------------------------------------------------------------------- ------------------------------------------------------- ----------------------- controlled ------------------------------------------------------------------- ----------------------------------------------------------- -------------------------- subsidiary subsidiary llc --------------------------------- ------------------------------- ----------------------- --------------------------------- ------------------------------- ----------------------- ---------------------------------------- ------------------------------------------------ ----------------------- lp ----------------------------------------------------------------------------- ----------------------------------------------------------- ----------------------------- business a --------------------------------------------------------------------------------- --------------------------------------------------------------------------------- --------------------------------------------------------------------------------- plr-146798-14 --------------------------------------------------------------------------------- --------- ------------- ------ -------- --------------- ------------------- state a b c date dear ------------ this letter responds to your date letter requesting a ruling on certain federal_income_tax consequences of a proposed transaction the proposed transaction additional information was submitted in letters dated date date date date and date the information provided in the request and subsequent correspondence is summarized below the ruling contained in this letter is based on facts and representations submitted by the taxpayer and accompanied by a penalties of perjury statement executed by the appropriate party while this office has not verified any of the materials submitted in support of the request_for_ruling it is subject_to verification on examination this letter is issued pursuant to section dollar_figure of revproc_2015_1 2015_1_irb_1 regarding one or more significant issues under sec_332 sec_351 sec_355 sec_368 or sec_1036 the ruling contained in this letter only addresses one discrete legal issue involved in the transaction this office expresses no opinion as to the overall tax consequences of the transactions described in this letter or as to any issue not specifically addressed by the ruling below summary of facts distributing is the common parent of a consolidated_group the distributing group the authorized and outstanding capital stock of distributing consists of two classes of common_stock the distributing class a stock and the distributing class b stock and collectively the distributing common_stock distributing wholly owns subsidiary and llc subsidiary wholly owns subsidiary each of distributing subsidiary and subsidiary is classified as a corporation for federal_income_tax purposes under sec_301_7701-2 and -3 and is a plr-146798-14 member of the distributing group llc is an entity disregarded as separate from its owner for federal_income_tax purposes under sec_301_7701-3 a disregarded_entity prior to the proposed transaction subsidiary and llc own approximately a and b percent of lp respectively lp is classified as a partnership for federal_income_tax purposes under sec_301_7701-3 lp owns directly or indirectly all of the interests in various limited_liability companies foreign_corporations or partnerships each of which is a disregarded_entity the lp des lp and the lp des operate business a and other businesses proposed transaction distributing is entering into the proposed transaction in order to facilitate the distribution of business a to its shareholders lp formed controlled a state corporation on date subsidiary will convert to a limited_liability_company that will be classified as a disregarded_entity for federal_income_tax purposes under sec_301_7701-3 prior to the date of the distribution defined below lp will borrow up to dollar_figurec the borrowing proceeds lp will restructure the assets and liabilities of the lp des so that they are separated and either a will be held directly by lp or owned by disregarded entities that will remain with lp retained des or b will be held directly by controlled or owned by disregarded entities that will be transferred to controlled controlled des lp will contribute the controlled des all or substantially_all of the directly held assets relating to business a and a portion of the borrowing proceeds to controlled in exchange for all the issued and outstanding_stock of controlled and the assumption of various liabilities in a transaction intended to qualify under sec_351 and in which amounts may be taken into the gross_income of lp pursuant to revproc_2004_34 2004_1_cb_991 the partnership contribution lp will distribute all of the stock of controlled to llc in a distribution in partial_redemption of llc 1’s interest in lp in which gain may be recognized under sec_751 the partnership_distribution llc will distribute all of the stock of controlled to distributing in a transaction intended to qualify under sec_368 controlled will file an amended and restated certificate of incorporation pursuant to which controlled’s outstanding common_stock will be recapitalized as controlled class a common_stock the controlled class a stock and controlled class b common_stock the controlled class b stock and collectively with the controlled class a stock the controlled plr-146798-14 stock and controlled will issue to distributing a sufficient number of shares of each class necessary to effect the distribution described in step after steps through distributing will distribute all of the controlled class a stock pro_rata to holders of distributing class a stock with respect to such stock and all of the controlled class b stock pro_rata to holders of distributing class b stock with respect to such stock in a transaction intended to qualify under sec_355 the distribution representations the following representations have been made regarding the proposed transaction a for the entire five-year period ending on the date of the distribution i members of distributing’s separate_affiliated_group within the meaning of sec_355 have owned all of the interests in lp and ii lp has conducted a portion of business a qualifying as an active trade_or_business within the meaning of sec_355 directly or through the lp des b except with respect to the acceleration of income under sec_481 pursuant to revproc_2004_34 no income or gain will be recognized in connection with the partnership contribution c except with respect to the possible recognition of gain under sec_751 no income or gain will be recognized in connection with the partnership_distribution ruling based solely on the information submitted and the representations set forth above we rule as follows regarding the proposed transaction the fact that gain_or_loss may be recognized under sec_751 or that income may be taken into account by lp under revproc_2004_34 as a result of the proposed transaction will not prevent controlled from satisfying the active_trade_or_business_requirement of sec_355 caveats no opinion is expressed or implied about the federal_income_tax consequences of any other aspect of any transaction or item discussed or referenced in this letter or the federal_income_tax treatment of any conditions existing at the time of or effects resulting from the transaction that are not specifically covered by the above rulings plr-146798-14 procedural statements this ruling letter is directed only to the taxpayer requesting it sec_6110 provides that it may not be used or cited as precedent a copy of this letter_ruling 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 in accordance with the power_of_attorney on file with this office a copy of this letter_ruling is being sent to your authorized representative sincerely _ken cohen_________________ ken cohen senior technician reviewer branch office of associate chief_counsel corporate


internal_revenue_service number release date index number ------------------------------ ------------------------ ------------------------------ ---------------------------- ------------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact --------------- id no --------------- telephone number --------------------- refer reply to cc corp b03 plr-108505-12 date march legend parent -------------------------------------------------------------------- ------------------------------- date date -------------------------- --------------------------- company official ---------------------------------------------------------------------------------- --------------------------------------------------------------------------- ---------------- tax professional ------------------------------------------------------- -------------------------------------------------------------------- --------------------------------------------------------------------------- ----------------------------- dear --------------- this is in response to a letter dated date submitted on behalf of parent requesting an extension of time under sec_301_9100-1 through of the procedure and administration regulations to file an election the extension is being requested for parent to file an election under sec_1_1502-21 to relinquish the entire carryback period for the parent consolidated group’s consolidated_net_operating_loss cnol for the tax_year ending date the election additional information was submitted in a letter dated date the material information submitted for consideration is summarized below plr-108505-12 parent is the common parent of a consolidated_group parent group parent group incurred a cnol for the tax_year ending date parent has represented that parent group has not and will not carry any portion of the cnol to a prior consolidated_return_year of parent group and that no corporation that was a member of parent group at any time during the tax_year ending date had a separate_return_year within the meaning of sec_1_1502-1 at any time during the carryback period parent has also represented that it is not seeking to alter a return position for which an accuracy-related_penalty has been or could be imposed under sec_6662 at the time parent requested relief and the new return position requires or permits a regulatory election for which relief is requested parent intended to file the election the election was required to be filed by date but for various reasons parent failed to file a valid election the period of limitations on assessment under sec_6501 has not expired for parent group’s tax_year ending date or any subsequent taxable_year sec_1_1502-21 provides that a consolidated_group may make an irrevocable election to relinquish the entire carryback period with respect to a cnol for any consolidated_return_year the election is made in a separate statement entitled this is an election under sec_1_1502-21 to waive the entire carryback period pursuant to sec_172 for the insert consolidated_return_year cnols of the consolidated_group of which insert name and employer_identification_number of common parent is the common parent sec_1_1502-21 also provides that the statement must be filed with the group's income_tax return for the consolidated_return_year in which the loss arises under sec_301_9100-1 the commissioner has discretion to grant a reasonable extension of time to make a regulatory election or a statutory election but no more than six months except in the case of a taxpayer who is abroad under all subtitles of the internal_revenue_code except subtitles e g h and i sec_301_9100-1 through provide the standards the commissioner will use to determine whether to grant an extension of time to make a regulatory election sec_301_9100-1 sec_301_9100-2 provides automatic extensions of time for making certain elections requests for relief under sec_301_9100-3 will be granted when the taxpayer provides evidence to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government sec_301_9100-3 in this case the time for filing the election is fixed by the regulations ie sec_1_1502-21 therefore the commissioner has discretionary authority under sec_301_9100-1 to grant an extension of time for parent to file the election provided plr-108505-12 parent shows it acted reasonably and in good_faith the requirements of sec_301_9100-1 and sec_301_9100-3 are satisfied and granting relief will not prejudice the interests of the government information affidavits and representations submitted by parent company official and tax professional explain the circumstances that resulted in the failure to timely file the election the information establishes that parent reasonably relied on a qualified_tax professional who failed to make or advise parent to make the election see sec_301_9100-3 based on the facts and information submitted including the representations made we conclude that parent has shown it acted reasonably and in good_faith the requirements of sec_301_9100-1 and sec_301_9100-3 are satisfied and granting relief will not prejudice the interests of the government accordingly an extension of time is granted under sec_301_9100-1 until days from the date on this letter for parent to file the election with respect to the relinquishment of the entire carryback period for the cnol for the tax_year ending date as described above the above extension of time is conditioned on the taxpayers’ parent’s and the members of its consolidated_group tax_liability if any being not lower in the aggregate for all years to which the election applies than it would have been if the election had been timely made taking into account the time_value_of_money no opinion is expressed as to the taxpayers’ tax_liability for the years involved a determination thereof will be made by the director’s office upon audit of the federal_income_tax returns involved parent should file the election in accordance with sec_1_1502-21 parent group’s returns must be amended to attach the election statement required by sec_1_1502-21 a copy of this letter should be attached to the election statement alternatively if parent group files its returns electronically parent may satisfy this latter requirement by attaching a statement to its return that provides the date and control number of this letter_ruling we express no opinion as to the tax effects or consequences of filing the election late under the provisions of any other section of the code or regulations or as to the tax treatment of any conditions existing at the time of or effects resulting from filing the election late that are not specifically set forth in the above ruling for purposes of granting relief under sec_301_9100-1 we relied on certain statements and representations made by parent company official and tax professional however the director should verify all essential facts moreover notwithstanding that an extension is granted under sec_301_9100-1 to file the election penalties and interest that would otherwise be applicable if any still apply plr-108505-12 this ruling is directed only to the taxpayer s who requested 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 sincerely ____________________ ken cohen senior technician reviewer branch office of associate chief_counsel corporate


t c summary opinion united_states tax_court virgilio dela cruz milagros dela cruz petitioners v commissioner of internal revenue respondent docket no 1414-00s filed date milagros dela cruz pro_se h clifton bonney jr for respondent dinan special_trial_judge this case was heard pursuant to the provisions of sec_7463 of the internal_revenue_code in effect at the time the petition was filed the decision to be entered is not reviewable by any other court and this opinion should not be cited as authority unless otherwise indicated subseguent section references are to the internal_revenue_code in - - effect for the year in issue and all rule references are to the tax_court rules_of_practice and procedure respondent determined a deficiency in petitioners’ federal_income_tax of dollar_figure for the taxable_year the issues for decision are whether certain social_security disability benefits are includable in petitioners’ gross_income and whether petitioners are entitled to a deduction for attorney’s fees incurred in obtaining the social_security_benefits ’ some of the facts have been stipulated and are so found the stipulations of fact and the attached exhibits are incorporated herein by this reference petitioners resided in daly city california on the date the petition was filed in this case during petitioner wife ms dela cruz received a lump-sum payment of dollar_figure for social_security disability benefits attributable to and ms dela cruz personally received dollar_figure of this amount and the remaining dollar_figure was given to her lawyer in addition ms dela cruz’s daughter ‘respondent has made two concessions first respondent has accepted an amended_return filed by petitioners but not reflected in the notice_of_deficiency the amended_return reflects taxable_income of dollar_figure while the notice’s adjustments were made to taxable_income of dollar_figure respondent concedes the difference second respondent concedes a mathematical error in the notice the total increase in income in the notice should read dollar_figure rather than dollar_figure nerilyn a dela cruz received social_security_benefits of dollar_figure petitioners filed a joint federal_income_tax return in and reported dollar_figure in adjusted_gross_income in that year excluding the social_security_benefits respondent issued petitioners a statutory_notice_of_deficiency with the determination that they had unreported income of dollar_figure from these social_security_benefits ’ the inclusion of social_security_benefits in gross_income is governed by sec_86 social_security disability benefits are treated in the same manner as other social_security_benefits sec_86 thomas v commissioner tcmemo_2001_120 taxpayers who file a joint_return and whose modified_adjusted_gross_income plus half of the social_security_benefits received is greater than dollar_figure must include a portion of the benefits in their income sec_86 through c benefits generally are included in income in the year in which they are received even if the benefits are attributable to prior years sec_86 sec_451 the portion included in income never exceeding percent varies according to a formula set forth in sec_86 petitioners had modified_adjusted_gross_income of at least dollar_figure see sec_86 and received benefits of dollar_figure because their modified_adjusted_gross_income plus half respondent also determined that petitioners had unreported income of dollar_figure in dividends petitioners concede this amount q4e- their benefits exceeds dollar_figure by at least dollar_figure they must include in income percent of the benefits see sec_86 c thus respondent is correct in his determination that petitioners must include in income percent of the social_security disability benefits or dollar_figure petitioners’ primary argument is that the payments should not be included in income because they are disability payments as noted above however social_security disability benefits are treated in the same manner as other social_security_benefits and must be included in income to the extent required under sec_86 see thomas v commissioner supra a portion of the benefits was paid directly to ms dela cruz’s lawyer as a general_rule income is taxed to the person earning it even if the right to receive the income is contractually assigned to another person prior to its being earned 281_us_111 114_tc_399 affd 259_f3d_881 7th cir banks v commissioner tcmemo_2001_48 see also s rept 1983_2_cb_328 stating that the total amount of social_security_benefits received by a taxpayer is not to be reduced by attorney’s fees under this principle the social_security_benefits paid to ms dela cruz are includable in income despite the fact that her lawyer was paid directly by the social_security administration - - under sec_212 taxpayers are allowed as a deduction all the ordinary and necessary expenses paid_or_incurred during the taxable_year for the production_or_collection_of_income the amount of the deduction is limited to expenses related to the collection of income which is required to be included in gross_income for federal_income_tax purposes sec_265 sec_1_212-1 income_tax regs thus petitioners are entitled to deduct percent of the legal expenses_incurred in securing the social_security disability benefits the percentage of the benefits which are included in income see andrews v commissioner tcmemo_1992_668 we briefly note that the social_security_benefits paid to or for ms dela cruz’s daughter nerilyn are not at issue this amount was not determined to be includable in petitioners’ gross_income by respondent in the notice_of_deficiency only the dollar_figure in benefits paid with respect to ms dela cruz were included this deduction is a miscellaneous itemized_deduction subject_to the 2-percent floor of sec_67 according to the amended_return petitioners have other itemized_deductions in the total amount of dollar_figure there are few details in the notice_of_deficiency concerning each of the individual deductions comprising this total amount and neither party introduced into evidence a copy of petitioners’ federal_income_tax return for however the notice does state that petitioners claimed miscellaneous_itemized_deductions of dollar_figure this shows that a deduction for legal fees was not taken on the original return no such deduction was taken on the amended_return either which increased petitioners’ total itemized_deductions by dollar_figure to report additional home mortgage interest -- - reviewed and adopted as the report of the small_tax_case division to reflect the foregoing decision will be entered under rule


department of the treasury internal_revenue_service washington d c t a x e x e m p t a n d g o v e r n m e n t e n t i t i e s d i v i s i o n contact person telephone number identification_number number release date date uil number employer_identification_number legend a b c dear --------------- this is in response to a letter from your authorized representative requesting a ruling on your behalf that you meet the requirements of revproc_95_48 1995_2_cb_418 facts the state of b created the university of b the university under b state statute the governor of the state of b appoints the board_of directors of the university the university created the university of b healthcare system the system under b state statute and the system created a a then created c the university is the sole member of the system and elects its board_of directors a is the sole member of c and elects its board_of directors c is exempt from federal_income_tax under sec_501 of the internal_revenue_code and is classified as a supporting_organization under sec_509 a provides management services to its four subordinate health care organizations three of these organizations are exempt under sec_501 and one is non-exempt c’s financial support is received from the general_public by providing medical services under statutory authority from the system c is included in the financial statements of the state of b c must be audited for each fiscal_year and the results presented to the state of b the state of b officials and personnel approve all of c’s expenses c has no taxable subsidiary does not engage in public fund-raising efforts and its activities do not provide significant benefits to any private interest under c’s articles of incorporation if c is terminated its assets will be distributed either directly or indirectly to the system ruling requested c meets the requirements to be treated as an affiliate of a governmental_unit under revproc_95_48 1995_2_cb_418 and therefore is not required to file form_990 law sec_501 of the code provides an exemption from federal_income_tax for organizations described in sec_501 including organizations that are organized and operated exclusively for charitable educational or scientific purposes sec_6033 of the code generally requires the filing of annual information returns by exempt_organizations sec_512 of the code defines unrelated_trade_or_business taxable_income as the gross_income derived by any organization from any unrelated_trade_or_business regularly carried on by it less the allowable deductions directly attributable to such business activity with certain modifications sec_514 of the code defines unrelated_debt-financed_income as income produce from debt- financed property from an unrelated business as discussed in sec_512 sec_6033 of the code provides certain mandatory exceptions to filing annual information returns sec_6033 of the code provides discretionary exceptions from filing such returns where the secretary determines that such filing is not necessary to the efficient administration of the tax laws revproc_95_48 provides an exception from filing for governmental units or affiliates of governmental units that are exempt from federal_income_tax under sec_501 section dollar_figure of revproc_95_48 provides that an organization will be treated as an affiliate of a governmental_unit if it is described in sec_501 and either a it has a ruling from the service that its exempt_purpose income is excluded under sec_115 it is entitled to receive deductible contributions under sec_170 because the contributions are the for_the_use_of a governmental_unit or it is a wholly owned instrumentality of a state or political_subdivision for employment_tax purposes or b it meets the requirements of sec_4 b sec_4 b of revproc_95_48 provides the following criteria to be used to determine whether an organization meets the requirements of sec_4 b the organization is either operated supervised or controlled within the meaning of sec_1_509_a_-4 of the regulations by governmental units or by an organization's governing body that is elected by the public at large the organization possesses two or more affiliation factors listed under section dollar_figure of the revenue_procedure and the organization's filing of form_990 is not otherwise necessary to the efficient administration of the internal revenue laws section dollar_figure of revproc_95_48 describes among the affiliation factors the following a the organization was created by one or more governmental units organizations that are affiliates of governmental units or public officials acting in their official capacity b the organization is subject_to financial audit by the governmental_unit to which it reports or the governmental_unit or affiliate of a governmental_unit exercises control_over or oversees some or all of the organization's expenditures and c one or more governmental units or organizations that are affiliates of governmental units exercise control_over or oversee some or all of the organization’s expenditures section dollar_figure of revproc_95_48 provides that in making a ruling or determination whether the organization’s filing of form_990 is otherwise necessary to the efficient administration of the internal revenue laws under sec_4 b iii all relevant facts and circumstances shall be considered these include the extent to which the organization has taxable subsidiaries or participates in joint ventures with non-exempt entities whether it engages in substantial public fund-raising efforts and whether its activities provide significant benefits to private interests sec_1_509_a_-4 of the income_tax regulations provides in part that the terms operated by supervised by ' and controlled by as used in sec_509 presupposes a substantial degree of direction over the policies programs and activities of a supporting_organization by one or more publicly supported organizations the relationship described under any one of these terms is comparable to that of a parent and subsidiary where the subsidiary is under the direction of and accountable or responsible to the parent organization this relationship is established by the fact that a majority of the officers directors or trustees of the supporting_organization are appointed or elected by the governing body officers acting in their official capacity or the membership of one or more publicly supported organizations analysis c does not have a letter that meets the criteria of sec_4 a of revproc_95_48 and therefore it must meet the requirements in sec_4 b the internal_revenue_service has determined that c is exempt from federal_income_tax under sec_501 of the code and is a supporting_organization under sec_509 all of the members of c’s board_of directors are indirectly appointed by the university therefore the university effectively controls c thus c is operated supervised or controlled by a governmental_unit within the meaning of sec_1_509_a_-4 of the regulations accordingly c meets the requirement of sec_4 b i of revproc_95_48 c was created by the university via its subsidiary system the university is a governmental entity created by the state of b the university controls c through its subsidiary system the sole member of c is a therefore c possesses the affiliation factor in sec_4 a of revproc_95_48 c’s financial support is received from medical services rendered to the general_public under statutory authority from the system therefore c possesses the affiliation factor in sec_4 b of revproc_95_48 c is included in the financial statements of the state of b c must be audited for each fiscal_year and the results presented to the state of b the state of b officials and personnel approve all of c’s expenses therefore since c is financially accountable to a governmental_unit c possesses the affiliation factor in sec_4 c of revproc_95_48 under c’s articles of incorporation if c is terminated its assets will be distributed either directly or indirectly to the system therefore c possesses the affiliation factor in sec_4 e of revproc_95_48 therefore since c possesses two or more of the affiliation factors listed in section dollar_figure of revproc_95_48 c meets the requirements of sec_4 b ii c has no taxable subsidiary participates in no joint_venture with a non-exempt entity does not engage in substantial public fund-raising efforts and does not provide significant benefits to private interests therefore since the filing of form_990 is not otherwise necessary to the efficient administration of the internal revenue laws c meets the requirement of sec_4 b iii of revproc_95_48 since c is described in sec_501 of the code and meets the requirements of sec_4 b of revproc_95_48 c is treated as an affiliate of a governmental_unit under section dollar_figure of revproc_95_48 ruling c meets the requirements to be treated as an affiliate of a governmental_unit under revproc_95_48 and therefore is not required to file form_990 this ruling does not address the applicability of any section of the code or regulations to the facts submitted other than with respect to the sections described please keep a copy of this ruling in your permanent records this ruling is based on the understanding that there will be no material changes in the facts upon which it is based this ruling is directed only to the organization that requested it sec_6110 of the code provides that it may not be used or cited by others as precedent this ruling will be made available for public inspection under sec_6110 of the code after certain deletions of identifying information are made for details see enclosed notice notice of intention to disclose a copy of this ruling with deletions that we intend to make available for public inspection is attached to notice if you disagree with our proposed deletions you should follow the instructions in notice if you have any questions about this ruling please contact the person whose name and telephone number are shown in the heading of this letter thank you for your cooperation sincerely yours lawrence m brauer acting manager exempt_organizations technical group enclosure notice


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 corp b03 - plr-139415-03 date date ------------------------------ ------------------------------ -------------------------------------- distributing -------------------------------------------------------------------------- --------------------------------------------------------------------- controlled -------------------------------------------------------------------------- --------------------------------------------------------------------- a -------------------------------------------------------------------- b -------------------------------------------------------------------- c business d ------------------------------------------------------------------------------------------------------------------ business e ------------------------------------------------------------------------------------------------------------ state x q r ----------------------------------- ------------------ ---------- --------- -------- ------------------------------------------------------------------------ ------------------------------------------------------------------------ -- ---- ------------ -------------- --------------- ----------------------------------------------- we respond to your request dated date for rulings on the federal plr-139415-03 s t u dollar_figurev date plans dear -------------------- income_tax consequences of a proposed transaction the information submitted for consideration is summarized below distributing is an accrual_method state x subchapter_s_corporation distributing is engaged directly in business d which has been conducted for more than five years distributing has outstanding r shares of voting common_stock that are owned in equal amounts by a and by b distributing treated as a disregarded_entity under sec_1_1361-4 of the income_tax regulations controlled is directly engaged in business e which it has conducted for more than five years controlled has outstanding q shares of voting common_stock all of which are held by distributing business d and business e had gross_receipts and operating_expenses representative of the active_conduct_of_a_trade_or_business for each of the past five years business d distributing hired a key_employee c with the talent and experience to expand the operations of business d and improve the profitability of distributing distributing’s profitability was greatly improved last year now in order to ensure that c remains in the employ of distributing and business d and to provide c with a strong incentive to develop business d so that a can hand over the management of last year in order to meet increased competition and declining earnings in its the taxpayer has supplied financial information that indicates that each of controlled is a wholly owned qualified_subchapter_s_subsidiary q sub of plr-139415-03 distributing to c and concentrate his efforts on managing business e for controlled the following transaction has been proposed i ii all of the outstanding_stock of controlled will be distributed in equal parts to a and to b distributing will then sell to c approximately s shares of its authorized but unissued stock which after the sale would constitute about t percent of distributing’s total outstanding_stock c will pay distributing for the stock with a note secured_by the stock accruing interest and requiring annual payments amortizing principal and interest over u years this equity stake would ensure c a position on distributing’s board_of directors iii after the distribution controlled will elect to be an s_corporation pursuant to sec_1362 of the internal_revenue_code for its first taxable_year the taxpayers have made the following representations in connection with the proposed transaction a b c d no part of the consideration to be distributed by distributing will be received by a shareholder as a creditor employee or in any capacity other than that of a shareholder of the corporation the five years of financial information submitted on behalf of distributing and controlled are representative of the corporations’ present operations and with regard to such corporations there have been no substantial operational changes since the date of the last financial statements submitted following the transaction distributing and controlled each will continue the active_conduct of its business independently and with its separate employees the distribution of the stock of controlled is carried out for the corporate business purposes of providing a substantial equity_interest in distributing to c and for risk reduction the distribution of the stock of controlled is motivated in whole or substantial part by these corporate business purposes e controlled will elect to be an s_corporation pursuant to sec_1362 effective immediately after the distribution there is no plan or intent to revoke or plr-139415-03 otherwise terminate the s_corporation_election of either distributing or controlled f g h i j k there is no plan or intention by the shareholders of distributing to sell exchange transfer by gift or otherwise dispose_of any of their stock in either distributing or controlled after the transaction there is no plan or intention by either distributing or controlled directly or through any subsidiary_corporation to purchase any of their respective outstanding_stock after the transaction other than through stock purchases meeting the requirements of sec_4 b of revproc_96_30 there is no plan or intention to liquidate either distributing or controlled to merge either corporation with any other corporation or to sell or otherwise dispose_of the assets of either corporation after the transaction except in the ordinary course of business no existing liabilities will be assumed in the transaction and the total adjusted bases and the fair_market_value of the assets deemed transferred to controlled by distributing each equals or exceeds any liabilities to which the transferred assets are subject no existing liabilities will be assumed in the transaction and the liabilities to which the transferred assets are subject were incurred in the ordinary course of business and are associated with the assets being transferred no intercorporate debt will exist between distributing and controlled at the time of or subsequent to the distribution of the controlled stock except an intercorporate debt consisting of promissory notes of controlled payable to distributing with an approximate total balance of dollar_figurev incurred by controlled on date to buy out the remaining former shareholders of controlled other than distributing l with the exception of the provisional continuation of plans no continuing transactions between distributing and controlled are anticipated but if there are any such transactions payments made in connection with all continuing transactions if any between distributing and controlled will be for fair_market_value based on terms and conditions arrived at by the parties bargaining at arm’s length m no two parties to the transaction are investment companies as defined in sec_368 and iv plr-139415-03 n o p follows the distribution of controlled stock is not part of a plan or series of related transactions within the meaning of sec_355 pursuant to which one or more persons will acquire directly or indirectly stock possessing percent or more of the total combined voting power of all classes of stock entitled to vote of either distributing or controlled or stock possessing percent or more of the total value of all classes of stock of either distributing or controlled no distributing shareholder or shareholders will hold immediately after the distribution disqualified_stock within the meaning of sec_355 which constitutes a 50-percent_or_greater_interest in distributing or controlled the income_tax_liability for the taxable_year in which investment_credit_property including any building to which sec_47 applies is transferred will be adjusted pursuant to sec_50 or a or sec_47 as in effect before amendment by pub_l_no title 104_stat_1388 if applicable to reflect an early disposition of the property based solely on the information and the representations made we hold as the distribution of all of the controlled stock to a and to b will cause the termination of the qsub election of controlled because controlled will cease to be a wholly owned subsidiary of distributing an s_corporation as a result controlled will be treated as a new corporation acquiring all of its assets and assuming all of its liabilities immediately before the termination from distributing in exchange for stock of controlled sec_1_1361-5 the deemed exchange of distributing’s business e assets subject_to liabilities for controlled stock resulting from the termination of the qsub election as set forth above followed by the distribution of all of the controlled stock to a and to b will be treated as a reorganization within the meaning of sec_368 distributing and controlled each will be a_party_to_a_reorganization within the meaning of sec_368 distributing will not recognize any gain_or_loss on the transfer of the business e assets subject_to liabilities to controlled in exchange for controlled common_stock and the assumption by controlled of the liabilities associated with the transferred assets sec_361 and sec_357 plr-139415-03 controlled will not recognize any gain_or_loss on the receipt of the business e assets subject_to liabilities in exchange for the controlled common_stock sec_1032 the basis of each asset received by controlled from distributing will be equal to the basis of such asset in the hands of distributing immediately prior to the transaction sec_362 the holding_period of each asset received by controlled from distributing will include the period during which such asset was held by distributing sec_1223 no gain_or_loss will be recognized by distributing on the distribution of the controlled stock to a and to b sec_361 no gain_or_loss will be recognized by and no amount will be included in the income of a or b upon the receipt of the controlled stock sec_355 the aggregate basis of the distributing stock and the controlled stock in the hands of a and of b immediately after the distribution will be the same as the basis of the distributing stock in the hands of a and of b immediately prior to the distribution sec_358 and sec_1_358-1 such aggregate basis will be allocated between the distributing stock and the controlled stock in proportion to the relative fair_market_value of each corporation’s stock in accordance with sec_1_358-2 sec_358 the holding_period of the controlled stock received by a and by b will include the holding_period of the distributing stock with respect to which the distribution will be made provided that the distributing stock is held as a capital_asset on the date of the distribution sec_1223 as provided in sec_312 proper allocation of earnings_and_profits between distributing and controlled will be made under sec_1_312-10 provided that controlled meets the requirements of sec_1361 and provided that distributing immediately distributes the stock of controlled distributing’s momentary ownership of the stock of controlled will not cause controlled to have an ineligible shareholder for any portion of its first taxable_year under sec_1361 and controlled is eligible to make a timely election without the consent of distributing to be an s_corporation for its first taxable_year transaction under other provisions of the code and regulations or about the tax no opinion is expressed or implied about the tax treatment of the proposed this ruling is directed only to the taxpayer requesting it sec_6110 of plr-139415-03 treatment of any conditions existing at the time of or effects resulting from the proposed transaction that are not specifically covered by the above rulings the code provided that it may not be used or cited as precedent returns of the taxpayers involved for the taxable_year in which the transaction covered by this letter is consummated been sent to the taxpayers’ authorized representative pursuant to the powers of attorney on file in this office a copy of this letter has it is important that a copy of this letter be attached to the federal_income_tax sincerely filiz a serbes filiz a serbes chief branch office of the associate chief_counsel corporate


internal_revenue_service department of the treasury number release date index number washington dc person to contact telephone number refer reply to cc corp -plr date date legend company district selling shareholders date date date date state c xxx ppp project b ddd percent purchaser purchaser purchaser ccc plr hhh dollar_figurefff dollar_figureggg dollar_figureiii case j dear this letter responds to the date request for rulings submitted by your representative on behalf of company and the selling shareholders listed on the attached schedule a with respect to the transfer of certain water rights you have requested a ruling that for federal_income_tax purposes company's participation in the procedures by which the transfer of the water is accomplished in conjunction with the sales by the selling shareholders of their rights to the water will not constitute a sale_or_other_disposition of property by company nor a distribution_of_property by the company to the selling shareholders with respect to their stock additionally you have requested rulings on whether the water rights will constitute capital assets in the hands of the selling shareholders and whether certain_sales of these water rights will constitute sales or exchanges of capital assets the information submitted in the request and in a later submission is summarized below facts company was organized on date as a ditch and reservoir company and is subject_to state c's statutory requirements for mutual ditch companies company uses the cash_method_of_accounting and its fiscal_year ends on date approximately xxx of the company's shareholders are selling shareholders the other shareholders are not transferring any of their water rights and are not involved in the transactions described herein state c mutual ditch companies generally were created when a group of farmers banded together and formed the cooperative company for the express purpose of storing and conducting water for irrigation purposes company's primary function has been to deliver to and store the water of its shareholders the company's assets are limited to those necessary to deliver and store the water these assets include weirs canals dams water control devices and a storage reservoir the shareholders used the bylaws and shares to quantify each of their beneficial use rights in the water transported by the company the company owns no land on which to make use of the water it transports and stores although water is derived from two sources only the water from project b the project b water as described below is the subject of this ruling_request plr on date district a quasi-governmental corporation subject_to state c's statutory requirements for such entities entered into an agreement the repayment contract with the united_states bureau of reclamation the bureau for the development of project b project b emanates from the reclamation act of as amended the repayment contract grants district the right to allocate the project b water the district does so through allotment contracts that require the water users to pay their proportionate share of the district's costs to operate and maintain project b and to repay the federal government for its construction costs the operating reimbursements costs on date district entered into an allotment contract with company which provided that company would be entitled to receive an allocation of water for the beneficial use of its shareholders the project b water was then allocated pro_rata among the shareholders based on their shares in addition to paying on a pro_rata basis company's annual operating_expenses based on their respective allocation of project b water each shareholder pays his proportionate share of the operating reimbursements costs under the allotment contract conditions in state c are such that water is in great demand as such the selling shareholders intend to relinquish their beneficial_ownership of ddd percent of the project b water through three sales agreements the master sales agreements with purchaser purchaser and purchaser the master sales agreements with purchaser and purchaser provide they will acquire an aggregate of ccc units of project b water at dollar_figurefff per unit and dollar_figureggg per unit respectively the master sales agreement with purchaser provides for an allocation of hhh units of project b water at dollar_figureiii per unit in order to satisfy certain transfer requirements of the district the master sales agreement with purchaser includes an option for purchaser to take all or some of the units through a twenty-five year interruptible supply contract the interruptible supply contract under the interruptible supply contract the price for the units is the same as in the master sales agreement and it includes an option to purchase the units for a nominal fee by its terms the interruptible supply contract will remove beneficial_ownership of the units from the selling shareholders you have indicated that purchaser has elected to take all the units pursuant to the interruptible supply contract the selling shareholders will be paid in full for all units upon the closing of all three transactions including the transaction subject_to the interruptible supply contract to facilitate the negotiation of the master sales agreements and the interruptible supply contract the selling shareholders created ppp to act as their agent the only members of ppp are the selling shareholders the selling shareholders are not selling their shares in company but their shares will bear a legend to reflect that they are no longer entitled to their full allocation of the project b water plr you have indicated that company is not materially participating in the transactions described above company as a party to the allotment contract however will agree to the amendment of the allotment contract to reflect the reduced allotment of project b water the master sales agreements and the interruptible supply contract are conditioned on our rulings herein however the selling shareholders due to the crisis situation in state c have already transferred some of the project b water to the purchasers the emergency sales the consideration received by the selling shareholders from these emergency sales is being held in escrow pending our rulings herein according to the courts of state c mutual ditch companies are unique entities which are formed not under state c' s general corporation statutes but under special legislation reserved for ditch and reservoir companies in analyzing the relationship between the shareholders and mutual ditch companies in regards to water rights the supreme court of state c in case j has stated that a mutual ditch company is merely engaged in the business of transporting and storing the water for its shareholders benefit and the law of state c uniformly holds that the actual ownership of the water rights is in the shareholder the supreme court's analysis noted that a longstanding tenet of state c law is that ownership of a water right can be acquired only by the actual beneficial use of the water mere diversion is not sufficient to meet the requirements of state c's constitution finally the supreme court noted that it is well established that the water rights owned by the shareholders are property rights accordingly based on this supreme court's decision and other decisions by this court it is clear that under state c law company is not the beneficial_owner of any of the water it transports for the benefit of its shareholders including the project b water representations company has represented that it is not a party to the master sales agreements or the interruptible supply contract and shall not receive any proceeds or other consideration arising or resulting from the transactions described herein based on the information and representations submitted we rule as follows the selling shareholders for federal_income_tax purposes are the beneficial owners of the project b water rights and the sale of such rights including the short-term emergency sales described above will not be deemed to be a sale_or_other_disposition of property by the company or a distribution_of_property by the company to the selling shareholders with respect to their stock accordingly the company will not realize gain_or_loss as a result of the selling shareholders' transactions sec_1001 sec_301 sec_311 plr the beneficial rights in the project b water constitutes a capital_asset in the hands of the selling shareholders sec_1221 the transfer of the beneficial rights in the project b water under the master sales agreements and the interruptible supply contract constitute sales of capital assets by the selling shareholders sec_1222 caveat no opinion is expressed about the tax treatment of the transactions under other provisions of the code and regulations or about the tax treatment of any conditions existing at the time of or effects resulting from the transactions that are not specifically covered by the above ruling for example no opinion is expressed about whether the short-term emergency sales constitute sales or exchanges of capital assets nor are we opining on the selling shareholders' bases in these water rights the rulings contained in this letter are based upon information and a representation submitted by the company 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 procedural statements 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 a copy of this letter must be attached to any income_tax return to which it is relevant in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your taxpayer_representative sincerely steven hankin senior technical reviewer branch office of associate chief_counsel corporate


department of the treasury internal_revenue_service washington d c office_of_chief_counsel date number release date cc corp b05 postf-157876-01 uilc memorandum for area_counsel associate chief_counsel corp cc corp b05 execution of form_872 by trustee of liquidating_trust from subject field_service_advice is not binding on examination or appeals and is not a final case determination this chief_counsel_advice should not be cited as precedent legend company trustee trust trust agreement agreement plan district x government_official date postf-157876-01 date date date date a b c d e f g issues which entity is the proper entity to execute a form_872 for company and its subsidiaries for the taxable years ending on date and date where company the common parent of a consolidated_group has filed for bankruptcy who is authorized to sign the form_872 for company and its subsidiaries for the taxable years ending on date and date where company the common parent of a consolidated_group has filed for bankruptcy conclusion sec_1 company remains the sole agent for the consolidated_group that it was the common parent of for the taxable years ending on date and date under sec_6062 and revrul_83_41 1983_1_cb_349 clarified and amplified by revrul_84_165 1984_2_cb_305 company’s president vice-president treasurer assistant treasurer chief accounting officer or any other officer duly authorized to act on behalf of company may sign a form_872 with respect to the consolidated income_tax_liability of company and its subsidiaries however it is unclear whether trustee may sign a form_872 on postf-157876-01 behalf of company with respect to the consolidated income_tax_liability of company and its subsidiaries for the taxable years ending on date and date facts company is the common parent of an affiliated_group_of_corporations the consolidated_group it filed consolidated u s corporate_income_tax returns form_1120 with its affiliates for the taxable years ending date and date on date company together with several of its direct and indirect subsidiaries filed a voluntary petition for relief under chapter of the bankruptcy code in the united_states bankruptcy court for district x on date the bankruptcy court entered an order confirming the plan in accordance with the plan company established a liquidating_trust known as trust to liquidate its assets trustee was appointed as the trustee of trust company also established trust to wind up company’s affairs and to ultimately dissolve company according to a report filed by trustee with the bankruptcy court on date trust is currently in the process of liquidating company’s assets pursuant to the plan and will file the final corporate tax_return on behalf of company company has not filed a certificate of dissolution with the government_official however the officers of company are no longer available to sign a consent on behalf of company in addition neither company nor the members of the consolidated_group have notified the service regarding the designation of another member to act as the agent for the consolidated_group pursuant to sec_1_1502-77 law and analysis issue generally sec_1_1502-77 provides that a common parent of a consolidated_group is the sole agent for each subsidiary member in the group duly authorized to act in its own name in all matters relating to the tax_liability for the consolidated_return_year thus a common parent of a consolidated_group is authorized to sign a form_872 on behalf of its subsidiaries in addition sec_1_1502-77 provides that unless otherwise agreed a common parent’s waiver of the statute_of_limitations on assessment shall bind each corporation that was a member of the consolidated_group for the consolidated_return_year in 93_tc_166 the united_states tax_court held that when a common parent of a consolidated_group filed for bankruptcy members of the consolidated_group were not permitted to file a petition with the tax postf-157876-01 court the tax_court explained that sec_1_1502-77 did not make an exception for the bankruptcy of the common parent thus even when the common parent has filed for bankruptcy the common parent remains the sole agent for its consolidated_group in this case although company has filed for bankruptcy because company remains in existence company remains the sole agent of the consolidated_group authorized to execute a form_872 on behalf of the consolidated_group for taxable years ending date and date accordingly the caption on the form_872 should read company and consolidated subsidiaries the ein of company should be inserted on the upper right hand corner of the form_872 in addition the following language should be included at the bottom of the first page of the form_872 this is with respect to the consolidated income_tax_liability of the company and affiliated subsidiaries consolidated_group for taxable years ending date and date issue sec_6062 provides that a corporation's income_tax return must be signed by the president vice-president treasurer assistant treasurer chief accounting officer or any other officer duly authorized to act the fact that an individual's name is signed on the return is prima facie evidence that the individual is authorized to sign the return on behalf of the corporation accordingly any such officer may sign a consent whether or not that person was the same individual who signed the return sec_6062 further provides that in the case of a return made for a corporation by a fiduciary pursuant to the provisions of sec_6012 such fiduciary must sign the return sec_6012 and sec_1_6012-3 of the regulations on procedure and administration regulations provide that in the case where a receiver trustee in a case under title of the united_states_code or assignee by order of a court of competent jurisdiction by operation of law or otherwise has possession of or holds title to all or substantially_all the property or business of a corporation whether or not such property or business is being operated such receiver trustee or assignee must make the income_tax return for such corporation in the same manner and form as corporations are required to make such returns in holywell corporation et al v fred staton smith etc et al united_states v fred staton smith et al 503_us_47 the supreme court held that a trustee in bankruptcy was required to pay the tax due on income attributable to the corporate debtors' property because sec_6012 of the code requires him to make a return as the assignee of the property of the corporation id pincite however postf-157876-01 trustee has only the powers defined in agreement which are specifically set forth in article a thus consistent with the court’s decision a trustee of a liquidating_trust is considered an assignee for purposes of sec_6012 thereby requiring the trustee to make a return for the corporation as its assignee neither sec_6501 nor the regulations thereunder specify who may sign consents revrul_83_41 1983_1_cb_349 clarified and amplified by revrul_84_165 1984_2_cb_305 provides that the service will generally apply the rules applicable to the execution of original returns to consents to extend the period of limitation for assessment however revrul_83_41 does not recite the second sentence of sec_6062 which provides that a fiduciary who makes a return on behalf of a corporation under sec_6012 may sign that return according to the facts provided trustee was appointed subsequent to the close of the taxable years ending date and date as a result the service is seeking an extension of the limitations_period for tax years that pre-date the trustee’s appointment and for which returns were timely filed this fact does not however prevent the trustee from executing the necessary consent for example the united_states bankruptcy court for the southern district of texas held in in re james jackson mcrae and rita joyce mcrae 181_br_866 that the trustee of a liquidating_trust be permitted to prepare and file all returns for pre- confirmation tax years as mentioned above article a of agreement provides the trustee with the powers to administer trust more specifically article b provides the trustee with the power to effect any_action which will protect the trust assets including any method prescribed by law or equity as such the execution of a consent for a year which predates the trustee’s appointment may certainly fall within the purview of protecting the trust assets by any method deemed appropriate similarly article c permits the trustee to determine and satisfy any and all liabilities assumed by trust the execution of a consent for years for which returns have been filed and which predate the assumption of the trustee's responsibilities constitutes the assumption of any and all liabilities assumed by trust therefore when read in conjunction with article b article c provides the trustee with the requisite authority to execute a consent for prior tax years article d further provides the trustee with authority to execute the necessary consent to the extent that the service determines that there is tax due for the tax years ending date and date article d vests with the trustee the power to pay any taxes determined to be due finally article e provides the trustee with the authority to pay taxes properly payable by trust to the extent that the service determines a tax_liability for the years in question such liability would be properly payable by trustee postf-157876-01 case development hazards and other considerations postf-157876-01 this writing may contain privileged information any unauthorized disclosure of this writing may have an adverse effect on privileges such as the attorney client privilege if disclosure becomes necessary please contact this office for our views please call at for further assistance


internal_revenue_service department of the treasury index number washington dc person to contact telephone number refer reply to cc intl br3-plr-120190-97 date date number release date ty a country b year c year d date e dear this is in response to your letter dated date requesting a ruling under sec_877 of the internal_revenue_code_of_1986 code that a’s surrender of his u s alien registration card green card did not have for one of its principal purposes the avoidance of u s taxes under subtitle a or subtitle b of the code the information submitted for consideration is substantially as set forth below the ruling contained in this letter is based upon information and representations submitted by the taxpayer and accompanied by penalty of perjury statements 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 plr-120190-97 a was born in country b and is a citizen of country b a moved to the united_states to live and work in year c a became a lawful permanent resident_of_the_united_states in year c a’s employment in the united_states terminated in year d a returned to country b in year d and abandoned his status as a lawful permanent resident expatriated on date e a is resident country b and is subject_to country b income_tax on his worldwide income at a rate that is higher than the applicable u s income_tax rates on the date of a's expatriation his net_worth exceeded dollar_figure a’s assets consist primarily of u s mutual funds and a short term deposit sec_877 generally provides that a citizen who loses u s citizenship or a long-term_resident who ceases to be taxed as a lawful permanent resident individuals who expatriate within the 10-year period immediately preceding the close of the taxable_year will be taxed on all of his or her u s source income as modified by sec_877 for such taxable_year unless such loss or cessation did not have for one of its principal purposes the avoidance of u s taxes sec_2107 and sec_2501 provide special estate and gift_tax regimes respectively for individuals who expatriate with a principal purpose to avoid u s taxes a former citizen or former long-term_resident will be treated as having expatriated with a principal purpose to avoid u s taxes for purposes of sec_877 sec_2107 and sec_2501 if the individual’s average income_tax_liability or the individual’s net_worth on the date of expatriation exceed certain thresholds see sec_877 sec_2107 and sec_2501 a former u s citizen whose net_worth or average tax_liability exceeds these thresholds however will not be presumed to have a principal purpose of tax_avoidance if that former citizen is described within certain statutory categories and submits a request for a ruling within one year of the date of loss of u s citizenship for the secretary’s determination as to whether such loss had for one of it principal purposes the avoidance of u s taxes see sec_877 sec_2107 and sec_2501 under notice_98_34 1998_27_irb_30 modifying notice_97_19 1997_1_cb_394 a former long-term_resident whose net_worth or average tax_liability exceeds the applicable thresholds will not be presumed to have a principal purpose of tax_avoidance if that former resident is described within certain categories and submits a complete and good_faith request for a ruling as to whether such loss had for one of its principal purposes the avoidance of u s taxes notice_97_19 as modified by notice_98_34 requires that certain information be submitted with a request for a ruling that an individual's expatriation did not have for one of its principal purposes the avoidance of u s taxes plr-120190-97 a is eligible to request a ruling pursuant to notice_98_34 because he became fully liable to tax on his worldwide income in country b the country in which he was born a submitted all of the information required to be submitted by notice_97_19 as modified by notice_98_34 including additional information requested by the service after review of the submission accordingly based solely on the information submitted and the representations made it is held that a has made a complete and good_faith submission in accordance with sec_877 and notice_97_19 as modified by notice_98_34 therefore a will not be presumed under sec_877 to have as one of his principal purposes for expatriating the avoidance of u s taxes it is further held that a will not be treated under sec_877 as having as one of his principal purposes for expatriating the avoidance of u s taxes because the information submitted clearly establishes the lack of a principal purpose to avoid taxes under subtitle a or b of the code 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 addition no opinion is expressed as to a’s u s tax_liability for the taxable years prior to expatriation or his united_states tax_liability for periods after his loss of permanent resident status under sections of the code other than sec_877 sec_2107 and sec_2501 a copy of this letter must be attached to a’s u s income_tax return for the year in which a obtained the ruling whether or not a is otherwise required to file a return this ruling is directed only to the taxpayer requesting it sec_6110 of the code provides that it may not be used or cited as precedent plr-120190-97 in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to a sincerely yours ____________ allen goldstein reviewer office of associate chief_counsel international


t c memo united_states tax_court newby's plastering inc petitioner v commissioner of internal revenue respondent docket no filed date helen l simpson for petitioner kay hill for respondent memorandum opinion laro judge petitioner petitioned the court to redetermine respondent's determination of the following additions to its federal_income_tax a dollar_figure addition under sec_6651 a dollar_figure addition under sec_6651 and a dollar_figure addition under sec_6655 we decide sua sponte whether we have jurisdiction to decide whether petitioner is liable for these additions to tax we hold we do not section references are to the internal_revenue_code in effect for the year at issue rule references are to the tax_court rules_of_practice and procedure petitioner's principal_place_of_business was in anchorage alaska when it petitioned the court background petitioner filed a federal_income_tax return on date on date respondent issued petitioner a notice_of_deficiency reflecting a determination that petitioner was liable for the three additions to tax mentioned above respondent did not determine and the notice_of_deficiency did not assert that petitioner had a deficiency in its federal_income_tax petitioner timely petitioned the court with respect to the notice_of_deficiency alleging in the petition that it was not liable for the additions to tax determined by respondent the petition did not allege and petitioner does not assert in this proceeding that it overpaid its federal_income_tax discussion this court is a court of limited jurisdiction and we may exercise our jurisdiction only to the extent authorized by congress 85_tc_527 we acquire jurisdiction when the commissioner issues to a taxpayer a notice_of_deficiency that reflects a deficiency in respect of any_tax imposed by subtitle a or b sec_6212 and the taxpayer timely petitions this court to redetermine that deficiency sec_6213 rule a c 74_tc_377 46_tc_499 in the instant case respondent has not determined a deficiency in respect of any_tax imposed by subtitle a or b sec_6212 respondent has determined only that petitioner is liable for the three additions to tax mentioned above pursuant to sec_6665 none of these additions to tax is treated as a tax that is imposed by subtitle a or b as stated in sec_6665 sec_6665 applicable rules a additions treated as tax --except as otherwise provided in this title-- the additions to the tax additional_amounts and penalties provided by this chapter shall be paid upon notice_and_demand and shall be assessed collected and paid in the same manner as taxes and any reference in this title to tax imposed by this title shall be deemed also to refer to the additions to the tax additional_amounts and penalties provided by this chapter b procedure for assessing certain additions to tax --for purposes of subchapter_b of chapter relating to deficiency procedures for income estate gift and certain excise_taxes subsection a shall not apply to any addition_to_tax under sec_6651 sec_6654 or sec_6655 except that it shall apply-- in the case of an addition described in sec_6651 to that portion of such addition which is attributable to a deficiency in tax described in sec_6211 or to an addition described in sec_6654 or sec_6655 if no return is filed for the taxable_year because respondent has not determined a deficiency in tax we hold that we lack jurisdiction to decide this case to reflect the foregoing an appropriate order of dismissal for lack of jurisdiction will be entered