significant index no department of the treasury internal_revenue_service washington d c uu q tax exempt anc overnment entities division apr re company former parent hourly plan bankruptcy court plan_of_reorganization dear mr this letter constitutes notice that the company's request for a modification of the conditional waiver of the minimum_funding_standard for the salaried plan for the plan _ that was granted in a ruling letter dated date year ending september and modified by ruling letters dated date date date and date has been approved accordingly conditions and of the funding waiver as modified are replaced with the following conditions by date the company replaces the current letter_of_credit with a letter_of_credit in favor of the salaried plan from a financial_institution _in the acceptable to the amount of dollar_figure under which this funding waiver has been granted the this letter_of_credit for the benefit of the salaried plan at anytime thereafter this letter_of_credit shall expire on the earlier of i the date that condition is satisfied or ii date the effective date of the plan_of_reorganization is no later than date if the company fails to meet any one of the conditions may draw upon _ 2uu826037 lf any one of the conditions of the funding waiver as modified is not met the waiver for the plan_year ending september is retroactively null and void _ _ the company announced that it was taking the steps necessary to is prepared to provide additional exit financing the on enable the completion of its exit financing syndication furthermore the former parent has advised the company that it company believes that the former parent's increased participation in the exit financing structure is necessary to successfully syndicate its exit financing on a timely basis and is consistent with the plan_of_reorganization in connection with the re-launch of its exit financing syndication the company's lead investor agreed to extend from the first date by which it could terminate the to if the effective date of the plan_of_reorganization has investment agreement with not occurred in order to provide the company additional time to comply with closing conditions under the investment agreement the company has represented that the funding waivers that the salaried and hourly plans have received are critical to the implementation of the plan_of_reorganization if the modifications that the company has requested are not approved the waivers would be rendered retroactively null and void if the company does not emerge from chapter bankruptcy protection on or before date the modifications agreed to by the company will extend the deadline for the company's emergence from in consideration of this extension the chapter bankruptcy protection to date company will a replace certain letters of credit that it has provided to the salaried plan and the hourly plan as a condition of the funding waivers each plan received for the _ and b increase the value of the letter_of_credit plan years ending september by date held by the hourly plan by dollar_figure this conditional waiver has been granted in accordance with sec_412 of the code and sec_303 of erisa the amount for which this conditional waiver has been granted is equal to the contributions that would otherwise be required to reduce the balance in the funding_standard_account to zero as of date your attention is called to sec_412 of the code and sec_304 of erisa which describe the consequences that would result in the event the hourly plan is amended to increase benefits change the rate in the accrual_of_benefits or to change the rate of vesting while any portion of the waived_funding_deficiency remains unamortized please note that any amendment to a profit sharing plan or any other retirement plans covering employees covered by the hourly plan maintained by the company to increase the liabilities of those plans would be considered an amendment for purposes of sec_412 of the code and sec_304 of erisa similarly the establishment of a new profit sharing plan or any other retirement_plan by the company covering employees covered by the hourly plan would be considered an amendment for purposes of sec_412 of the code and sec_304 of erisa this ruling is directed only to the taxpayer that requested it sec_6110 of the code provides that it may not be used or cited by others as precedent we have sent a copy of this letter to the to the and to your authorized representative pursuant to a power_of_attorney on file in this office we suggest that you furnish a copy of this letter to the enrolled_actuary who is responsible for the completion of the schedule b if you require further assistance in this matter please contact _at sincerely yours gs ichael d jubahsile rector employee_plans


office_of_chief_counsel internal_revenue_service memorandum number release date cc tege eoeg et1 postn-113850-08 uilc date date to director submission processing cincinnati oh attn entity unit from office of division counsel associate chief_counsel tax exempt government entities subject railroad_retirement_tax_act status in accordance with the coordination procedure established between the service and the railroad retirement board rrb the rrb has provided us with its opinion that the following businesses are not covered employers under the jurisdiction of the railroad_retirement_tax_act and the railroad unemployment insurance act ----------------------------------------- --------------------------------------------- ------------------ --------------------------------------- ------------------------------------ we have reviewed the opinion of the rrb and based upon the information submitted to us by the rrb we also conclude that ---------------------------------------- and ------------------ ------------------------- are not covered employers under the jurisdiction of the railroad_retirement_tax_act please take the appropriate action regarding this business cc _______________________ janine cook


internal_revenue_service number info release date march cc psi 1-genin-107907-03 dear uilc we are answering correspondence submitted on your behalf by requesting automatic late s_corporation relief under revproc_97_48 for an effective date of date however automatic relief is unavailable under revproc_97_48 in your situation because the internal_revenue_service sent a notice about your form_2553 deficiency within six months after the date your first form_1120s tax_return was filed although we are unable to respond to your request as submitted this letter provides information relating to your request announcement copy enclosed provides guidance on seeking relief for late s_corporation elections generally to request relief for a late s_corporation_election you must request a private_letter_ruling from the national_office the information forwarded to our office is insufficient for us to process a private_letter_ruling request the procedures for requesting a private_letter_ruling are set forth in revproc_2003_1 copy enclosed in addition taxpayers must submit a user_fee along with their ruling_request the standard user_fee for a private_letter_ruling is dollar_figure however taxpayers with gross_income of less than dollar_figure million on their tax_return for the most recent 12-month taxable_year qualify for a reduced user_fee in the amount of dollar_figure if you qualify for the reduced fee you must include a statement claiming that your gross_income for the last 12-month taxable_year was less than one million dollars if you decide to submit a formal request for a private_letter_ruling please follow the sample format provided in appendix b of revproc_2003_1 your request should include all required procedural statements a check for the user_fee and any documents that substantiate your intent to be an s_corporation from inception please refer your request to our office by adding the following to the address attn cc pa t p o box ben franklin station washington dc direct to cc psi room in addition the irs has developed two new cd-roms to help educate small_business owners on their tax responsibilities introduction to federal taxes for small_business self-employed and a virtual small_business workshop these two cd- roms are free and can be ordered by calling the irs also provides a special website www irs gov smallbiz which is dedicated to providing information to small_business taxpayers please keep this letter with your tax records and feel free to provide a copy of it to your authorized representative we hope that the above information proves helpful sincerely yours dianna k miosi chief branch associate chief_counsel passthroughs and special industries enclosures announcement revproc_2003_1


rsw enterprises inc petitioner v commissioner of internal revenue respondent key lime investments inc petitioner v commissioner of internal revenue respondent docket nos 14820-11r 14821-11r filed date ps domestic corporations each established a retirement_plan and received a favorable determination_letter from the irs regarding the plan’s qualified status under sec_401 the irs later revoked the plans’ qualified status on the basis that each plan failed to satisfy the coverage require- ments of sec_401 and sec_410 and also failed to satisfy the minimum participation requirements of sec_401 ps petitioned requesting declaratory judgments that the plans’ qualified status should not have been revoked r seeks summary_judgment in his favor held r’s motion for summary_judgment will be denied because genuine disputes of united_states tax_court reports material fact remain held further the court is not limited to considering the administrative record alone in a proceeding concerning a revocation where the parties disagree as to whether the administrative record contains all the relevant facts and as to whether those facts are in dispute june waage an officer for petitioners shawn p nowlan for respondent opinion buch judge petitioners are before the court seeking declaratory judgments as to the revocation of their retire- ment plans’ qualified status under sec_401 after ini- tially issuing favorable determinations the irs issued subse- quent revocation letters stating that the plans did not qualify under sec_401 because the plans did not meet the cov- erage requirements of sec_401 and sec_410 and also failed to satisfy the minimum participation requirements of sec_401 respondent filed a motion for summary_judgment and a supporting memorandum petitioners oppose the motion and filed a response and a supporting memo- randum after viewing the facts in the light most favorable to petitioners as the nonmoving parties we will deny respondent’s motion because genuine disputes of material fact still remain background the following facts are not in dispute and are stated solely for the purpose of deciding respondent’s motion for summary_judgment these are not findings_of_fact for this case see 128_tc_113 see also 125_tc_227 citing fed r civ p a and lakewood assocs v commissioner t c memo scott and june waage were husband and wife at all rel- evant times and either one or both of them were involved in all of the relevant entities mr waage was the sole share- holder ceo president chief financial officer and secretary of the waage law firm from its incorporation until its dis- unless otherwise indicated all section references are to the internal_revenue_code in effect at all relevant times and all rule references are to the tax_court rules_of_practice and procedure rsw enters inc v commissioner solution after the years in issue the waage law firm employed tax attorneys certified public accountants actu- aries paralegals and accountants the waage law firm provided a sec_401 plan for its employees from through the sec_401 plan offered coverage to between and eligible employees rsw enterprises inc is a california corporation orga- nized in date ms waage is the president secretary and chief financial officer and mr waage is the vice presi- dent rsw provided real_estate and marketing services to the waage law firm all of rsw’s stock is owned by the rsw irrevocable_trust u t d ms waage as the settlor of the rsw irrevocable_trust transferred the stock into the trust the beneficiaries of which are the siblings of ms waage ms waage’s sister is the trustee rsw adopted the rsw enterprises inc defined benefit pension_plan rsw plan the irs issued a favorable deter- mination letter dated date regarding the rsw plan during each year in issue rsw contributed money to the rsw plan and deducted the contributed amount on its return during those years mr and ms waage were the only plan participants key lime investments inc is a nevada corporation orga- nized in date ms waage is the president sec- retary and chief financial officer and mr waage is the vice president key lime licensed intellectual_property to the waage law firm all of key lime’s stock is owned by the key lime irrevocable_trust u t d ms waage as the settlor of the key lime irrevocable_trust transferred the stock into the trust the beneficiaries of which are the siblings of ms waage ms waage’s sister is the trustee key lime adopted the key lime inc i defined ben- efit pension_plan key lime plan the irs issued a favor- able determination_letter dated date regarding the key lime plan during each year in issue key lime contributed money to the key lime plan and deducted the contributed amount on its return during those years mr and mrs waage were the only plan participants the irs issued revocation letters regarding both the rsw plan and the key lime plan on date the irs mailed rsw a final revocation letter notifying it that the rsw plan did not meet the qualification requirements of sec- united_states tax_court reports tion a for the plan_year ending date and all subsequent plan years the irs issued a similar letter on the same day to key lime notifying it that the key lime plan did not meet the qualification requirements of sec_401 for the plan_year ending date and all subse- quent plan years in essence the irs asserts that the waages are the true owners of both rsw and key lime and that because mr waage owns the waage law firm all three entities are all part of the same controlled_group the irs also asserts that rsw key lime and the waage law firm are part of the same affiliated_service_group because the waages own rsw and key lime and a significant portion of rsw’s and key lime’s business is the performance of serv- ices for the waage law firm accordingly because the waages were the only participants in the rsw plan and the key lime plan and the plans were not offered to the employees of the waage law firm the plans were no longer qualified under sec_401 both rsw and key lime while maintaining their principal places of business in cali- fornia petitioned this court these cases were later consoli- dated i summary_judgment discussion the purpose of summary_judgment is to avoid unnecessary and expensive trials fla peach corp v commissioner 90_tc_678 however summary_judgment is not a substitute for trial and it should not be invoked in pro- ceedings where there are disputed facts 61_tc_861 summary_judgment may be granted if the pleadings answers to interrogatories deposi- tions admissions and any other acceptable materials together with the affidavits or declarations if any show that there is no genuine dispute as to any material fact and that a decision may be rendered as a matter of law rule b the party moving for summary_judgment bears the burden of demonstrating that a genuine dispute does not exist as to any material fact 98_tc_518 aff ’d 17_f3d_965 7th cir because the moving party bears this burden any factual inferences will be treated in a manner that is most favorable rsw enters inc v commissioner to the nonmoving party 85_tc_812 while the burden falls on the moving party the nonmoving party may not rest upon the mere allega- tions or denials of such party’s pleading but such party’s response must set forth specific facts showing that there is a genuine dispute for trial rule d the ques- tion of whether there is a dispute for trial in this declaratory_judgment proceeding concerning a plan revocation is further complicated by another issue whether we can go beyond the administrative record ii tax_court jurisdiction sec_401 provides the requirements that must be met for a_trust forming part of a stock bonus pension or profit- sharing plan to be eligible for favorable tax treatment this court has jurisdiction to issue a declaratory_judgment with respect to a determination by the secretary regarding the initial or continuing qualification of a retirement_plan under sec_401 sec_7476 a determination relating to a continuing qualification includes a revocation id both parties point us to rule rule b provides that resolution by summary_judgment may be appropriate in actions for declaratory_judgment and respondent argues that summary_judgment is appropriate because our review is limited to the administrative record respondent cites 124_tc_198 aff ’d 456_f3d_320 3d cir as support for the proposition that we are limited to the administrative record however respondent’s position is contradicted by our rules which pro- vide that disposition of an action for declaratory_judgment involving a revocation may be made on the basis of the administrative record alone only where the parties agree that such record contains all the relevant facts and that such facts are not in dispute rule a emphasis added because stepnowski did not involve a revocation it is not controlling here in stepnowski a corporation requested a determination_letter after amending its plan to comply with a change in the law the corporation received a favorable determination but a plan participant petitioned this court in response to the favorable determination because that participant believed united_states tax_court reports the amendment was an that impermissible cutback although the parties stipulated to the administrative record the plan participant sought to conduct additional discovery in discussing the court’s rationale in denying the request the court stated the legislative_history of sec_7476 makes clear that congress did not expect the court to conduct a trial de novo in declaratory_judgment actions arising under that section no matter whether that action arose with respect to the initial qualification or the continuing qualification of a retirement_plan see 658_f2d_735 10th cir affg 71_tc_824 h rept pincite c b supp s rept pincite c b supp see also wenzel v commis- sioner f 2d 2d cir aff ’g t c memo therefore discovery or introduction of extrinsic evidence in such cases is inconsistent with the legislative intent that such cases be resolved without a trial based solely on the materials contained in the administrative record stepnowski v commissioner t c pincite consistent with stepnowski absent good cause for example when the administrative record is incomplete we limit ourselves to the administrative record in cases involving the initial qualification of a retirement_plan or the initial qualification or classification of an exempt organiza- tion private_foundation or private_operating_foundation rule a while the presumption in those cases is that we are limited to the administrative record the presumption contemplated by our rule is the opposite in the case of a rev- ocation in cases involving a revocation we are limited to the administrative record only where the parties agree that such record contains all the relevant facts and that such facts are not in dispute id when promulgating this rule we went so far as to highlight the distinction in our notes to the rule stating the distinction in treatment under this rule for cases involving a rev- ocation results from the difference in processing of such cases by the internal_revenue_service which usually bases its determination of rev- ocation on its own investigation rather than by accepting the facts asserted by the applicant and which go into the administrative record in other cases rule a note 68_tc_1048 we made this distinction because i n those cases there may be unresolved factual disputes rule b note t c rsw enters inc v commissioner a trial therefore may be necessary to resolve these factual disputes rule a note 68_tc_1043 in short a revocation case typically involves an audit and likely involves fact disputes as is the case here and because this case involves a revocation we presumptively can go beyond the administrative record cf animal prot inst inc v united_states u s ct_cl lexi sec_804 wl ct_cl 141_tc_151 neither stepnowski nor the cases it cites fall within this latter rule for the simple reason that they do not involve plan revocations as discussed above in stepnowski the plan was held by the irs to continue to qualify it did not involve a revocation likewise in wenzel v commissioner f 2d pincite the plan participants challenged the irs’ favorable determination as to the plan’s continuing qualification after a merger it did not involve a revocation tamko asphalt prods inc v commissioner f 2d pincite involved an initial determination that the plan at issue did not qualify in short neither stepnowski nor the cases it relied upon addressed the question of a plan revocation the instant cases present a revocation the situation in which rule a contemplates going beyond the adminis- trative record rsw and key lime argue that the waage law firm rsw and key lime are not one controlled_group because the waages did not own the stock of rsw and key lime because the trusts owned the stock respondent counters that the trusts are shams and the waages are the true owners of rsw and key lime rsw and key lime fur- ther argue that they are not an affiliated_service_group with the waage law firm because they did not perform the nec- essary activities to be considered part of such a group and because the record does not support such a finding again respondent disagrees although rsw and key lime do not dispute the genuine- ness of the items in the administrative record they maintain that the administrative record contains facts that are con- flicting and in dispute further respondent’s own motion states that respondent lacks evidence regarding the actions of the trustee and the stock transfers the filings from rsw and key lime indicate that such evidence is available united_states tax_court reports nothing in our rules precludes rsw and key lime from pro- ducing this evidence or using it at trial accordingly when viewing factual inferences in the light most favorable to rsw and key lime as the nonmoving par- ties we find that genuine disputes of material fact exist the parties argue about the meaning of rule we hold that under that rule we are not limited to the administrative record in this proceeding concerning plan revocations because the parties do not agree that the administrative record con- tains all of the relevant facts and that those facts are not in dispute to reflect the foregoing an appropriate order will be denying respondent’s motion issued f


internal_revenue_service number release date index number --------------------------------------------------------- ---------------------------------- ----------------------------------------------------------- ------------------------------ ------------------------------------ - department of the treasury washington dc third party communication none date of communication not applicable_person to contact ------------------- id no ------------- telephone number --------------------- refer reply to cc psi b03 plr-110794-06 date january ---------------------------------------------------------- x ----------------------------------------- country d1 dear ---------------- ------------------------ --------- this letter responds to a letter dated date written on behalf of x requesting a ruling under ' and of the procedure and administration regulations that x be granted an extension of time to file an election to be classified as a partnership under ' facts according to the information submitted x is an entity formed under the laws of country x represents that x is a foreign_entity eligible to elect to be treated as a partnership and that x intended to elect to be a partnership effective d1 however x inadvertently failed to file form_8832 entity classification election electing to treat x as a partnership effective d1 law and analysis sec_301_7701-3 provides that a business_entity that is not classified as a corporation under ' b or an eligible_entity can elect its classification for federal tax purposes as provided in ' plr-110794-06 sec_301_7701-3 provides that except as provided in ' b unless the entity elects otherwise a foreign eligible_entity is a partnership if it has two or more members and at least one member does not have limited_liability an association if all members have limited_liability or disregarded as an entity separate from its owner if it has a single owner that does not have limited_liability sec_301_7701-3 provides that an eligible_entity may elect to be classified other than as provided in ' b by filing form_8832 with the service_center designated on form_8832 sec_301_7701-3 provides that an election made under sec_301_7701-3 provides in part that if an eligible_entity makes an ' c i will be effective on the date specified by the entity on form_8832 or on the date filed if no date is specified on the election form the effective date specified on form_8832 cannot be more than days prior to the date on which the election is filed and cannot be more than months after the date on which the election is filed election under sec_301_7701-3 to change its classification the entity cannot change its classification by election again during the sixty months succeeding the effective date of the election sec_301_9100-1 provides that the commissioner 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 or a statutory election but no more than six months except in the case of a taxpayer who is abroad under all subtitles of the code except subtitles e g h and i sec_301_9100-1 defines a regulatory election to include an election whose due_date is prescribed by a regulation published in the federal_register making certain elections not meet the requirements of sec_301_9100-2 under sec_301_9100-3 a request for relief will be granted when the taxpayer provides evidence to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and granting relief will not prejudice the interests of the government sec_301_9100-2 provides the rules governing automatic extensions of time for sec_301_9100-3 provides extensions of time for regulatory elections that do conclusion based on the facts submitted and the representations made we conclude that the requirements of and have been satisfied as a result x is granted an extension of time of days from the date of this letter to file form_8832 plr-110794-06 with the appropriate service_center and elect to be classified as partnership for federal tax purposes effective d1 a copy of this letter should be attached to the form_8832 except as specifically set forth above no opinion is expressed or implied concerning the federal tax consequences of the transaction described above under any other provision of the code specifically no opinion is expressed or implied as to whether x is otherwise eligible to make the election this ruling is directed only to the taxpayer requesting it sec_6110 of the internal_revenue_code provides that it may not be used or cited as precedent in accordance with a power_of_attorney on file with this office we are sending a copy of this letter to x s authorized representatives sincerely s william p o'shea associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes


internal_revenue_service number release date index number ------------------------ ------------------------ ---------------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ----------------------- id no ----------------- telephone number --------------------- refer reply to cc intl b04 plr-144970-09 date may legend individual x ------------------------ entity a ----------------------------------------------------------------------------------------------------- ---------------------------------------------------------- ------------------------------ entity b ----------------------------------------------------------------------------------------------------- ---------------------------------------------------------- --------------------------------------- entity c ------------------------------------------------------------------------------------------------------- ---------------------------------------------------------- ----------------------------------- entity d ------------------------------------------------------------------------------------------------------ ------------------ entity e ------------------------------------------------------------------------------------------------------------ ------------ country country aa ---------------- ------------ -------- plr-144970-09 dear ------------------- 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 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 facts individual x is a permanent resident of country but a citizen of country he represents that the income_tax treaty between country and the united_states applies to the transactions discussed below individual x is the aa shareholder of entity a a domestic_corporation individual x is also the sole shareholder of entity b a domestic_corporation furthermore individual x is the sole member of entity c a domestic limited_liability_company which is disregarded as an entity separate from its sole owner for u s federal_income_tax purposes entity a and entity b constitute u s real_property holding corporations the shares of which are u s real_property interests pursuant to sec_897 of the internal_revenue_code entity c also owns u s real_property interests pursuant to sec_897 of the internal_revenue_code as part of a restructuring of his business enterprises individual x will undertake two separate but interrelated transactions in transaction individual x will transfer all of his shares in entity a and entity b as well as all of his interests in entity c to newly formed domestic entity d in exchange for all the authorized shares of entity d after transaction is complete individual x will immediately undertake transaction individual x will transfer all of the shares of entity d to newly formed entity e which will be organized under the laws of country in exchange for all the shares in entity e simultaneously with this transfer entity e will file a notice with the internal_revenue_service under sec_897 of the code electing to be treated as a domestic_corporation for purposes of sec_897 sec_1445 and sec_6039c the following representations have been made in connection with the proposed transactions entity a and entity b are united_states real_property holding corporations within the meaning of sec_897 and the interests in them constitute united_states real_property interests as defined in sec_897 plr-144970-09 immediately after transaction entity d will be a united_states_real_property_holding_corporation within the meaning of sec_897 its stock will be subject_to u s taxation upon its disposition and individual x will comply with the filing_requirements of sec_1_897-5t as modified by notice_89_57 1989_1_cb_698 immediately after transaction entity e will be a united_states_real_property_holding_corporation within the meaning of sec_897 its stock will constitute a united_states_real_property_interest as defined in sec_897 that will be subject_to u s taxation upon its disposition and individual x will comply with the filing_requirements of sec_1 5t d iii as modified by notice_89_57 1989_1_cb_698 law and analysis sec_897 provides that gain_or_loss of a nonresident_alien_individual or a foreign_corporation from the disposition of a united_states_real_property_interest shall be taken into account as if the taxpayer were engaged_in_a_trade_or_business_within_the_united_states during the taxable_year and as if such gain_or_loss were effectively connected with such trade_or_business the term united_states_real_property_interest usrpi includes an interest_in_real_property including an interest in a mine well or other natural_deposit located in the united_states or the virgin islands and any interest other than an interest solely as a creditor in any domestic_corporation unless the taxpayer establishes at such time and in such manner as the secretary by regulations prescribes that such corporation was at no time a united_states_real_property_holding_corporation during the 5-year period ending on the date of disposition of such interest sec_897 provides that the term united_states_real_property_holding_corporation usrphc means any corporation if the fair_market_value of its usrpis equals or exceed sec_50 percent of the fair_market_value of the following i its usrpis ii its interests_in_real_property located outside the united_states and iii any other of its assets which are used or held for use in a trade_or_business with respect to a transaction coming within a nonrecognition_provision of the code sec_897 states that such nonrecognition_provision will apply to a transaction only in the case of an exchange of a usrpi for an interest the sale of which would be subject_to taxation the term nonrecognition_provision includes any provision under the code for not recognizing gain_or_loss such as sec_351 sec_1 6t addresses the application of any nonrecognition_provision to a transfer by a foreign_person under sec_897 the regulation states that a nonrecognition_provision will apply to a transfer by a foreign_person of a usrpi on which gain is realized only to the extent that the transferred interest is exchanged for a usrpi which immediately following the exchange would be subject_to u s taxation upon its disposition and the transferor complies with the filing_requirements of sec_1_897-5t plr-144970-09 sec_1445 provides that except as otherwise provided in this section in the case of any disposition of a united_states_real_property_interest as defined in sec_897 by a foreign_person the transferee shall be required to deduct and withhold a tax equal to percent of the amount_realized on the disposition sec_1_1445-2 provides that a transferee shall not be required to withhold under sec_1445 with respect to the transfer of a usrpi if the following occurs a the transferor notifies the transferee in the manner described in sec_1 d iii that by reason of the operation of a nonrecognition_provision of the internal_revenue_code or the provisions of any unites states treaty the transferor is not required to recognize any gain_or_loss with respect to the transfer and b by the 20th day after the date of the transfer the transferee provides a copy of the transferor’s notice to the internal_revenue_service provided in sec_1_1445-1 together with a cover letter setting forth the name identifying number and the home address in the case of an individual or office address in the case of an entity of the transferee providing the notice to the service sec_897 provides that if a foreign_corporation holds a united_states_real_property_interest and under any treaty obligation of the united_states the foreign_corporation is entitled to nondiscriminatory treatment with respect to that interest then such foreign_corporation may make an election to be treated as a domestic_corporation for purposes of this section sec_1445 and sec_6039c sec_1_897-3 provides in part that this section provides rules pursuant to which a foreign_corporation may elect under sec_897 to be treated as a domestic_corporation for purposes of sec_897 sec_1445 and sec_6039c and the regulations thereunder a foreign_corporation with respect to which an election under sec_897 is in effect is subject_to all rules under sec_897 and sec_1445 that apply to domestic corporations a foreign_corporation that makes an election under sec_897 shall not be treated as a domestic_corporation for purposes of any other provision of the code or regulations except to the extent that it is required to consent to such treatment as a condition to making the election for further information concerning the effect of an election under sec_897 upon the withholding requirements of sec_1445 see sec_1_1445-7 sec_1_1445-7 provides that pursuant to sec_897 a foreign_corporation may elect to be treated as a domestic_corporation for purposes of sec_897 and sec_6039c a foreign_corporation that has made such an election shall also be treated as a domestic_corporation for purposes of the withholding required under sec_1445 in accordance with the provisions of this section for transaction to qualify for nonrecognition treatment it must satisfy the requirements of sec_897 and sec_1_897-6t that is the interests in entities a b and c must be exchanged for a usrpi which immediately following the plr-144970-09 exchange would be subject_to u s taxation upon its disposition and individual x must comply with the filing_requirements of sec_1_897-5t as modified by notice_89_57 1989_1_cb_698 individual x represents that entity a and entity b are usrphcs and that his interests in entities a and b constitute usrpis in addition individual x who represents that entity c has elected to be treated as a disregarded_entity for u s tax purposes is treated as directly owning the usrpis which in turn are owned by entity c individual x also represents that immediately after transaction entity d will be a usrphc and that individual x will comply with the filing_requirements of sec_1_897-5t as modified by notice_89_57 1989_1_cb_698 transaction will therefore qualify for nonrecognition treatment for transaction to qualify for nonrecognition treatment it must also satisfy all the requirements of sec_897 and sec_1_897-6t that is the interests in entity d must be exchanged for a usrpi which immediately following the exchange would be subject_to u s taxation upon its disposition individual x represents that entity d will be a usrphc and that individual x’s interest in it will constitute a usrpi furthermore individual x represents that immediately after transaction individual x’s interest in entity e will constitute a usrpi which will be subject_to u s taxation upon disposition individual x will make an i election so that entity e will be treated as a domestic_corporation for purposes of sec_897 sec_1445 and sec_6039c entity e is eligible for an election under i because it holds a united_states_real_property_interest and is entitled to nondiscriminatory treatment with respect to that interest under the income_tax treaty with country entity e will be a usrphc under sec_897 immediately_after_the_exchange and individual x’s interest in entity e will constitute a usrpi individual x further represents that he will comply with the filing_requirements of sec_1_897-5t as modified by notice_89_57 1989_1_cb_698 based upon the foregoing transaction satisfies the requirements of sec_1_897-6t and will qualify for nonrecognition treatment under sec_897 other representations transfer no stock_or_securities will be issued for services rendered to or for the benefit of entity d in connection with the proposed transaction no stock_or_securities will be issued for indebtedness of entity d that is not evidenced by a security or for interest on indebtedness of entity d which is accrued on or after the beginning of the holding_period of individual x for the debt transfer is not the result of the solicitation by a promoter broker or investment house individual x will not retain any rights in the property transferred to entity d there is no indebtedness between entity d and individual x and there will be no plr-144970-09 indebtedness created in favor of individual x as a result of transaction transaction will occur under a plan agreed upon before the transaction in which the rights of the parties are defined there is no plan or intention on the part of entity d to redeem or otherwise reacquire any stock or indebtedness to be issued in transaction taking into account any issuance of additional shares of entity d stock any issuance of stock for services the exercise of any entity d stock_rights warrants or subscriptions a public offering of entity d stock and the sale exchange transfer by gift or other_disposition of any of the stock of entity d to be received in the exchange the transferor will be in control of entity d within the meaning of sec_368 of the code rev_rul c b individual x will receive stock securities or other_property approximately equal in value to the fair_market_value of the property transferred to entity d entity d will remain in existence and retain use of the property transferred to it in a trade_or_business there is no plan or intention by entity d to dispose_of the transferred property other than as proposed in transaction each of the parties to transaction will pay its or his her own expenses if any incurred in connection with transaction entity d will not be an investment_company within the meaning of sec_351 of the code and sec_1 c ii of the regulations individual x is not under the jurisdiction of a court in a title_11_or_similar_case within the meaning of sec_368 and the stock_or_securities received in the exchange will not be used to satisfy the indebtedness of such debtor entity d will not be a personal_service_corporation within the meaning of sec_269a of the code the aggregate fair_market_value of the assets transferred to entity d by individual x will equal or exceed the aggregate adjusted_basis of these assets plr-144970-09 transfer no stock_or_securities will be issued for services rendered to or for the benefit of entity e in connection with the proposed transaction no stock_or_securities will be issued for indebtedness of entity e that is not evidenced by a security or for interest on indebtedness of entity e which is accrued on or after the beginning of the holding_period of individual x for the debt transfer is not the result of the solicitation by a promoter broker or investment house individual x will not retain any rights in the property transferred to entity e there is no indebtedness between entity e and individual x and there will be no indebtedness created in favor of individual x as a result of transaction transaction will occur under a plan agreed upon before the transaction in which the rights of the parties are defined there is no plan or intention on the part of entity e to redeem or otherwise reacquire any stock or indebtedness to be issued in transaction taking into account any issuance of additional shares of entity e stock any issuance of stock for services the exercise of any entity e stock_rights warrants or subscriptions a public offering of entity e stock and the sale exchange transfer by gift or other_disposition of any of the stock of entity e to be received in the exchange the transferor will be in control of entity e within the meaning of sec_368 of the code individual x will receive stock securities or other_property approximately equal in value to the fair_market_value of the property transferred to entity e entity e will remain in existence and retain use of the property transferred to it in a trade_or_business there is no plan or intention by entity e to dispose_of the transferred property each of the parties to transaction will pay its or his her own expenses if any incurred in connection with transaction entity e will not be an investment_company within the meaning of sec_351 of the code and sec_1 c ii of the regulations individual x is not under the jurisdiction of a court in a title_11_or_similar_case within the meaning of sec_368 and the stock_or_securities received plr-144970-09 in the exchange will not be used to satisfy the indebtedness of such debtor entity e will not be a personal_service_corporation within the meaning of sec_269a of the code the aggregate fair_market_value of the assets transferred to entity e by individual x will equal or exceed the aggregate adjusted_basis of these assets conclusion based solely on the information submitted and on the representations made we rule that transaction and transaction each qualify as separate exchanges under sec_351 and that as long as the filing_requirements of sec_1_897-5t as modified by notice_89_57 1989_1_cb_698 are met individual x will not recognize gain_or_loss on transaction or transaction under sec_897 see sec_1_897-6t in regard to the withholding requirements on transaction and transaction under sec_1445 see sec_1_1445-2 and sec_1_1445-7 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 no opinion is expressed as to the validity of the election by entity e under sec_897 of the code nor as to the effect on this ruling of any requirement that entity e might be required to consent to as a condition to making that election except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter this ruling is directed only to the taxpayer requesting it sec_6110 of the code provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative plr-144970-09 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 sincerely charles p besecky chief branch office of the associate chief_counsel international cc


internal_revenue_service number release date index number ---------------------- --------------------- ------------------------------ ------------------- --------------------------------- ----------------------------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact -------------------------- id no ------------- telephone number --------------------- refer reply to cc tege eb hw plr-114674-07 date october --------------- ---------------------------------------------- legend taxpayer ----------------------------------------------------- state trust ------------------------------------------------------------------------------------------ -------------------------------------------------------------------------------------------------------------------- plan ------------------------------------------------------------------------------ dear ------------ this is in reply to the your letter dated date and subsequent correspondence requesting rulings on behalf of taxpayer concerning the plan and the trust -------------------------------- taxpayer is a municipality organized and existing under the laws of state as a municipality taxpayer is a political_subdivision of state taxpayer adopted plan to provide post-retirement medical benefits for its employees only taxpayer’s full-time facts plr-114674-07 employees their spouses and eligible dependents as defined in sec_152 of the internal_revenue_code the code may participate in plan plan covers all full-time employees including collectively bargained employees only mandatory employer contributions mandatory employee contributions and mandatory_contributions of accumulated leave are made to plan the plan provides that mandatory employee contributions ie mandatory salary reduction contributions and mandatory_contributions of accumulated sick leave vacation and severance which are not actually or constructively received by the participant will be considered employer contributions for purposes of the plan the plan also provides that no contributions other than employer contributions are required nor will they be accepted contributions are made during an employee’s active employment with taxpayer under plan each employee has a separate health account to be used after retirement distributions from the retired employee’s health account can only be used for health insurance or medical_care expenses_incurred after retirement specifically distributions can be used only for medical_expenses as defined in sec_213 of the code any balance remaining in the account after the death of the retiree and his or her spouse and dependents must be forfeited at that point the account will be closed and any remaining funds will become general assets of the plan even on death the balance in the account may be spent only on permissible healthcare expenses for the decedent’s surviving_spouse or dependents the balance in the account can never be conveyed to anyone else taxpayer represents that there is no individual employee election in the plan there is no election as to whether or not to participate and no election on the level of mandatory employer contributions mandatory employee contributions or mandatory leave settlement participation is mandatory for all employees in a bargaining unit that negotiates to participate in plan taxpayer established trust to fund plan benefits the trustee is appointed by taxpayer and can be removed by taxpayer at any time in the event of the trustee’s removal or resignation a successor trustee will be appointed by taxpayer contributions to plan are deposited in trust and invested among the investments selected by taxpayer trust’s income is derived from plan contributions and investment_income trust assets are held for the exclusive purposes of providing benefits to participants of plan and their beneficiaries and defraying the reasonable expenses of administering plan and trust the trust agreement provides that no portion of the corpus or income of trust will revert to taxpayer and that no private interests participate in or benefit from the operation of trust other than as providers of goods or services taxpayer proposes to amend the trust agreement to provide that taxpayer may amend the trust agreement or terminate the trust at any time in addition the trust plr-114674-07 agreement will be amended to provide that upon the termination of trust in no case will trust’s assets be distributed to an entity that is not a state a political_subdivision of a 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_utilities or the performance of some governmental function that accrued to either a state or municipality the ruling points out that it may be assumed that congress did not desire in any way to restrict a state’s participation in enterprises that might be useful in carrying out projects that are desirable from the standpoint of a state government and which are within the ambit of a sovereign to properly conduct in addition pursuant to sec_6012 and the underlying regulations the investment fund being classified as a corporation that is subject_to taxation under subtitle a of the code was required to file a federal_income_tax return each year in revrul_90_74 1990_2_cb_34 the service determined that the income of an organization formed funded and operated by political subdivisions to pool various risks casualty public liability workers’ compensation and employees’ health is excludable from gross_income under sec_115 of the code in revrul_90_74 private interests neither materially participate in the organization nor benefit more than incidentally from the organization trust provides health benefits to retired employees of taxpayer their spouses and eligible dependents taxpayer is the sole participating employer in plan and is a political_subdivision of a state providing health benefits to former employees of a political_subdivision as well as to their spouses and dependents constitutes the performance of an essential government function based upon revrul_90_74 and revrul_77_261 trust performs an essential_governmental_function within the meaning of sec_115 of the code the income of trust accrues to taxpayer a political_subdivision and the sole participating employer in plan the distribution of funds in trust to participating retirees plr-114674-07 satisfies an obligation taxpayer has assumed with respect to providing health benefits to its employees any benefit to the insurance_companies health care providers or to the participating retirees their spouses and dependents is incidental to the public benefit no private interests participate in or benefit from the operation of trust other than as providers of goods and services see revrul_90_74 sec_106 of the code provides that gross_income of an employee does not include employer-provided coverage under an accident_or_health_plan sec_1_106-1 of the regulations provides that the gross_income of an employee does not include contributions which his employer makes to an accident_or_health_plan for compensation through insurance or otherwise to the employee for personal injuries or sickness incurred by him his spouse or his dependents as defined by sec_152 the employer may contribute to an accident_or_health_plan either by paying the premium or a portion of the premium on a policy of accident_or_health_insurance covering one or more of his employees or by contributing to a separate trust or fund including a fund referred to in sec_105 which provides accident and health benefits directly or through insurance to one or more of his employees however if the insurance_policy trust or fund provides other_benefits in addition to accident or health sec_106 applies only to the portion of the contributions allocable to accident or health benefits coverage provided under an accident_and_health_plan to former employees and their spouses and dependents is excludable from gross_income under sec_106 see revrul_62_199 1962_2_cb_32 revrul_82_196 1982_2_cb_53 based on the information and representations submitted by trust and provided the amendments to the trust agreement described above are adopted we hold that as of the date the amendments are adopted the income of trust is derived from the exercise of an essential_governmental_function and will accrue to a state or a political_subdivision thereof for purposes of sec_115 accordingly trust’s income is excludable from gross_income under sec_115 of the code we also conclude that mandatory_contributions made to plan on behalf of active employees to provide for the health coverage after retirement their spouses and dependents as defined in sec_152 are excludable from gross_income under sec_106 of the code no opinion is expressed concerning the federal tax consequences of plan or trust under any other provision of the code other than those specifically stated herein in particular section dollar_figure of revproc_2007_3 2007_1_irb_108 provides that the service will not issue a ruling concerning whether a self-insured_medical_reimbursement_plan satisfies the requirements of sec_105 for a plan_year accordingly no opinion is expressed concerning whether plan satisfies the nondiscrimination requirements of sec_105 or sec_1_105-11 plr-114674-07 this ruling is directed only to the taxpayer requesting it sec_6110 of the code provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative sincerely harry beker branch chief health and welfare branch office of division counsel associate chief_counsel tax exempt and government entities


t c summary opinion united_states tax_court chad w and aliza kold-warren petitioners v commissioner of internal revenue respondent docket no 24445-05s filed date chad w and aliza kold-warren pro_se michael s hensley for respondent whalen judge this case was heard pursuant to the provisions of sec_7463 of the internal_revenue_code in effect when the petition was filed all 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 unless otherwise indicated pursuant to sec_7463 the decision to be entered is not reviewable by any other court and this opinion shall not be treated as precedent for any other cases the court issued a bench opinion in this case on date and directed therein that the decision be entered pursuant to the procedures set forth in rule of the tax_court rules_of_practice and procedure in accordance with those procedures each party submitted a computation of the deficiency respondent’s computation for entry of decision was filed date petitioners’ alternative computation for entry of decision was filed date respondent’s reply to petitioners’ alternative computation for entry of decision referred to herein as respondent’s revised computation was filed date the case is before the court to resolve the differences between the parties regarding the amount of the deficiency to be entered by the court respondent’s original computation asks the court to redetermine a deficiency for of dollar_figure and to redetermine petitioners’ liability for a penalty of dollar_figure under sec_6662 respondent’s revised computation concedes that the original computation is incorrect on a number of points respondent’s revised computation asks the court to decide that there is a deficiency of dollar_figure in petitioners’ income_tax for as computed in respondent’s revised computation and to decide further that petitioners are liable for an accuracy- related penalty under sec_6662 in the amount of percent of the deficiency or dollar_figure petitioners’ alternative computation asks the court to decide that the amount of the deficiency is dollar_figure petitioners’ computation does not discuss the accuracy-related_penalty under sec_6662 nevertheless we note that the court expressly sustained respondent’s determination of the accuracy-related_penalty in its bench opinion and petitioners’ liability for the accuracy-related_penalty under sec_6662 is not in issue in these proceedings under rule the decision in this case will include petitioners’ liability for an accuracy-related_penalty in the amount of percent of the deficiency a summary of the deficiency computations of both parties is appended hereto as appendix there are six differences between petitioners’ computation and respondent’s revised computation the attached summary highlights those six differences we address each of them below item no petitioners’ computation claims a capital_loss of dollar_figure whereas respondent’s revised computation allows a capital_loss of dollar_figure a difference of dollar_figure paragraph of the stipulation of facts states that petitioners incurred a capital_loss of dollar_figure during accordingly the capital_loss allowed in respondent’s revised computation is correct item no petitioners’ computation claims miscellaneous deductions subject_to the 2-percent of adjusted_gross_income limitation of dollar_figure whereas respondent’s revised computation allows a higher amount dollar_figure a difference of dollar_figure the amount allowed by respondent is the sum of dollar_figure and dollar_figure these amounts are set forth in paragraphs and of the stipulation of facts respectively they relate to deductions for depreciation and other automobile expenses for the unreimbursed employee business use of petitioners’ truck accordingly the miscellaneous deductions subject_to the percent of adjusted_gross_income limitation allowed in respondent’s revised computation dollar_figure is correct item no petitioners’ computation calculates tax of dollar_figure based upon taxable_income of dollar_figure whereas respondent’s revised computation calculates tax of dollar_figure based upon taxable_income of dollar_figure the tax computed by respondent is dollar_figure more than the tax computed by petitioners respondent’s tax computation based upon the tax table for married individuals filing joint returns is correct ie dollar_figure-dollar_figure x dollar_figure item no petitioners compute no alternative_minimum_tax whereas respondent’s revised computation computes alternative_minimum_tax of dollar_figure the alternative_minimum_tax is not mentioned in the stipulation of facts and it was not raised as an issue at trial in their computation petitioners point out that alternative_minimum_tax of dollar_figure was reported on their return for but no alternative_minimum_tax was determined per exam in effect petitioners’ computation suggests that alternative_minimum_tax is not applicable because none was computed in the notice_of_deficiency we disagree there is nothing in the record to suggest that respondent conceded the alternative_minimum_tax in this case and petitioners have shown no reason why the alternative_minimum_tax is not applicable no alternative_minimum_tax was determined by respondent in the notice_of_deficiency because there was no excess of tentative_minimum_tax over regular_tax based upon the adjustments determined in the notice_of_deficiency see sec_55 based upon the adjustments redetermined in these proceedings the situation is different this is simply a computational matter we agree with respondent that alternative_minimum_tax is applicable and we agree with the amount computed in respondent’s revised computation dollar_figure item no petitioners claim a child_tax_credit of dollar_figure the same amount claimed on their return whereas respondent’s revised computation allows zero respondent disallowed the child_tax_credit in the notice_of_deficiency as a result of the application of the limitation based on petitioners’ adjusted_gross_income see sec_24 similarly based upon the adjusted_gross_income redetermined in these proceedings petitioners are still not entitled to the child_tax_credit by reason of the limitation set forth in sec_24 item no petitioners’ computation claims a credit for federal_income_tax withheld of dollar_figure whereas respondent’s revised computation allows a credit of dollar_figure or dollar_figure less we note that petitioners’ return claimed a refund of dollar_figure respondent’s revised computation correctly reduced the amount of the credit for federal_income_tax withheld by the amount claimed by petitioners as a refund on their return for the reasons set forth above we agree with the computation of the deficiency set forth in respondent’s revised computation accordingly decision will be entered in accordance with respondent’s reply to petitioners’ alternative computation for entry of decision appendix wages taxable interest dividends capital_gain or loss rental real_estate losses other income gambling adjusted_gross_income medical and dental taxes home interest contributions miscellaneous deductions subject_to agi limit agi excess miscellaneous deductions other miscellaneous deductions total itemized_deductions petitioners respondent differences dollar_figure dollar_figure dollar_figure -dollar_figure -dollar_figure dollar_figure dollar_figure -0- dollar_figure dollar_figure dollar_figure dollar_figure dollar_figure dollar_figure dollar_figure dollar_figure dollar_figure dollar_figure -dollar_figure -dollar_figure -dollar_figure dollar_figure dollar_figure -dollar_figure -0- dollar_figure dollar_figure dollar_figure dollar_figure -dollar_figure dollar_figure -dollar_figure dollar_figure -dollar_figure dollar_figure dollar_figure dollar_figure -dollar_figure adjusted_gross_income total itemized_deductions dollar_figure dollar_figure agi less itemized_deductions dollar_figure -dollar_figure exemptions taxable_income tax from tax table alternative_minimum_tax dollar_figure dollar_figure -0- dollar_figure -dollar_figure dollar_figure -dollar_figure dollar_figure dollar_figure -dollar_figure -0- dollar_figure dollar_figure dollar_figure -dollar_figure dollar_figure -dollar_figure less credits child care dollar_figure dollar_figure total_tax less credits federal tax withheld deficiency dollar_figure dollar_figure dollar_figure dollar_figure -dollar_figure dollar_figure dollar_figure dollar_figure -dollar_figure


internal_revenue_service number release date index no department of the treasury washington dc person to contact telephone number cc intl br1 plr-154805-01 date refer reply to date taxpayer holding_company date a date b date c date d year e year f dear this responds to your letter dated a as supplemented by letters from the taxpayer’s authorized representative dated b c and d in which you requested a ruling that premiums received by the taxpayer on policies of insurance or reinsurance of u s risks are exempt from the insurance excise_tax imposed by sec_4371 of the internal_revenue_code_of_1986 as amended code pursuant to the united states- switzerland income_tax convention treaty the ruling contained in this letter is based upon information and representations submitted by or on behalf of the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party although this office has not verified any of the material submitted in support of the request for a ruling it is subject_to verification on examination the taxpayer is a reinsurance company that was organized in switzerland in year e it is a wholly owned subsidiary of holding_company a swiss holding_company whose shares are publicly traded on the swiss stock exchange the taxpayer and holding_company are residents of switzerland sec_4371 imposes an excise_tax on premiums_paid on insurance policies issued to u s persons and covering risks wholly or partly within the united_states and to foreign persons engaged in a u s trade_or_business and covering risks within the page united_states see sec_4372 revproc_92_39 1992_1_cb_860 establishes procedures for entering into a closing_agreement to establish an exemption from the sec_4371 excise_tax when the exemption is claimed under a u s income_tax treaty article business profits of the treaty provides as follows the business profits of an enterprise of a contracting state shall be taxable only in that state unless the enterprise carries on business in the other contracting state through a permanent_establishment situated therein paragraph of the protocol to the treaty provides with respect to article as follows the united_states tax on insurance premiums_paid to foreign insurers shall not be imposed on insurance or reinsurance premiums which are the receipts of a business of insurance carried on by an enterprise of switzerland whether or not that business is carried on through a permanent_establishment in the united_states except to the extent that the risks covered by such premiums are reinsured with a person not entitled to the benefits of this or any other convention which provides a similar exemption from u s tax article b taxes covered includes the sec_4371 excise_tax within the scope of the treaty but contains the following limitation the convention shall however apply to the excise_taxes imposed on insurance premiums_paid to foreign insurers only to the extent that the risks covered by such premiums are not reinsured with a person not entitled to the benefits of this or any other convention which provides exemption from these taxes the limitation_on_benefits provision in article of the treaty sets forth several alternative safe harbors for claiming benefits under the treaty under the provision a company qualifies for treaty benefits if a predominant interest in the company is owned by a swiss publicly traded company article e extends benefits to a company i whose principal class of shares is primarily and regularly_traded on a recognized stock exchange or ii if one or more companies described in clause i are the ultimate beneficial owners of a predominant interest in such company the treaty does not define primarily and regularly_traded article of the treaty provides that an undefined term shall be defined under the domestic law of the contracting state from which treaty benefits are sought the u s definition of regularly page traded is found in sec_1_884-5 it requires that the shares be traded in more than de_minimis quantities on at least days of the taxable_year and that the aggregate number of shares traded must be at least percent of the average number of shares outstanding during the year the treaty also does not define predominant interest for purposes of article e ii according to the treasury_department technical explanation a predominant interest is a direct or indirect interest of more than percent of the equity interests in an entity and a direct or indirect interest of more than percent of the aggregate business interests in the entity the taxpayer represents that holding_company owns percent of the equity_interest and aggregate business_interest in the taxpayer holding_company has a single class of stock that trades on the swiss stock exchange which is a recognized exchange under article a i of the treaty the taxpayer also represents that during year f holding company’s shares are expected to be traded in more than de_minimis quantities on at least days of the taxable_year and the aggregate number of shares traded is expected to be at least percent of the average number of shares outstanding during the year based on these representations we conclude that the taxpayer satisfies the test for a subsidiary of a publicly traded company under article e and is eligible for benefits under the treaty according to paragraph a of the closing_agreement the liability of the taxpayer for federal excise_tax as agreed upon including liability resulting from reinsurance of u s risks with persons not entitled to exemption under the treaty or another convention will commence on date the date specified by the taxpayer the letter_of_credit required by paragraph a of the closing_agreement in the amount of dollar_figure must be in effect within days of the date the agreement is signed on behalf of the commissioner any person otherwise required to remit the federal excise_tax on foreign insurance or reinsurance policies issued by the taxpayer pursuant to sec_46_4374-1 of the excise_tax regulations may rely upon a copy of this letter or an executed copy of the closing_agreement as authority that they may consider premiums_paid to the taxpayer on and after date as exempt under the treaty from the federal excise_tax page 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 does not address the issues of whether the taxpayer is an insurance_company or whether premiums_paid to the taxpayer are deductible under sec_162 of the code this ruling is directed only to the taxpayer requesting it sec_6110 of the code provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to the taxpayer’s representative sincerely yours w edward williams senior technical reviewer branch office of associate chief_counsel international


internal_revenue_service number release date index number -------------------------------------------- ---------------------------------------------------- ------------------------------------ ------------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact --------------------------- id no ---------------- ----------------- telephone number -------------------- refer reply to cc psi b04 plr-146144-11 date date decedent trust date date qtip family_trust --------------------------------------------------- -------------------- ----------------------------------------------------------------------------------- ----------------------- --------------------- ------------------------------ dear ---------------------- this letter responds to your submission dated date requesting an extension of time pursuant to sec_301_9100-3 of the procedure and administration regulations to treat a_trust as two separate trusts for purposes of sec_26_2652-2 of the generation-skipping_transfer_tax regulations on date decedent formed trust on decedent’s death survived by his spouse trust is divided into two trusts a marital trust and a family_trust during the spouse’s lifetime the spouse is the sole income_beneficiary of both trusts decedent died on date survived by his spouse on a timely filed form_706 united_states estate and generation-skipping_transfer_tax return decedent’s co-executors elected to treat a portion of the assets passing to the family_trust as qualified_terminable_interest_property qtip so that that portion qualified for the marital_deduction under sec_2056 of the internal_revenue_code qtip family_trust in addition the co- executors made a special election under sec_2652 to treat the assets of qtip family_trust for generation-skipping_transfer gst tax purposes as if the election under sec_2056 had not been made a reverse_qtip_election the co-executors allocated decedent's remaining gst_exemption to qtip family_trust subsequent to the filing of decedent's form_706 sec_26_2652-2 was issued this regulation provides a transitional rule that allows certain trusts subject_to a reverse_qtip_election to which gst_exemption had been allocated to be treated as two separate trusts so that only a portion of the trust would be treated as subject_to the reverse_qtip_election and that portion would be treated as having a zero inclusion plr-146144-11 ratio the deadline for making the election set forth in the transitional rule was date the co-trustees of qtip family_trust are requesting an extension of time to elect to treat qtip family_trust as two separate trusts pursuant to sec_26_2652-2 so that one trust has an inclusion_ratio of zero due to the previous allocation of decedent's remaining gst_exemption to qtip family_trust and the other has an inclusion_ratio of one for gst tax purposes the reverse_qtip_election would be treated as applying only to the trust with the zero inclusion_ratio sec_2601 imposes a tax on every generation-skipping_transfer a gst is defined under sec_2611 as a taxable_distribution a taxable_termination and a direct_skip sec_2602 provides that the amount of the tax is the taxable_amount multiplied by the applicable_rate sec_2641 defines applicable_rate as the product of the maximum_federal_estate_tax_rate and the inclusion_ratio with respect to the transfer sec_2631 as in effect for the year at issue provided that for purposes of determining the inclusion_ratio every individual shall be allowed a gst_exemption of dollar_figure which may be allocated by such individual or his executor to any property with respect to which such individual is the transferor sec_2631 provides that any allocation under sec_2631 once made shall be irrevocable sec_2632 provides that any allocation by an individual of his or her gst_exemption under sec_2631 may be made at any time on or before the date prescribed for filing the estate_tax_return for such individual's estate determined with regard to extensions regardless of whether such a return is required to be filed sec_2652 states that with respect to any trust for which a deduction is allowed under sec_2056 regarding qualified_terminable_interest_property the estate of the decedent may elect to treat all of the property in such trust for purposes of the gst tax provisions as if the qtip_election had not been made this election is referred to as the reverse_qtip_election the consequence of a reverse_qtip_election is that the decedent remains for gst tax purposes the transferor of the qtip_trust for which the election is made as a result the decedent's gst_exemption may be allocated to that qtip_trust sec_26_2652-2 provides that a reverse_qtip_election is not effective unless it is made with respect to all of the property in the trust to which the qtip_election applies sec_26_2652-2 provides that if a reverse_qtip_election is made with respect to a_trust prior to date and the gst_exemption has been allocated to that trust the transferor or the transferor's executor may elect to treat the trust as two separate trusts one of which has a zero inclusion_ratio by reason of the transferor's plr-146144-11 gst_exemption previously allocated to the trust the separate trust with the zero inclusion_ratio consists of that fractional share of the value of the entire trust equal to the value of the nontax_portion of the trust under sec_26_2642-4 the reverse_qtip_election is treated as applying only to the trust with the zero inclusion_ratio an election under this section is made by attaching a statement to a copy of the return on which the reverse_qtip_election was made under sec_2652 the statement is to be filed before date sec_301_9100-3 provides in part that requests for relief subject_to sec_301_9100-3 will be granted when the taxpayer provides the evidence to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and the grant of relief will not prejudice the interests of the government sec_301_9100-3 provides that a taxpayer is deemed to have acted reasonably and in good_faith if the taxpayer failed to make the election because after exercising reasonable diligence taking into account the taxpayer's experience and the complexity of the return or issue the taxpayer was unaware of the necessity for the election sec_301_9100-3 provides in part that the commissioner will grant a reasonable extension of time to make a regulatory election only when the interests of the government will not be prejudiced by the granting of relief based on the facts submitted and the representations made we conclude that the requirements of sec_301_9100-3 have been satisfied accordingly an extension of time of days from the date of this letter is granted in which to make the election under sec_26_2652-2 to treat qtip family_trust as two separate trusts one of which has a zero inclusion_ratio by reason of decedent's gst_exemption previously allocated to qtip family_trust the election should be made by completing the statement required in sec_26_2652-2 and submitting the election a copy of the return on which the reverse_qtip_election was made under sec_2652 and a copy of this letter to the cincinnati service_center at the following address internal_revenue_service cincinnati service_center stop cincinnati oh 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 representative the rulings contained in this letter are based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed plr-146144-11 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 associate chief_counsel passthroughs special industries ______________________ james f hogan chief branch office of the associate chief_counsel passthroughs special industries enclosure copy for sec_6110 purposes copy of this letter cc


department of the treasury internal_revenue_service washington d c tax_exempt_and_government_entities_division jan la he t ecla ns lo apo egend a am hf lp group b employer n plan x in a letter dated date and as supplemented by letters dated date date your authorized representative requested a ruling on your november behalf concerning the federal_income_tax treatment of certain contributions to plan x under sec_414 h of the internal ‘revenue code date date and the following facts and representations have been submitted employer n is a political_subdivision of state a plan x for the benefit of group b employees x meets the qualification requirements of sec_401 of the code requires mandatory employee contributions by group b employees employer n maintains you have represented that plan plan xx by proposed resolution r employer n will agree to pick up ie assume the mandatory employee contributions of group b employees to plan x and pay proposed resolution r provides it will be effective after a favorable ruling is issued by the internal_revenue_service on this request proposed resolution r will specify that the contributions although designated as employee contributions will be paid_by employer n group b employees proposed resolution r states that the group b employees will not have the option of choosing to receive the contributed amounts directly instead of having them paid_by employer n to plan x in lieu of contributions by based on the aforementioned facts you request the following rulings the mandatory employee contributions picked up by employer n shall be excluded from the current gross_income of group b employees until distributed or otherwise made available the picked-up contributions paid_by employer n are not wages for federal_income_tax withholding purposes and federal income taxes need not be withheld on the picked-up contributions sec_414 h of the code provides that contributions otherwise designated as employee contributions shall be treated as employer contributions if such contributions are made to a plan described in sec_401 established by a state government or a political_subdivision thereof and are picked up by the employing unit the federal_income_tax treatment to be accorded contributions which are of the code picked up by the employer within the meaning of sec_414 in that revenue is specified in revrul_77_462 c b ruling the employer school district agreed to assume and pay the amounts employees were required by state law to contribute to a state pension_plan revrul_77_462 concluded that the school district's picked-up contributions to the plan are excluded from the employees' gross_income until the revenue_ruling held such time as they are distributed to the employees of the code the further that under the provisions of sec_3401 a school district's contributions to the plan are excluded from wages for purposes of the collection of income_tax at source on wages therefore no withholding is required from the employees' salaries with respect to such picked-up contributions the issue of whether contributions have been picked up by an employer is addressed in revenue_ruling and revrul_81_36 c b within the meaning of code sec_414 these c b revenue rulings established that the following two criteria must be met the employer must specify that the contributions although designated as employee contributions are being paid_by the employer in lieu of the employee must not be given the contributions by the employee and option of choosing to receive the contributed amounts directly instead of is having them paid_by the employer to the pension_plan immaterial for purposes of the applicability of sec_414 h whether an employer picks up contributions through a reduction in salary an offset against future salary increases or a combination of both furthermore it in revrul_87_10 c b the internal_revenue_service considered whether contributions designated as employee contributions to a governmental_plan are excludable from the gross_income of the employee the service concluded that to satisfy the criteria set forth in revenue rulings and with respect to particular contributions the required specification of designated employee contributions must be completed before the period to which such contributions relate pursuant to proposed resolution r the criteria set forth in revrul_81_35 and revrul_81_36 will be satisfied by providing in effect that employer n will make contributions in lieu of group b employees' contributions and by providing that group b employees shall not be given the option to receive such contributions directly accordingly we conclude that the amounts picked up by employer n on behalf of group b employees will be treated as employer contributions and will not be includible in group b employees' gross_income in the year in which such amounts are contributed these amounts will be includible in the gross_income of the employees or their beneficiaries only in the taxable_year in which they are distributed because we have determined that the picked-up amounts are to be treated as employer contributions they are excepted from wages as defined in sec_3401 a therefore no withholding of federal_income_tax is required from group b employees' salaries with respect to such picked-up contributions of the code for federal_income_tax withholding purposes for purposes of the application of sec_414 is immaterial whether an employee picks up contributions through a reduction in salary an offset against future salary increases or a combination of both of the code it in accordance with revrul_87_10 this ruling does not apply to any contribution to the extent it relates to compensation earned before the later of the effective date of the relevant statutes the date the pick-up election is executed or the date it is put into effect no opinion is expressed as to whether the amounts in question are subject_to tax under the federal_insurance_contributions_act no opinion is expressed as salary reduction agreement within the meaning of sec_3121 b to whether the amounts in question are paid pursuant to a these rulings are based on the assumption that plan x will be qualified under sec_401 of the code at the time of the proposed contributions and distributions and that proposed resolution r will be adopted this ruling is directed only to the taxpayer who requested it section of the code provides that it may not be used or cited by others a sec_6110 precedent a copy of this letter has been sent to your authorized representative in if you have any at accordance with a power_of_attorney on file in this office questions please contact ee sincerely yours frances v sloan manager employee_plans technical group tax_exempt_and_government_entities_division enclosures deleted copy of this ruling notice