department of the treasury internal_revenue_service washington d c tax_exempt_and_government_entities_division mar z014 uniform issue list legend company plana plan b plan c plan d plan e dear this is in response to your letter dated date in which you request a private_letter_ruling that the minimum distribution_requirements of sec_401 a of the internal_revenue_code code would not be violated if the company amended plans a b c d and e collectively the plans to offer a lump sum payment option during a limited window period to the plan's retirees and other participants alternate payees and beneficiaries including those for whom annuity payments have already begun the following facts and representations have been submitted under penalty of perjury in support of the ruling requested page facts the taxpayer company designs manufactures and sells goods both in the united_states and throughout the world it is the sponsor of the plans which are intended to be tax-qualified defined benefit plans that received their most recent favorable determination letters dated july august july date and december respectively the plans cover a significant number of employees and former employees of the company as well as beneficiaries the automatic form of benefit for a single participant in plan a is a single_life_annuity and the automatic form of benefit for a married participant is a joint_and_survivor_annuity optional forms of benefit in the plans include a a or joint_and_survivor_annuity a period certain annuity or lump sum payments in certain cases the automatic form of benefit for a single participant in plan b is a single_life_annuity and the automatic form of benefit for a married participant is a joint_and_survivor_annuity a joint_and_survivor_annuity for disabled participants optional forms of benefit in the plans include a a or joint_and_survivor_annuity and a period certain annuity the automatic form of benefit for a single participant in plan c is a single_life_annuity and the automatic form of benefit for a married participant is a joint_and_survivor_annuity optional forms of benefit in the plans include a a or joint_and_survivor_annuity or a period certain annuity or lump sum payments in certain cases the automatic form of benefit for a single participant in plan d is a single_life_annuity and the automatic form of benefit for a married participant is a joint_and_survivor_annuity a joint_and_survivor_annuity for disabled participants optional forms of benefit in the plans include a a or joint_and_survivor_annuity or a period certain annuity or lump sum payments in certain cases the automatic form of benefit for a single participant in plan e is a single_life_annuity and the automatic form of benefit for a married participant is a joint_and_survivor_annuity optional forms of benefit in the plans include a a or joint_and_survivor_annuity or a period certain annuity the company represents that the pension benefit obligations attributable to the plans and reported on the company's financial statements are disproportionately large and very sensitive to swings in interest rates over time these obligations have skewed disproportionately towards retirees swings in interest rates and changes in economic conditions have caused the plans' pension obligations to be very volatile the company represents that this volatility may adversely impact its ability to obtain required financing and may impact its cash_flow profile thus making the company less competitive in the marketplace page to reduce the impact of the volatility of the large pension obligations the company proposes to amend the plans to offer during a limited period of time a lump sum payment option to certain participants and beneficiaries of the plans the window would be offered to a broad group of the plans' participants and beneficiaries in four categories participants currently receiving benefit payments participants who have retired upon attaining normal_retirement_age or early retirement age but have not begun receiving benefit payments beneficiaries who presently are receiving either pre-retirement or post-retirement survivor benefits or are eligible to receive survivor benefits under the plans and alternate payees currently receiving benefits collectively window-eligible participants the company represents that this window period to select a lump sum payment will be offered on a one-time basis to window eligible participants under the amendment window-eligible participants would have a specified limited window period of between and days during which they could elect to receive what the company represents is the actuarial present_value of their remaining benefits under the plans at the time of such election in the form of a single lump sum payment in addition to the single lump-sum option those window-eligible participants receiving benefit payments would be able to elect to receive in lieu of their current annuity the actuarial present_value of their remaining accrued_benefits as a single_life_annuity a qualified_joint_and_survivor_annuity or a qualified_optional_survivor_annuity elections by window-eligible participants to receive a new distribution option will be subject_to applicable spousal consent the company represents that each window-eligible participant would be provided information and guidance sufficient to enable participants to clearly understand their options without steering participants to a particular result the company represents that window-eligible participants that elect a new distribution option will be considered to have a new annuity_starting_date as of the first day of the month in which their new benefit is payable the company represents that the funding levels of the plans are sufficient so that the window programs will not trigger benefit restrictions described in sec_436 of the code in addition the company represents that the amendment will not change the ability of window-eligible participants to elect during the window period to receive qualified joint and survivor annuities or qualified optional survivor annuities in accordance with sec_401 a and of the code based on the facts and representations stated above company requests a ruling that the minimum distribution_requirements of sec_401 a ofthe code would not be violated if the company amended the plans to offer the lump sum window to participants and beneficiaries including those for whom annuity payments have commenced under the plans spousal consent must include where the law requires both the current spouse and a former spouse if the annuitant has remarried since the annuity_starting_date the company is not requesting a ruling with respect to window-eligible participants for whom annuity payments have not commenced page applicable law sec_401 a of the code and the regulations thereunder regulations provide rules relating to required minimum distributions from qualified_plans sec_401 of the code was enacted to ensure that the amounts contributed to qualified_retirement_plans were used for retirement by requiring that retirement payments begin no later than a certain date with no less than a certain amount being distributed each year of retirement the legislative_history of the original version of sec_401 a of the code in stated that its purpose is in preventing lifetime accumulations which might escape income_taxation altogether congo rec statement of sen smathers in general sec_401 a a of the code states that a_trust shall not constitute a qualified_trust under this subsection unless the plan provides the entire_interest of each employee i ii will be distributed to such employee not later than the required_beginning_date or will be distributed beginning not later than the required_beginning_date in accordance with regulations over the life of such employee or over the lives of such employee and a designated_beneficiary or over a period not extending beyond the life expectancy of such employee or the life expectancy of such employee and a designated_beneficiary sec_401 a of the code generally provides that a defined_benefit_plan will not be considered a qualified_plan unless vested benefits with respect to a married participant who dies before the annuity_starting_date are payable in the form of a qualified_preretirement_survivor_annuity and with respect to a married participant who dies after the annuity_starting_date a qualified_joint_and_survivor_annuity sec_415 a a of the code provides that a_trust which is a part of a pension_plan will not constitute a qualified_trust if the pension_plan provides for the payment of benefits which exceed the limitation of sec_415 b sec_415 b of the code generally provides that if the benefit under a defined_benefit_plan is payable in any form other than a straight life_annuity the determination as to whether the sec_415 limit has been satisfied shall be made by adjusting the benefit so that it is equivalent to a straight life_annuity sec_417 of the code provides that a plan meets the requirements of sec_401 a if among other requirements each participant may elect during the applicable_election_period to waive the qualified_joint_and_survivor_annuity form of benefit or the qualified_preretirement_survivor_annuity form of benefit or both sec_417 of the code defines the applicable_election_period as meaning in part in the case of an election to waive the qualified_joint_and_survivor_annuity form of benefit the 180-day page 201422030' period ending on the annuity_starting_date sec_1 a -6 q a-1 a in pertinent part states that in order to satisfy sec_401 a of the code distributions of the employee's entire_interest under a defined benefit pension_plan must be paid in the form of periodic annuity payments for the employee's life or the joint lives of the employee and beneficiary or over a period certain that does not exceed the maximum length of the period certain determined in accordance with a-3 of this section once payments have commenced over a period the period may only be changed in accordance with a-13 or a-14 of this section except as otherwise provided in this section such as permitted increases described in a-14 of this section all payments whether paid over an employee's life joint lives or a period certain also must be nonincreasing sec_1_401_a_9_-6 q a-13 a states that an annuity_payment period may be changed in accordance with the provisions set forth in paragraph b of this a-13 or in association with an annuity_payment increase described in a-14 of this section sec_1_401_a_9_-6 q a-14 a states that except as otherwise provided in this section all annuity payments whether paid over an employee's life joint lives or a period certain must be nonincreasing or increase only in accordance with one or more of the following with an annual percentage increase that does not exceed the percentage increase in an eligible cost-of-living index as defined in paragraph b of this a-14 for a 12-month_period ending in the year during which the increase occurs or the prior year with a percentage increase that occurs at specified times eg at specified ages and does not exceed the cumulative total of annual percentage increases in an eligible cost-of-living index as defined in paragraph b of this a-14 since the annuity_starting_date or if later the date of the most recent percentage increase however in cases providing such a cumulative increase an actuarial increase may not be provided to reflect the fact that increases were not provided in the interim years to the extent of a reduction in the amount of the employee's payments to provide for a survivor benefit but only if there is no longer a survivor benefit because the beneficiary whose life was being used to determine the period described in sec_401 over which payments were being made dies or is no longer the employee's beneficiary pursuant to a qualified_domestic_relations_order within the meaning of sec_414 to pay increased benefits that result from a plan amendment to allow a beneficiary to convert the survivor portion of a joint_and_survivor_annuity into a single sum distribution upon the employee's death or page to the extent increases are permitted in accordance with paragraph c or d of this a-14 sec_1 b - b iii provides that if a participant will have distributions commencing at more than one annuity_starting_date the limitations of sec_415 of the code must be satisfied as of each of the annuity starting dates taking into account the benefits that have been provided at all of the annuity starting dates analysis sec_401 a of the code provides a tax_deferral for retirement benefits accumulated in a qualified_pension plan sec_401 a of the code and the regulations ensure that these tax-deferred accumulations are in fact used during retirement and do not escape taxation sec_1 a -6 sets forth the rules governing required distributions from defined benefit plans and annuity_contracts sec_1 a -6 q a-13 a states that an annuity_payment period may be changed in association with an annuity_payment increase described in a-14 of this section sec_1 a -6 q a a provides that annuity payments from a qualified_plan may increase if the payment of increased benefits results from a plan amendment the company's proposed amendments to each of the plans adds a lump sum option for window-eligible participants under which they will have the opportunity to elect within a window period of no less than days and no more than days to receive in lieu of their current annuity either the automatic annuity form of benefit including a qualified_joint_and_survivor_annuity and a qualified_optional_survivor_annuity or a lump sum payment elections by window-eligible participants to receive a new distribution option will be subject_to applicable spousal consent the proposed amendment will result in a change in the annuity_payment period the annuity_payment period will be changed in association with the payment of increased benefits as a result of the addition of the lump sum option in addition window-eligible participants who wish to change their current_distribution option will be considered to have a new annuity_starting_date as of the first date of the month in which their new benefit is payable because the ability to select a lump sum option will only be available during a limited window the increased benefit payments will result from the proposed plan amendment and as such are a permitted_benefit increase under sec_1 a -6 q a-14 a in order for a plan to remain qualified under sec_401 a of the code the calculation of the value of the benefit elected under the lump sum window option must comply with the requirements of sec_417 e and the regulations thereunder under section dollar_figure spousal consent must include where the law requires both the current spouse and a former spouse if the annuitant has remarried since the annuity_starting_date page of revproc_2014_4 subject_to certain exceptions the irs generally does not issue letter rulings on matters involving qualification issues under sec_401 through of the code qualification matters are generally handled by the employee_plans determination_letter program as provided in revproc_2014_6 accordingly we have not considered among other matters whether the lump sum window benefits comply with the requirements of sec_417 and the regulations thereunder with respect to the amount of the distribution and minimum present_value requirement that is applied based on the present_value of the normal_retirement_benefit instead this letter_ruling is based on your representation that the limited window period satisfies sec_417 of the code and sec_1_417_e_-1 of the regulations ruling therefore in this circumstance the minimum distribution_requirements of sec_401 a of the code would not be violated if the company amended the plans to offer a lump sum payment option during a limited window period of no less than days and no more than days to the plans' participants and beneficiaries for whom annuity payments have already begun except as specifically ruled above no opinion is expressed as to the federal tax consequences of the transaction described above under any other provision of the code including sec_401 sec_411 sec_415 sec_417 and sec_436 or of title i of erisa no opinion is expressed regarding the qualification of the plan in addition no opinion is expressed on whether the method for valuing benefits under the limited window period option satisfies the requirements of sec_417 and the regulations thereunder this letter is directed only to the taxpayer who requested it sec_6110 k of the code provides that it may not be used or cited as precedent page if you wish to inquire about this ruling please contact at - please address all correspondence to se t ep ra t2 sincerely william b hulteng manager employee_plans technical group enclosures deleted copy of ruling letter notice of intention to disclose cc


internal_revenue_service department of the treasury index no washington dc contact person pee pitelis re ir nome we ser dom p si - plr-112806-98 oct jo9 b x a date year dear this responds to a letter dated date and subsequent correspondence submitted on behalf of x by x's authorized representative requesting a ruling under sec_1362 of the internal_revenue_code the information submitted states that x was incorporated on a of year date the intent of x that x be an s_corporation effective for year its first taxable_year but a form_2553 election by a smail business corporation was not timely filed for that year because of miscommunication between a and x's attorney as x's president represents that it was sec_1362 b of the code provides that if -- a an election under sec_1362 is made for any taxable_year after the date prescribed by sec_1362 for making such election for such taxable_year or no such election is made for any taxable_year and for the failure to timely make such election the secretary may treat such an election as timely made for such taxable_year the secretary determines that there was reasonable_cause b based solely on the facts and the representations submitted we conclude that x has established reasonable_cause for failing to make a timely election to be an s_corporation for x's first taxable_year s_corporation by filing a completed form_2553 with the appropriate service_center effective for its year taxable_year within days following the date of this letter then such election will be treated as timely made for x’s year taxable_year a copy of this letter should be attached to the form_2553 accordingly provided x makes an election to be an except as specifically set forth above no opinion is expressed concerning the federal tax consequences of the facts described under any other provision of the code including whether x was or is of the code a small_business_corporation under sec_1361 this ruling is directed only to the taxpayer who requested sec_6110 of the code provides that it may not be it used or cited as precedent pursuant to the power_of_attorney on file with this office a copy of this letter is being sent to x’s authorized representative sincerely yours h grace kim assistant to the chief branch office of the assistant chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes


tax exempt and - government entities division 2v0926039 department of the treasury internal_revenue_service washington d c mar qr se st ap rat uniform issue list keekekekkkr rekkkkreaek kerkkkrkkek legend taxpayer a iraa account amount - kkeekeeres eddedndnionintinikik a irr ree aeererrccss financial_institution a oni financial_institution b ea dea r kekkkeheeke this is in response to your request dated as supplemented by correspondence dated and in which you request a waiver of the 60-day rollover requirement contained in sec_408 of the internal_revenue_code the code’ the following facts and representations have been submitted under penalty of perjury in support of the ruling requested taxpayer a age at the time of distribution represents that she received a distribution from ira a totaling amount taxpayer a asserts that her failure to accomplish a rollover within the 60-day period prescribed by sec_408 was due to the failure of financial_institution b to follow taxpayer a’s instructions to place amount in a rollover ira account ' taxpayer a represents that in an attempt to consolidate and simplify her finances she closed her individual_retirement_account ira a with financial_institution a taxpayer a intended to roll the distribution over from ira a into another ira with financial_institution b taxpayer a received a distribution of amount from ira a on and then on the next day to consolidate her accounts at one bank taxpayer a went to financial_institution b and requested that a rollover ira certificate of deposit cd be opened for amount amount however was deposited into a standard non-ira cd account with financial_institution b amount has remained in account and has not been used for any other purpose taxpayer a assumed that account had been opened as a rollover ira cd until her son who now handles her finances discovered otherwise based on the above facts and representations you request a ruling that the internal_revenue_service service waive the 60-day rollover requirement contained in sec_408 of the code with respect to the distribution of amount in this instance sec_408 of the code provides that except as otherwise provided in sec_408 any amount_paid or distributed out of an ira shall be included in gross_income by the payee or distributee as the case may be in the manner provided under sec_72 of the code sec_408 of the code defines and provides the rules applicable to ira_rollovers sec_408 of the code provides that sec_408 of the code does not apply to any amount_paid or distributed out of an ira to the individual for whose benefit the ira is maintained if i the entire amount received including money and any other_property is paid into an ira for the benefit of such individual not later than the day after the day on which the individual receives the payment or distribution or ii the entire amount received including money and any other_property is paid into an eligible_retirement_plan other than an ira for the benefit of such individual not later than the day after the date on which the payment or distribution is received except that the maximum amount which’ may be paid into such plan may not exceed the portion of the amount received which is includible in gross_income determined without regard to sec_408 sec_408 of the code provides that sec_408 does not apply to any amount described in sec_408 received by an individual from an ira if at any time during the 1-year period ending on the day of such receipt such individual received any other amount described in sec_408 from an ira which was not includible in gross_income because of the application of sec_408 sec_408 of the code provides a similar 60-day rollover period for partial rollovers ti zn99 sec_408 of the code provides that the rollover provisions of section d do not apply to any amount required to be distributed under sec_408 sec_408 of the code provides that the secretary may waive the 60-day requirement under sec_408 and sec_408 of the code where the failure to waive such requirement would be against equity or good conscience including casualty disaster or other events beyond the reasonable control of the individual subject_to such requirement only distributions that occurred after date4 are eligible for the waiver under sec_408 of the code revproc_2003_16 2003_4_irb_359 date provides that in determining whether to grant a waiver of the 60-day rollover requirement pursuant to sec_408 the service will consider all relevant facts and circumstances including errors committed by a financial_institution inability to complete a rollover due to death disability hospitalization incarceration restrictions imposed by a foreign_country or postal error the use of the amount distributed for example ' in the case of payment by check whether the check was cashed and the time elapsed since the distribution occurred the information presented and documentation submitted by taxpayer ais consistent with her assertion that her failure to accomplish a timely rollover was caused by amount being placed into a standard non-ira cd account which she intended and assumed to be a rollover ira cd account therefore pursuant to sec_408 of the code the service hereby waives the 60-day rollover requirement with respect to the distribution of amount from ira a taxpayer a is granted a period of days from the issuance of this ruling letter to contribute an amount no greater than amount less the required minimum distributions for and into a rollover ra provided all other requirements of sec_408 of the code except the 60-day requirement are met with respect to such amount such amount will be considered a rollover_contribution within the meaning of sec_408 of the code this ruling does not authorize the rollover of amounts that are required to be distributed by sec_408 and sec_401 of the code no opinion is expressed as to the tax treatment of the transaction described herein under the provisions of any other section’ of either the code or regulations which may be applicable thereto this letter is directed only to the taxpayer who requested it sec_6110 of the code provides that it may not be used or cited as precedent a copy of this letter_ruling has been sent to your authorized representative pursuant to a power_of_attorney on file in this office ' ' if you wish to inquire about this ruling please contact identification number' at - _ please address all correspondence to sincerely yours coulton fs watkins cariton a watkins manager employee_plans technical group


internal_revenue_service department of the treasury ull washinaton dc contact person o qie o el telephone number in reterence to op e br t jan attn legend state a employer m group b employees plan x plan y resolution r form p contract c dear this is in response to a ruling_request dated date as supplemented by correspondence dated date date and date submitted on your behalf by your authorized representative concerning the federal_income_tax treatment under sec_414 of the internal_revenue_code code of certain contributions to plan x and plan y including contributions to purchase additional retirement credit the following facts and representations have been submitted state a has established various pension plans which are qualified under sec_401 of the code including plan x and plan y employer m an instrumentality of state a is a participating employer in plan x and plan y employer m contributes to plan x for employees who qualify as teachers under the state a statute page -2- employer m also contributes to plan y for nonteaching employees state law requires that employees must participate in the plan for which they are eligible to participate unless they opt_out of participation under the state statute allowing such an election as in the case of student employees at universities plan x and plan y members may purchase certain types of additional eligible retirement credit such as relating to out-of-state teaching and military service by payroll deductions if their employer adopts a program to so allow employer m has adopted such a payroll deduction program for contributions from affected members’ after-tax_income employer m’s employees fall within nine collective bargaining units after collective bargaining with a unit employer m proposes to offer the following to employees eligible to participate in either plan x or plan y the board_of education governing board_of employer m will pass a resolution offering to employees covered by the unit the opportunity to purchase allowable retirement credits on a pre-tax basis under the following terms and conditions a employer m agrees to deduct and remit the payments to the applicable state pension_plan as employer contributions b a participating employee must irrevocably agree to continue payroll deductions until the purchase is complete or employment is terminated and c no direct payments to the plan may be made by the employee while the payroll deduction is in force d no federal income taxes will be withheld from the picked-up contributions e the pickup arrangement with réspect to the purchase of permissive retirement credit will start only after the said resolution is duly adopted and the irrevocable agreement for payroll deductions for this purpose is fully executed by the taxpayer and the affected employee the resolution will also provide that employer m will pick up the contributions to plan x and plan y to purchase additional eligible retirement credit on a pre-tax basis page -3- 19e s9g2 the proposed resolution provides that in order to permit tax_deferral for these additional_amounts any member of who wishes to purchase or restore plan x and plan y credit by payroll deduction on a pre-tax basis must enter into a binding irrevocable payroll deduction authorization and such employee shall not have the option of choosing to receive the amounts directly instead of having them paid_by employer m to plan x and pian y be it further resolved that additional_amounts herein specified through payroll deduction from salary are designated as being picked up by employer m in accordance with the internal revenue coue requirements based on the aforementioned facts you request the following rulings the amounts deducted by employer m from affected employees’ pre-tax incomes for purposes of purchasing additional retirement credits will qualify as picked- up contributions under code sec_414 picked-up contributions made on a pre-tax basis will not be included in the affected employee’s gross_income until such time as they are distributed to the employee the fact that participating employees will have the option to choose between making such contributions through pre-tax and after-tax payroll deductions does not affect the treatment of such contributions as picked-up contributions within the meaning of code sec_414 no income_tax_withholding is required from the employees’ salaries with respect to picked-up contributions made on a pre-tax basis no fica tax is required to be withheld on pre-tax picked-up contributions sec_414 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 of the code 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 picked up by the employer within the meaning of sec_414 of the code is specified in revrul_77_462 1977_2_cb_358 in that revenue_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 page -4- 1999bovu district's picked-up contributions to the plan are exciuded from the employees’ gross_income until such time as they are distributed to the employees the revenue_ruling held further that under the provisions of sec_3401 of the code the 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 within the meaning of sec_414 of the code is addressed in revrul_81_35 1981_1_cb_255 and revrul_81_36 1981_1_cb_255 these 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 contributions by the employee and the employee must not be given the option of choosing to receive the contributed amounts directly instead of having them paid_by the employer to the pension_plan in revrul_87_10 1987_1_cb_136 the internal_revenue_service considered whether contributions designated as employee contributions to a governmental pian are exciudable 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 if not the designated employee contributions paid_by the employer are actually employee contributions paid_by the employee and recharacterized at a later date thus the retroactive specification of designated employee contributions are paid_by the employing unit ie the retroactive pick-up of designated employee contributions by a governmental employer is not permitted under code sec_414 in this request the proposed resolution if adopted by employer m satisfies the criteria set forth in revrul_81_35 and revrul_81_36 by providing that the contributions although designated as employee contributions are to be made by employer m in lieu of contributions by the employees and that the employees may not elect to receive such contributions directly accordingly we conclude that if employer m and the unions adopt the resolution and form p as proposed page -5s- - the amounts picked up by employer m on behalf of employees who participate in plan x and plan y for purposes of purchasing additional retirement credit will qualify as picked-up contributions under code sec_414 picked-up contributions made on a pre-tax basis will not be treated as employer contributions and will not be includible in the employees’ gross_income in the year in which such amounts are contributed the contributions whether picked up by payroll deduction offset against future salary increases or both and though designated as employee contributions will be treated as employer contributions for federal_income_tax purposes because the contributions will be treated as employer contributions they will be excepted from wages for federal withholding purposes in the taxable_year in which they are contributed to plan x and plan y therefore no income_tax_withholding is required with respect to picked-up contributions made on a pre-tax basis as we previously advised you your ruling on the fica tax withholding was transferred to the office_of_chief_counsel employee_benefits and exempt_organizations that office will respond directly to you on this request the effective date for the commencement of any proposed pick-up as specified in the resolution cannot be any earlier than the later of the date the resolution is signed or the date it is put into effect in addition these rulings are contingent upon the adoption of proposed resolution r and form p as contained in your correspondence dated date date and date these rulings are based on the assumption that plan x and plan y will be qualified under sec_401 of the code at the time of the proposed contributions and distributions page -6- a copy of this letter has been sent to your authorized representative in accordance with the power_of_attorney on file with this office sincerely yours signed joyuk wip joyce e floyd chief employee_plans technical branch enclosures copy of this letter deleted copy notice m7


tax_exempt_and_government_entities_division department of the treasury internal_revenue_service tege eo examinations mail stop dal commerce st dallas tx date date number release date cuend a xx - pate address a address certified mail dear taxpayer_identification_number person to contact employee identification_number employee telephone number telephone fax this is a final notice of adverse determination that your exempt status under sec_501 of the internal_revenue_code is revoked recognition of your exemption under internal_revenue_code sec_501 is revoked to january 20xx for the following reason s you have failed to produce documents to establish that you are operated exclusively for exempt purposes within the meaning of internal_revenue_code sec_501 and that no part of your net_earnings inure to the benefit of private shareholders or individuals also you have failed to keep adequate books_and_records as required by sec_6001 and the regulations there under in our letters dated november 20xx february 20xx and october 20xx we requested information necessary to conduct an examination of your form_990-pf for the years ending december 20xx and december 20xx we have not received the requested information records obtained from your bank account by means of a summons show expenditures_for the benefit of your private shareholders or individuals which leads to our conclusion that not only have you failed to demonstrate that your net_earnings have not inured to the benefit of your private shareholders or individuals but that in addition some part of your net_earnings inured to the benefit of your private shareholders or individuals sec_1_6033-2 of the income_tax regulations provides in part that every organization which is exempt from tax shall submit such additional information as may be required by the internal_revenue_service for the purpose of inquiring into its exempt status you have not provided the requested information you fail to meet the operational requirements for continued exemption under sec_501 you have not provided requested information we hereby revoke your organization’s exemption from federal_income_tax under sec_501 of the internal_revenue_code effective january 20xx contributions to your organization are no longer deductible effective january 20xx since your exempt status has been revoked you are required to file form_1041 u s income_tax return for estates trusts for all years beginning on or after january 20xx income_tax returns for subsequent years are to be filed with the appropriate service_center identified in the instructions for those returns it is determined that your failure_to_file a written appeal constitutes a failure to exhaust your available administrative remedies however if you decide to contest this determination in court you must initiate a suit for declaratory_judgment in the united_states tax_court the united_states claims_court or the district_court of the united_states for the district of columbia must be filed before the ninety-first day after the date this determination was mailed to you contact the clerk of the appropriate court for rules for initiating suits for declaratory_judgment to secure a petition form write to the following address please understand that filing a petition for declaratory_judgment under sec_7428 will not delay the processing of subsequent income_tax returns and assessments of any taxes due you also have the right to contact the office_of_the_taxpayer_advocate however you should first contact the person whose name and telephone number are shown above since this person can access your tax information and can help you get answers you can call and ask for the taxpayer_advocate assistance or you can contact the advocate from the site where this issue was determined by writing to taxpayer_advocate assistance cannot be used as a substitute for established irs procedures formal appeals processes etc the taxpayer_advocate is not able to reverse legal or technically correct_tax determinations nor extend the time fixed by law that you have to file a petition in court the taxpayer_advocate can however see that a tax matter that may not have been resolved through normal channels gets prompt and proper handling this letter should be kept within your permanent records if you have any questions please contact the person whose name and telephone number are shown in the heading of this letter sincerely nanette m downing director eo examinations enclosures publication department of the treasury internal_revenue_service watt avenue eo group sa-6209 sacramento ca tax period ein telephone number fax number tax exempt and government entities iinacunk date date org address dear we enclose a copy of our report of examination explaining why we believe revocation of your exempt status under sec_501 of the internal_revenue_code is necessary in addition the report proposes private_foundation_excise_taxes for incurring taxable_expenditures pursuant to sec_4945 for the years shown above the report identifies the acts or failure to acts on which these adjustments are based and the actions necessary to correct the taxable_expenditures taxes under sec_4945 of the internal_revenue_code will be determined as shown in the report of examination if you fail to make correction correction is detailed in form a of the report of examination on pages we are requesting that you make correction as detailed in form 886-a of the report of examination taxes under sec_4945 will be avoided if correction is made we had previously sent letter and form_872 consent to extend time to assess tax to you for the year ended december 20xx on november 20xx we did not receive signed form_872 consent to extend time to assess tax from you as matters stand the earliest statute_of_limitations expires on may 20xx if you want us to consider any facts or arguments please contact please review the report us forthwith but no later than days from the date on this letter you may request a closing conference with me and my manager if you request a closing conference we request that you agree to extend the statute and have enclosed a new letter and form_872 with this correspondence for the year ended december 20xx if we do not hear from you then we will process this examination to its administrative conclusion by issuing a final adverse determination_letter revoking your sec_501 exempt status and statutory_notice_of_deficiency for the private_foundation_excise_taxes if after reviewing our report you do not wish to further interface with me and my manager but wish to submit a protest to irs appeals for their independent consideration of the issues before the final administrative actions final revocation letter and notice_of_deficiency then please sign and date both copies of form_872 and return both copies of form_872 with the envelope provided in addition you must submit to us a written request for appeals_office consideration within days from the date of this letter to protest our proposed enforcement actions your protest should include a statement of the facts the applicable law and arguments in support of your position as set forth in page of publication and page of publication signing and returning the form_872 is prerequisite for consideration by appeals because of the limited time remaining until the statute expires if you do sign and return the form_872 and submit a complete and valid protest then an appeals officer will review your case the appeals_office is independent of the director eo examinations the appeals_office resolves most disputes informally and promptly the enclosed publication the examination process and publication exempt_organizations appeal procedures for unagreed issues explain how to appeal an internal_revenue_service irs decision publication also includes information on your rights as a taxpayer and the irs collection process as noted earlier if we do not receive any response from you within days then we will issue a statutory_notice_of_deficiency based on the tax adjustments shown in the report of examination and issue a final revocation letter be advised that we may also consider your failure to contact us as a failure to exhaust your available administrative remedies sec_7428 of the code provides in part section shall not be issued in any proceeding unless the tax_court the claims_court or the district_court of the united_states for the district of columbia determines that the organization involved has exhausted its administrative remedies within the internal_revenue_service as such rights in litigation with respect to the revocation may be limited by failure to pursue administrative remedies a declaratory_judgment or decree under this you have the right to contact the office_of_the_taxpayer_advocate taxpayer_advocate assistance is not a substitute for established irs procedures such as the formal appeals process the taxpayer_advocate cannot reverse a legally correct_tax determination or extend the time fixed by law that you have to file a petition in a united_states court the taxpayer_advocate can however see that a tax matter may not have been resolved through normal channels gets prompt and proper handling you may call toll-free and ask for taxpayer_advocate assistance if you prefer you may contact your local taxpayer_advocate at am available at the telephone number shown in the heading of this letter please provide a telephone number and the most convenient time to call if we need to contact you if you write thank you for your cooperation sincerely michael silva eo revenue_agent enclosures letter and attachments publication publication publication report of examination form 886a name of taxpayer schedule no or exhibit year period ended explanation of items department of the treasury - internal_revenue_service tin org 20xx12 20xx12 ein legend org - organization name state - state trustees - trustees companies county - county xx - date address - address tru-1 tru-2 city - city tru agent - agent co-1 through co-16 through issue revocation does org qualify for exemption under sec_501 of the internal_revenue_code issue taxable_expenditures are expenditures incurred by org taxable_expenditures per sec_4945 of the internal_revenue_code and thus subject_to tax per sec_4945 of the internal_revenue_code issue a taxable_expenditure sec_2 tier tax if the expenditures are deemed to be taxable_expenditures and the foundation_manager refuses to agree to part or all of the correction would the additional tax per b be applicable facts org here in after org was recognized as tax exempt under sec_501 of the internal_revenue_code by the internal_revenue_service in february of 20xx it is not known what org’s exempt_purpose is org lists none on part ix-a summary of direct charitable activities on their form 990-pf’s for the 20xx and 20xx years org also lists none on part ix-b summary of program-related investments on their form 990-pf’s for the 20xx and 20xx years on org’s form_990-pf for 20xx line grants and contributions paid during the year or approved for future payment under part xv supplementary information list none it is left blank in the 20xx year form_990-pf for both the 20xx and 20xx years lists tru-1 and tru-2 as trustees of org the trustees s and org’s address is listed as address city state on form_990-pf for both the 20xx and 20xx years part il of form_990-pf for both 20xx and 20xx list a mortgage as the only liability of org public records indicate that the trustees s transferred title of this property was to an entity known as co-1 in january of 20xx in october of 20xx title was transferred to co-2 in november of 20xx title was transferred to the org public records also indicate that the trustees s resident address is that of this property during this time to the present form 886-a crev department of the treasury - internal_revenue_service page -1- form_8 a name of taxpayer schedule no or exhibit year period ended explanation of items department of the treasury - internal_revenue_service tin org ein 20xx12 20xx12 form_990-pf for both the 20xx and 20xx years lists the same telephone number for org on november 20xx this phone number was called and a message was left with a man that answered the phone this number was again called on december 20xx and a message was left on voicemail neither phone call was returned letter was mailed on november 20xx to org along with publication and form_4564 information_document_request a response in regards to this letter was received from org on december 20xx in the response tru-1 stated that it was his intention to fully comply with the request but that he could not proceed in any communication with the assigned revenue_agent agent until an enclosed public servant questionnaire was completed and returned to him he requested that the questionnaire be completed and returned within days the public servant's questionnaire included questions and required it to be signed swearing that the answers were complete and correct information requested on the questionnaire included the assigned agent's full legal name and residence address and the question will public servant uphold the constitution of the united_states the questionnaire was not completed or returned to tru-1 on december 20xx another letter was received from tru-1 in this letter he stated that he had all the documents requested and would provide them as soon as he received the completed public servants questionnaire his letter went on to state that if the questionnaire could not be answered and completed to please state in writing the reasons why and mail copies of identification and delegation of authority or to have agent’s superior write to him with their authority once this was completed he would send the requested books_and_records no response in regards to this letter was submitted to tru-1 on december 20xx a letter was received from tru-1 this letter was a copy of a letter that tru-1 had mailed to agent in the letter he states that his requests have not been complied with and asks agent to verify that agent works in the tax exempt entities division and has the proper delegation of authority from the secretary_of_the_treasury to conduct an audit on the foundation no response in regards to this letter was submitted to tru-1 on february 20xx letter was mailed along with an idr and publication to the foundation to expand the examination to the 20xx year on february 20xx a response in regards to this letter was received from tru-1 tru-1 stated that his previous request for a completed public servants questionnaire had not been complied with enclosed with this letter was another copy of the public servants questionnaire he again requests that it be completed so that he can comply with the service’s request for records no response in regards to this letter was submitted to tru-1 form 886-a cev department of the treasury - internal_revenue_service page -2- a race form_8 a name of taxpayer schedule no or exhibit year period ended explanation of items department of the treasury - interna revenue service tin org ein 20xx12 20xx12 on march 20xx a letter was received from tru-1 stating that since his requests for a completed public servants questionnaire to properly identify the agent have not been fulfilled he would be enlisting agent’s employer the united_states department of agriculture to look into this matter no response in regards to this letter was submitted to tru-1 the service issued a summons to org’s last known bank co-3 on july 20xx notice of the summons was provided to org on the same day on july 20xx a letter was received from tru-1 stating that he has received no response to his previous requests he goes on to say that agent must cease and desist from auditing org until his previous requests are answered no response in regards to this letter was submitted to tru-1 revenues reported on org’s form 990-pf’s were as follows 20xx 20xx line contributions gifts grants etc received dollar_figure dollar_figure bank records showed the following deposits in org’s account 20xx 20xx 20xx total deposits for 20xx dollar_figure dollar_figure dollar_figure dollar_figure check written to co-4 check written to co-4 cash on the deposited check made out to co-4 in the amount of dollar_figurethe memo line stated landscaping no deposits were made in org’s account for the 20xx year expenses reported on org’s form 990-pf’s were as follows legal fees accounting fees interest taxes depreciation occupancy travel conferences and meetings 20xx dollar_figure 20xx h s a a a p a r p form 886-a rev department of the treasury - internal_revenue_service page -3- form_8 a name of taxpayer schedule no or exhibit year period ended explanation of items department of the treasury - internal_revenue_service tin org 20xx12 20xx12 ein utilities insurance fuel telephone telecommunications pest control organizational fees -- co-10 organizational fees - irs bookkeeping expense misc dollar_figure dollar_figure dollar_figure dollar_figure dollar_figure dollar_figure dollar_figure dollar_figure dollar_figure totals dollar_figure cancelled checks and bank records show that org made the following expenditures 20xx 20xx dollar_figure dollar_figure dollar_figure dollar_figure a h a dollar_figure dollar_figure dollar_figure county co-5 co-6 co-7 smud co-8 co-16 co-9 co-10 co-11 co-12 irs co-13 cash co-14 co-15 totals dollar_figure dollar_figure dollar_figure dollar_figure dollar_figure dollar_figure dollar_figure on october 20xx a letter was mailed to org along with the two form 4564’s that had previously been mailed on november 20xx and february 20xx the letter also requested that org provide a narrative explaining its exempt_purpose and exempt_activities on november 20xx a response from tru-1 was received in response to this letter he again states that his requests for a completed public servant questionnaire have gone unanswered enclosed with the response was a public servant questionnaire form 886-a rev department of the treasury - internal_revenue_service page -4- form_8 a name of taxpayer schedule no or exhibit year period ended explanation of items department of the treasury - internal_revenue_service tin org 20xx12 20xx12 ein org did not provide any records or information requested law issue revocation sec_501 of the internal_revenue_code exempts from federal_income_tax organizations organized and operated exclusively for religious charitable scientific testing for public safety literary educational_purposes to foster national or international amateur sports competition or for the prevention of cruelty to children or animals provided that no part of the organization’s net_earnings inures to the benefit of any private_shareholder_or_individual sec_6001 of the internal_revenue_code provides that every person liable for any_tax imposed by the irc or for the collection thereof shall keep adequate_records as the secretary_of_the_treasury or_his_delegate may from time to time prescribe sec_6033 of the internal_revenue_code provides except as provided in internal_revenue_code sec_6033 every organization exempt from tax under sec_501 shall file an annual return stating specifically the items of gross_income receipts and disbursements and such other information for the purposes of carrying out the internal revenue laws as the secretary may by forms or regulations prescribe and keep such records render under oath such statements make such other returns and comply with such rules and regulations as the secretary may from time to time prescribe sec_1_501_c_3_-1 of the regulations provides that in order to be exempt as an organization described in sec_501 of the code the organization must be one that is both organized and operated exclusively for one or more of the purposes specified in that section sec_1_501_c_3_-1 of the regulations provides that an organization will not be regarded as operated exclusively for exempt purposes if more than an insubstantial part of its activities is not in furtherance of exempt purposes sec_1_501_c_3_-1 of the regulations provides that to meet the operational_test an organization must be engaged in activities furthering public purposes rather than private interests it must not be operated for the benefit of designated individuals or the persons who created it sec_1_6001-1 of the regulations in conjunction with sec_1_6001-1 of the regulations provides that every organization exempt from tax under internal revenue form 886-a rev department of the treasury - internal_revenue_service page -5- form_886 a name of taxpayer schedule no or exhibit year period ended explanation of items department of the treasury - internal_revenue_service tin org ein 20xx12 20xx12 code sec_501 and subject_to the tax imposed by internal_revenue_code sec_511 on its unrelated_business_income must keep such permanent books or accounts or records including inventories as are sufficient to establish the amount of gross_income deduction credits or other matters required to be shown by such person in any return of such tax such organization shall also keep such books_and_records as are required to substantiate the information required by internal_revenue_code sec_6033 sec_1_6001-1 of the regulations states that the books_or_records required by this section shall be kept at all times available for inspection by authorized internal revenue officers or employees and shall be retained as long as the contents thereof may be material in the administration of any internal revenue law sec_1_6033-1 of the regulations provides that every organization which has established its right to exemption from tax whether or not it is required to file an annual return of information shall submit such additional information as may be required by the district_director for the purpose of enabling him to inquire further into its exempt status and to administer the provisions of subchapter_f sec_501 and the following chapter of the code and internal_revenue_code sec_6033 revrul_59_95 1959_1_cb_627 concerns an exempt_organization that was requested to produce a financial statement and statement of its operations for a certain year however its records were so incomplete that the organization was unable to furnish such statements the service held that the failure or inability to file the required information_return or otherwise to comply with the provisions of sec_6033 and the regulations which implement it may result in the termination of the exempt status of an organization previously held exempt on the grounds that the organization has not established that it is observing the conditions required for the continuation of exempt status issue and 2a taxable_expenditures sec_4945 of the internal_revenue_code imposes an initial tax equal to of each taxable_expenditure this tax shall be paid_by the private_foundation sec_4945 of the internal_revenue_code imposes a tax equal to of the amount of the taxable_expenditure if the initial tax is imposed under sec_4945 and if the expenditure is not corrected within the taxable_period sec_4945 of the internal_revenue_code defines the term taxable_expenditure as any amount_paid or incurred by a private_foundation for any purpose other than that specified in sec_170 form 886-a crev department of the treasury - internal_revenue_service page -6- fotm a name of taxpayer schedule no or exhibit year period ended explanation of items department of the treasury - internal_revenue_service tin org ein 20xx12 20xx12 sec_170 of the internal_revenue_code defines the term charitable_contribution as a contribution or gift to of for_the_use_of a foundation that is organized and operated exclusively for religious charitable scientific literary or educational_purposes sec_4945 of the internal_revenue_code defines correction and correct as recovering part or all of the expenditure to the extent recovery is possible and where full recovery is not possible such additional corrective action as is prescribed the secretary by regulations sec_4945 defines the term taxable_period with respect to any taxable_expenditure the period beginning with the date on which the taxable_expenditure occurs and ending on the earlier of a the date of mailing a notice_of_deficiency with respect to the tax imposed by subsection a or b the date on which the tax imposed by subsection a is assessed taxpayer's position issue revocation unknown at this time issue and 2a taxable_expenditures unknown at this time government's position issue revocation org has not provided any information requested since no information has been provided the service cannot ascertain as to whether or not org is operating for a tax exempt_purpose as described in sec_501 of the internal_revenue_code sec_1_501_c_3_-1 of the regulations provides that in order to be exempt as an organization described in sec_501 of the code the organization must be one that is both organized and operated exclusively for one or more of the purposes specified in that section it is not known that org is both organized and operated exclusively for exempt purposes org's 990-pf’s for the 20xx and 20xx years make no mention of activities that may serve an exempt_purpose org lists none on part ix-a summary of direct charitable form 886-a rev department of the treasury - internal_revenue_service page -7- form_886 a name of taxpayer schedule no or exhibit year period ended explanation of items department of the treasury - internal_revenue_service tin org ein 20x x12 20xx12 activities on their form 990-pf’s for the 20xx and 20xx org also lists none on part ix-b summary of program-related investments on their form 990-pf’s for the 20xx and 20xx years on org’s form_990-pf for 20xx line grants and contributions paid during the year or approved for future payment under part xv supplementary information lists none it is left blank in the 20xx year expenses listed on org’s 990-pf’s for 20xx and 20xx offer no insight into what exempt_purpose org may be carrying out expenses include utilities insurance property_tax telephone telecommunications bookkeeping expense fuel pest control misc and interest the returns list a mortgage as the only liability of org the trustees s resident address is the same as org’s the expenses listed on the return are consistent with personal living_expenses sec_1_501_c_3_-1 of the regulations provides that to meet the operational_test an organization must be engaged in activities furthering public purposes rather than private interests it must not be operated for the benefit of designated individuals or the persons who created it requested documents and records were not provided and as such it is not known how the expenses listed on org's 990-pf’s serve an exempt_purpose rather than a private purpose requests for org to provide its books_and_records were sent by the service multiple times org did not comply with any of these requests tru-1 trustee of org replied to these requests with a request of his own he would not provide any information requested until his public servant questionnaire was completed and returned to him sec_1_6001-1 of the regulations provides that the books_and_records required by this section shall be kept at all times available for inspection by authorized internal revenue officers or employees sec_1_6033-1 of the regulations provides that every organization which has established its right to exemption from tax shall submit additional information as may be required by the district_director for the purpose of enabling him to inquire further into its exempt status org did not provide any records requested and as such has not complied with these sections of the regulations in revrul_59_95 1959_1_cb_627 an exempt_organization loses its exempt status for failing to maintain complete records the ruling illustrates that an organization may lose its exempt status for failing to comply with the provisions of sec_6033 of the internal_revenue_code and the regulations that implement it org is not in compliance with sec_6033 of the internal_revenue_code or the regulations that implement it because org has not provided the records requested of it since org did not provide the requested records it has failed to establish that it is observing the conditions required for the continuation of exempt status as such the tax-exempt status of org should be revoked issue and 2a taxable_expenditures form 886-acrev department of the treasury - internal_revenue_service page -8- form_886 a name of taxpayer schedule no or exhibit year period ended explanation of items department of the treasury - internal_revenue_service tin org ein 20xx12 20xx12 org has not provided records to demonstrate that it is organized and operating exclusively for charitable purposes cancelled checks for the 20xx year totaled dollar_figure checks were made payable to county co-5 co-8 co-16 co-9 co-10 co-11 co- irs co-13 and cash most of these payments appear to be for general living_expenses and expenses related to the property at address city state the property is in org’s name but public records indicate that the trustees s reside there it is not known what exempt_purpose if any these expenses are related to org did not provide records to explain its exempt_purpose or its expenses sec_4945 defines the term taxable_expenditure as any amount_paid or incurred by a private_foundation for any purpose other than that specified in sec_170 since org has not provided records to demonstrate that it is operating for an exempt_purpose all expenses obtained from its cancelled checks for 20xx are held to be taxable_expenditures and thus subject_to tax under a and b the taxes under these sections are calculated as follows sec_4945 of the internal_revenue_code imposes an initial tax equal to of each taxable_expenditure this tax shall be paid_by the private_foundation taxable_expenditures tax_rate sec_4945 tax_year 20xx sec_4945 of the internal_revenue_code imposes a tax equal to of the taxable_expenditure if the initial tax is imposed under sec_4945 and if the expenditure is not corrected within the taxable_period this tax shall be paid_by org the term correction is defined in sec_4945 of the internal_revenue_code and the term taxable_period is defined in sec_4945 of the internal_revenue_code correction would be achieved if the trustees family paid back the foundation for expenses held to be taxable_expenditures the trustees family must pay back org dollar_figurewithin the taxable_period to achieve correction this figure is simply the same amount held to be taxable_expenditures since these expenditures were not in furtherance of a charitable purpose if the foundation fails to make correction then org is liable for tax under sec_4945 of the internal_revenue_code tax under sec_4945 will be calculated as follows year taxable_expenditures tax_rate sec_4945 tax 20xx form 886-a rev department of the treasury - internal_revenue_service page -9- form_886 a name of taxpayer schedule no or exhibit year period ended explanation of items department of the treasury - internal_revenue_service tin org ein 20xx12 20xx12 conclusion issue revocation org is not organized and operated exclusively for charitable purposes as required by sec_501 of the internal_revenue_code org’s tax-exempt status should be revoked issue and 2a taxable_expenditures org did not show that it was operating for an exempt_purpose and all expenditures were for purposes other than those described in c b all expenditures incurred by org are taxable_expenditures taxes under sec_4945 of the internal_revenue_code shall be imposed on org as calculated above if correction is not made within the taxable_period then taxes under sec_4945 of the internal_revenue_code shall be imposed as calculated above form 886-a rev department of the treasury - internal_revenue_service page -10-


internal_revenue_service department of the treasury index number washington dc person to contact telephone number refer reply to cc dom p si 7-plr-101734-99 date ne aar bod grandchild trust a decedent daughter dear sir or madam in a letter dated you requested a ruling that grandchild’s exercise of a testamentary limited_power_of_appointment will not cause the trust to lose its status as exempt from the generation-skipping_transfer gst tax imposed by chapter of the internal_revenue_code this letter responds to your request the facts and representations submitted are summarized as follows on a decedent established the trust for the benefit of grandchild during grandchild’s life the trustees are to pay so much of the income and also so much of the principal even to the extent of all of the income and principal as the trustees may in their discretion determine from time to time to one or more of the persons within a group consisting of so grandchild and grandchild’s issue living from time to time during grandchild’s life much of the income as is not so paid is to be accumulated and income so accumulated is to be added to and dealt with as principal provided however that if any trust_beneficiary is acting as co-trustee the other trustee or trustees who are not trust bbs plr-101734-99 beneficiaries are to have the exclusive right to exercise all discretion with respect to payments of income or principal on grandchild’s death the trustees are to distribute the then remaining principal if any as grandchild may appoint by grandchild's last will and testament subject_to certain restrictions or in default of or subject_to the appointment to grandchild’s then living issue or in default thereof to daughter's then living issue per stirpes provided that any unappointed principal becoming distributable to daughter's issue other than the descendants of grandchild is to be added to and dealt with for all purposes as part of the trust or trusts grandchild’s power_of_appointment is subject_to the following restrictions the power may not be exercised in favor of grandchild’s estate grandchild’s creditors or creditors of grandchild’s estate the power may be exercised only in favor of one or more of decedent's issue provided however that income only may be appointed to widows of decedent's issue the power may be exercised by grandchild’s last will signed before or after the date of the trust agreement but the testamentary power shall not be deemed exercised unless grandchild specifically identifies the power and expressly declares the intention to exercise the power - absent such identification of the power and declaration of intention the power shall be deemed unexercised grandchild may appoint outright or subject_to further trusts or limitations or conditions and may grant further powers to appoint but no beneficial_interest may be so appointed to anyone who is not an object of the power and no power created by the trust agreement and no further power created by exercising the power created by the trust agreement may be exercised to postpone vesting or suspend ownership or power of alienation for a period ascertainable without reference to the date of the trust agreement grandchild proposes to execute a codicil to grandchild’s will to exercise the testamentary limited_power_of_appointment the codicil will provide that the assets of the trust are to continue in trust under the terms of the trust agreement except to the extent modified by the codicil the modifications relate to successor trustee s and the termination of the trust with respect to the termination of the trust the codicil will provide that notwithstanding any other provisions of the codicil each trust if not previously terminated under other provisions of the exercise of the power_of_appointment or the trust agreement in any event is to terminate on the expiration of years following the death of the survivor of decedent and such of decedent's issue as ba plr-101734-99 were in being on the date of the trust agreement on the termination all the assets of the trust are to be distributed to the person or persons entitled thereto under the terms of the trust agreement it has been represented that the trust was irrevocable on date and there have been no additions to it since that date sec_2601 imposes a tax on every generation-skipping_transfer made by the transferor to a skip-person sec_26 -1 b i of the generation-skipping_transfer_tax regulations provides that the provisions of chapter do not apply to any generation-skipping_trust as defined in sec_2652 that was irrevocable on september transfer under a the rule_of the preceding sentence does not apply to a pro_rata portion of any generation-skipping_transfer under an irrevocable_trust if additions are made to the trust after date sec_26 -1 b ii provides that except as provided in sec_26_2601-1 or c any trust as defined in sec_2652 in existence on date is considered an irrevocable_trust sec_26_2601-1 provides that the release exercise or lapse of a power_of_appointment other than a general_power_of_appointment as defined in sec_2041 is not treated as an addition to a_trust if- such power_of_appointment was created in an irrevocable_trust that is not subject_to chapter under sec_26_2601-1 and for purposes of sec_26_2601-1 the exercise of a power of in the case of an exercise the power_of_appointment is not exercised in a manner that may postpone or suspend the vesting absolute ownership or power of alienation of an interest in property for a period measured from the date of creation of the trust extending beyond any life in being at the date of creation of the trust plus a period of years plus if necessary a reasonable period of gestation the perpetuities period appointment that validly postpones or suspends the vesting absolute ownership or power of alienation of an interest in property for a term of years that will not exceed years measured from the date of creation of the trust will not be considered an exercise that postpones or suspends vesting absolute ownership or the power of alienation beyond the perpetuities period power it exercised is deemed to be exercised to whatever extent the second power may be if a power is exercised by creating another bst plr-101734-99 based on the information submitted and the representations made we conclude that the trust is exempt from the gst tax because it was created funded and irrevocable on date and no additions actual or constructive have been made to it since that date and grandchild’s exercise of the testamentary limited_power_of_appointment will not be treated as a constructive_addition to the trust accordingly grandchild’s exercise of the testamentary limited_power_of_appointment will not cause the trust to become subject_to the gst tax except as ruled above we express or imply no opinion concerning the federal tax consequences of this transaction under the cited provisions of the code or any other provision of the code this ruling is directed only to the taxpayer 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 we are sending a copy of this letter to your authorized representative sincerely yours signed joseph h makurath joseph h makurath senior technician reviewer branch office of the assistant chief_counsel passthroughs and special industries bis


department of the treasury internal_revenue_service washington d c tax_exempt_and_government_entities_division number - release date jul uniform issue list coo t ep ra t3 legend companya date e date f _ dateg amounth irax dear this is in response to your request dated date for a ruling to waive the 60-day rollover requirement contained in sec_408 of the internal_revenue_code the correspondence dated date and date supplemented the code request - of page under penalty of perjury you have submitted the following facts and representations you are under age and represent that you received a distribution from ira x maintained at company a totaling amount h you assert that your failure to accomplish a rollover within the 60-day period prescribed by sec_408 of the code was due to effects hurricane katrina had on your family and relatives which aggravated a pre-existing medical_condition and rendered you incapable of handling your financial affairs in an appropriate manner until your family was safe you further represent that amount h has not been used for any other purpose on date e you withdrew amount h from ira h for the purpose of purchasing a home however the funds were never used for that purpose and you intended to return amount h to anira however as the end of the 60-day period for rolling over the funds to an ira approached hurricane katrina struck the gulf coast area you had relatives in the area that was affected by hurricane katrina and became stressed over your relatives safety and health you heard nothing from them and attempted to travel to the area due to the stress of not knowing the fate of your relatives the 60-day rollover period passed on date f less than days after the 60-day rollover period expired you contacted your accountant who advised you to put the money into an ira even though the 60-day rollover period had passed at that time you deposited your money in ira y a letter from your doctor dated date g indicated that you were being treated for a pre- existing medical_condition during the period that included the 60-day rollover period and that added stress aggravated this condition based on the facts and representations you request that the internal_revenue_service waive the day rollover requirement with respect to your contribution of amount h into an ira because the failure to waive such requirement would be against equity or good conscience with respect to your ruling_request sec_408 of the code provides that except as otherwise provided in sec_408 any amount_paid or distributed out of an ira shall be included in gross_income by the payee or distributee as the case may be in the manner provided under sec_72 of the code sec_408 of the code defines and provides the rules applicable to ira_rollovers sec_408 of the code provides that sec_408 of the code does not apply to any amount_paid or distributed out of an ira to the individual for whose benefit the ira is maintained if i the entire amount received including money and any other_property is paid into an ira for the benefit of such individual not later than the 60th day after the day on which the individual receives the payment or distribution or ii the entire amount received including money and any other_property is paid into an eligible_retirement_plan other than an ira for the benefit of such individual not later than the 60th day after the date on which the payment or distribution is received except that the maximum amount which may be paid into such plan may not exceed the portion of the amount received which is includible in gross_income determined without regard to sec_408 page sec_408 of the code provides that sec_408 does not apply to any amount described in sec_408 received by an individual from an ira if at any time during the 1-year period ending on the day of such receipt such individual received any other amount described in sec_408 from an ira which was not includible in gross_income because of the application of sec_408 sec_408 of the code provides a similar 60-day rollover period for partial rollovers sec_408 of the code provides that the secretary may waive the 60-day requirement under sec_408 and sec_408 of the code where the failure to waive such requirement would be against equity or good conscience including casualty disaster or other events beyond the reasonable control of the individual subject_to such requirement only distributions that occurred after date are eligible for the waiver under sec_408 of the code revproc_2003_16 2003_4_irb_359 date provides that in determining whether to grant a waiver of the 60-day rollover requirement pursuant to sec_408 the service will consider all relevant facts and circumstances including errors committed by a financial_institution inability to complete a rollover due to death disability hospitalization incarceration restrictions imposed by a foreign_country or postal error the use of the amount distributed for example in the case of payment by check whether the check was cashed and the time elapsed since the distribution occurred the information you presented and the documentation submitted on your behalf demonstrate that you intended to accomplish the rollover of amount h and your failure to do so was due to effects hurricane katrina had on your family and relatives which aggravated a pre-existing medical_condition and rendered you incapable of handling your financial affairs in an appropriate manner until your family was safe accordingly pursuant to sec_408 of the code the service hereby waives the day rollover requirement with respect to the distribution of amount h from ira x you are granted a period not to exceed days as measured from the issuance of this ruling letter to contribute amount h into a rollover ira provided all other requirements of sec_408 of the code except the 60-day requirement are met with respect to amount h the contribution of amount h sec_408 d of the code will be considered a rollover_contribution within the meaning of no opinion is expressed as to the tax treatment of the transaction described herein under the provisions of any other section of either the code or regulations which may be applicable thereto this letter is directed only to the taxpayer who requested it sec_6110 of the code provides that it may not be used or cited as precedent page in accordance with a power_of_attorney on file with this office a copy of this letter_ruling is being sent to your authorized representative if you wish to inquire about this ruling please contact id yat please address all correspondence to se t ep ra t3 sincerely yours employee_plans téchnical group enclosures deleted copy of ruling letter notice of intention to disclose