department of the treasury internal_revenue_service washington d c tax_exempt_and_government_entities_division u i l rekkkkkkkkkekekkkekekkkekkkeke jun - khkkkkkekkekkkkkekekkekekkkkke hkekkkkkkkkkkeekekkkekkekkekkekk hekkkkkkkekkkkkkekekkekkeeeee legend taxpayer a company f company r - _ hk kkk ikke ike eker ikke kkk eker kkk keke keke kkk ikke iai kkh eek kiiik kkk ke hkkkkkkk ek kekkekk keke kkk ek kkk kek kaki kkk kkkekekekkeer ira x kkkkkekkkkkeekk eek kkeekk keke eek keke kkk kekeeekkeeeekeekkekek khkkkkekekk kkk kkk keke eekkkeeke eek ek keke ek kkk kkeekekkeekeekekeke hhkakk kkk kkk ike ike kkk kkk kek kkk kkk kkk ikke kek akekkekakke account b _- hike ki kiki kiki kkk ikk kek iie kk ikk keke ek ekekekkeek kkk kkk kkk aee ike keke eek ikke kkk keke keke ekeeekekeek kkk kkk eek kek ek keke keke keke ikke kkk kkkekkeekeekee account c - kekkkkkkkkkkkkehk keke keke kiki kkk kkk keke hkhkkkhkkkk kkk kkk kee kek keke kkk ek kkk kekekekekekekekke account d _ khkk keke kkk keke ke keke ek ek k kek kkk kee keekekekkkk kk khkkkhkkekk ikke kee ke keke eek kkk ek ikk kek eekkeekkekkeekkekeekkeee kikhkk kkk keke iie eee ere eee eek ikeekkeekekkkekekekkkkk accountant j hha kkk ikk ak aker hee ikk kkk kkk kkk kekkkkkke amount e kkk kkk iki kkk kkk ikke eka kee kek kkk kk kkk kkk ikke keke amount f hhi k hk i kiki ikk ak kkk kkk ke kkk eka kiki eker kkee amount g faa kk ak ikk ik iki kkk kkk ikk kkk kkk ik kkk ikea kkk ikke keke amount h fo ir ioi ioi tori torr tor tata ik ia isa iia dais kia iia iiia i a iai i amount fora kit kk ik iki kkk kkk ikk kk kaka keke kkk keke eka kk kek amount j -_ kkk kkk kkk iir ikk ik kiki kicker keke kk ak kkk kkk kkk ik kek keke kee eker keke kk kkk kkk amount k rrekkkekkrkeekkrkkekkkkkkkkkrkk kkk kkk kkk dear kkkkkk kkk kkk this letter is in response to a request for a private_letter_ruling dated date submitted on your behalf by your authorized representative as supplemented by correspondence dated date date date and date in which you request a waiver of the 60-day rollover requirement contained in sec_408 of the internal_revenue_code code the following facts and representations have been submitted under penalties of perjury in support of the ruling requested taxpayer a who is x is an individual_retirement_account as described in sec_408 years old maintains ira x with company f ira taxpayer a met with company f to discuss a rollover on transaction with respect to ira x specifically taxpayer a desired to transfer certain securities held in ira x to account c a non-retirement account he maintained with company r in order to facilitate the transaction on securities with a fair_market_value of amount e were transferred from ira x to account b a non-retirement account established for taxpayer a at company f on in accordance with taxpayer a's previous instructions the securities with a fair_market_value of amount f held in account b were then transferred from account b to account c at company r taxpayer a asserts that it was his intention to transfer the assets transferred to account c back to ira x within days laxpayer a contacted his accountant accountant j to during discuss the rollover rules and determine whether he could roll back to ira x the securities distributed from ira x on market_value of the securities taxpayer a asserts that he was told by accountant j that he could roll over cash in lieu of the securities that were distributed from ira x but that he should verify this information with company f or cash equal to the fair taxpayer a subsequently discussed the proposed rollover with company f personnel on the basis of the advice received from company f taxpayer a wired cash in the amount of amount g to ira x on wired amount h an additional cash deposit to ira x on also on the three cash deposits made by taxpayer a to ira x equaled amount f an amount that represents the fair_market_value of the securities that were transferred from account b to account c on market_value of the securities distributed from ira x to account b on taxpayer a and deposited cash in the amount of amount to ra x not amount e the fair ka kk kkk kaka kkk kkk ek kek kk kkk kk kek kkk kekkekekkeek or amount j the taxable_distribution reported by company f on the form 1099-r these cash deposits were made to ira x outside the 60-day rollover period company f issued taxpayer a a form 1099-r indicating that a taxable_distribution in the amount of amount j was made from ira x for tax_year company f informed taxpayer a that the rollover of cash to on ira x would not qualify as a tax-free_rollover taxpayer a asserts that at the time he deposited the cash into ira x he held all of the original securities and could have rolled them back to ira x in anticipation of filing this ruling_request taxpayer a on established account d a new non-retirement account at company f to which he transferred from account c all of the securities that had previously been distributed from ira x with the exception of some securities that he sold on an account statement for account d for the month of indicates that a deposit in the amount of amount k was made to this account in the fair_market_value of the securities that were previously distributed from ira x also on other than taxpayer a asserts that amount k represents taxpayer a withdrew all of the assets in ira x in cash and dollar_figure taxpayer a asserts that he never had physical possession of the securities that were distributed from ira x and that the securities remained in account c continuously from transferred to account d where they are currently held taxpayer a further asserts that with the exception of securities he sold on did not otherwise sell trade or negotiate the securities held in account b except to the extent that while the securities were held in account b they counted toward satisfying applicable margin requirements when then were until he based on the facts and representations taxpayer a has requested that the service waive the 60-day rollover requirement with respect to the distribution of amount f from ira x 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 ra 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-- kkk kkk kkkkekkkkek kkk kkk kek kkk kkekkekekkekkkeek ek i ii 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 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 sec_408 of the code provides that the secretary may waive the 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 occur after date are eligible for the waiver under sec_408 of the code revproc_2003_16 2003_4_irb_359 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 in this case taxpayer a initiated a distribution of securities from ira x the distribution of securities was made on taxpayer a a form 1099-r indicating that a taxable_distribution in the amount of amount j was made from ira x to taxpayer a in tax_year documentation for ira x as submitted with the ruling_request for the months of company f issued account kkkkkk kkk kkk kk keke keke kek keke kekkkkekekkekk and indicate that deposits totaling amount f were made to ira x during those months such deposits were made to ira x outside the 60-day rollover period taxpayer a asserts that it was his intention when he initiated the distribution from ira x to roll the distribution back to ira x within days taxpayer a further asserts that at the time he deposited amount f in ira x he had the securities previously distributed from ira x on and that the securities could have been redeposited in ra x had be been advised to do so taxpayer a then transferred the securities held taxpayer a in anticipation of filing this ruling_request established account d with company f in in account c with company r to account d account documentation for account d for the month of amount k was made to this account during asserts that amount k represents the fair_market_value of the securities that were distributed from ira x to account c and further asserts that these securities remained in account c until they were transferred from account c to account d taxpayer a further asserts that with the exception of six securities that he sold in indicates that an addition in the amount of taxpayer a he did not otherwise trade sell or negotiate the securities distributed from ira x taxpayer a filed this request for a waiver of the 60-day rollover requirement shortly after he transferred the securities to account d therefore pursuant to sec_408 of the code the service hereby waives the 60-day rollover requirement with respect to the distribution of securities from ira x and that taxpayer a is granted a period of days from the issuance of this ruling letter to rollover the fair_market_value of the securities held in account d to ira x provided all other requirements of sec_408 of the code except the 60-day requirement are met with respect to the contribution we conclude that the 60-day rollover requirement is waived and that a contribution of the fair_market_value of the securities currently held in account d will be considered a rollover_contribution within the meaning of sec_408 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 further this ruling does not address the tax consequences of the ira x assets that remained in ira x during this transaction nor does it address the tax consequences of ira x assets that were not subsequently transferred from account b to account c this ruling is applicable only to the ira x assets that were actually distributed from ira x and are currently held in account d taxpayer a is over and therefore has attained his required_beginning_date for purposes of code sec_401 in this regard this ruling does not authorize the rollover of amounts that are required to be distributed to taxpayer a by sec_401 of the code kk th kk ak ha kkk kaka k kaka keke eee kkekekkeer this ruling 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 is sent to your authorized representative pursuant to provisions of a power_of_attorney on file in this office if you have any questions please contact rrr rrre rarer err er ae rerereaererer er at aeeaxeesee please address all correspondence to se t ep ra t sincerely yours signed joyce b floyd joyce e floyd manager employee_plans technical group enclosures deleted copy of ruling letter notice of intention to disclose


internal_revenue_service number release date index number ------------------------ --------------------------------------------------- --------------------------------- ----------------------------------- ------------------------------ --------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ----------------------- id no ------------- telephone number ------------------- refer reply to cc corp b05 plr-119586-11 date date legend legend parent ------------------------------------------------------------------- ----------------------------------------------------------- ------------------------------------- sub1 ------------------------------ ----------------------------------------------------------------- ----------------------------------------------------------- sub2 ------------------------------------------------------------------- ----------------------------------------------------------- --------------------------------------------------------------- sub3 ---------------------------------------------------------------------------- ------------------------------------------------ -------------------------- sub4 ---------------------------------------------------------- ------------------------------------------------ ------------------------------ sub5 ------------------------------------------------------------------- ------------------------------------------------ ---------------------------- sub6 -------------------------------------------------------------------------------- ------------------------------------------------ ------------------------------- plr-119586-11 sub7 -------------------------------------------------------------------------------- ----------------------------------------------------------- ---------------------------------------------------- sub8 ---------------------------------------------------------------------------- ----------------------------------------------------------- -------------------------------- sub9 ---------------------------------------------------------------------------- ------------------------------------------------ ------------------------------------ sub10 ---------------------------------------------------------------------------- ----------------------------------------------------------- -------------------- ------------------------------------------- sub11 -------------------------------------------------------------------------------- ----------------------------------------------------------- sub12 -------------------------------------------------------------------------------- ----------------------------------------------------------- --------------------- sub13 ---------------------------------------------------------------------------- ----------------------------------------------------------- ---------------------------- sub14 -------------------------------------------------------------------------------- ----------------------------------------------------------- --------------------------------- sub15 -------------------------------------------------------------------------------- ----------------------------------------------------------- ------------------------------ sub16 ------------------------------------------------------------- ------------------------------------------------ --------------------------- sub17 ---------------------------------------------------------------------------- ------------------------------------------------ ---------------------------------- plr-119586-11 sub18 -------------------------- ----------------------------- ------------------------------------------------ sub19 ------------------------------------------------------------------- ----------------------------------------------------------- -------------------------------------- sub20 ------------------------------------------------------------------- ------------------------------------------------ ---------------------- state a state b state c country a country b country c country d business a business b business c business d date a date b date c date d date e ------------- ---------- ------------- --------------------- ----------- ------------ ----------- -------------------------------------- ----------------------------------------------------- --------------------------------------------------------------------------------- ---------------------------------- --------------------- -------------------------- -------------------------- --------------------- ------------------- plr-119586-11 a b c d e f g h i j k l m n -- --- --- --- -------- -------- -------------- ------------ -------------- -------------- ---------------- ----------- --------------- -------------- dear ------------- this letter responds to your letter dated date and subsequent correspondence requesting rulings as to the federal_income_tax consequences of certain transactions the information provided in that request and in later correspondence is summarized below summary of facts parent is a publicly-traded state a corporation and the common parent of an affiliated_group_of_corporations that files a consolidated u s federal_income_tax return parent owns all the class a voting common_stock and indirectly owns all of the class d nonvoting common_stock of sub1 a state b corporation parent indirectly owns a percent of the stock of a corporation that owns all of the nonvoting class b preferred_stock of sub1 plr-119586-11 parent indirectly owns all the stock of sub2 a state c_corporation sub3 a country a entity classified as a corporation for u s federal_income_tax purposes and sub4 a country b entity classified as a corporation for u s federal_income_tax purposes sub4 owns all of the stock of sub20 a country a entity that will be classified as an entity disregarded as separate from its owner for u s federal_income_tax purposes under sec_301_7701-3 a disregarded_entity at the time of the sub14 sale defined below except for one share of class a common_stock held by sub5 an indirect wholly-owned subsidiary of parent as nominee for sub2 sub2 owns all the stock of sub6 a disregarded_entity organized in country a sub6 owns a nominal share and indirectly owns the remaining shares of the stock of sub7 a country a entity classified as a corporation for u s federal_income_tax purposes prior to date a sub7 owned all the stock of sub8 a country a entity classified as a corporation for u s federal_income_tax purposes sub8 is engaged in business a prior to date a sub3 owned all the stock of sub9 a country a entity classified as a corporation for u s federal_income_tax purposes sub9 is engaged in business b prior to date b sub3 owned all the stock of sub10 a country a entity that was prior to date c classified as a corporation for u s federal_income_tax purposes sub10 is engaged in business a in connection with the completed transaction defined below sub3 formed sub11 a country a entity classified as a corporation for u s federal_income_tax purposes sub is a country a entity classified as a corporation for u s federal_income_tax purposes and has three classes of stock outstanding one class of ordinary shares and two classes of preference shares the class a preference shares and the class b preference shares parent and sub1 own b percent and c percent respectively of the sub12 ordinary shares sub3 and sub9 each owns d percent of the sub class a preference shares and sub6 and sub7 own e percent and f percent respectively of the sub12 class b preference shares sub12 owns all the stock of sub13 a disregarded_entity organized in country a sub13 is engaged in business c businesses a b and c are all a part of business d plr-119586-11 prior to date b sub13 owned all the stock of sub14 a country a entity classified as a corporation for u s federal_income_tax purposes and all the stock of sub15 a disregarded_entity organized in country a prior to date a sub13 owned all of the stock of sub16 a country c entity classified as a corporation for u s federal_income_tax purposes prior to date b sub13 owned and currently owns all the stock of sub17 a country a entity classified as a corporation for u s federal_income_tax purposes prior to date b and ending on date a sub17 owned all the stock of sub18 a country d entity classified as a corporation for u s federal_income_tax purposes on date b in addition to the stock of sub16 and sub17 sub13 also owned stock in other subsidiaries that it controlled within the meaning of sec_304 these subsidiaries together with sub16 and sub17 the controlled_subsidiaries as of date b sub13’s liabilities consisted of debt owed to sub19 in the amount of approximately g units in country a currency and other liabilities in the amount of approximately h units in country a currency sub19 is a disregarded_entity organized in country a which is owned through other disregarded entities by sub7 sub19 provides financing services to certain entities in the parent group prior to date b sub12 had debt owing to sub13 in the amount of approximately i units in country a currency the sub12 debt the completed transaction to combine parent’s country a subsidiaries that are engaged in business d into a single corporate group and for other reasons the following transactions were undertaken collectively the completed transaction i on date b sub12 borrowed approximately j units in country a currency from sub19 and transferred this amount to sub13 in exchange for all the stock of sub14 and sub15 sub13 used the proceeds from this sale to repay debt owing to sub19 ii on date b sub3 contributed all of the stock of sub10 to sub11 and sub10 elected to be classified as a disregarded_entity effective one day after the contribution iii on date b sub12 borrowed approximately i units in country a currency from sub19 and transferred this amount to sub13 in repayment of the sub12 debt on a net_basis sub13 used a portion of the proceeds from the repayment of the sub12 debt to repay its remaining debt owing to sub19 and lent the remaining amount to sub19 plr-119586-11 iv v vi on date b following the repayment of the sub12 debt sub12 sold all the stock of sub13 to sub11 in exchange for a debt_instrument of sub11 in the amount of approximately k units in country a currency the sub11 receivable and such sale the sub13 sale because sub13 was a disregarded_entity at the time of the sub13 sale sub11’s acquisition of the stock of sub13 was treated for u s federal_income_tax purposes as an acquisition of sub13’s assets including the stock in the controlled_subsidiaries by sub11 in exchange for the sub11 receivable and sub11’s assumption of sub13’s liabilities the consideration deemed to be received in exchange for sub 13’s assets the sub13 sale consideration and the deemed exchange of a portion of such consideration for the stock of each of the controlled_subsidiaries a cross-chain stock sale and collectively the cross chain stock sales on date a sub13 transferred all of the stock of sub16 to sub11 in exchange for approximately l units in country a currency and sub17 transferred all of the stock of sub18 to sub11 in exchange for approximately l units in country a currency on date a but after the completion of step v sub7 transferred all the stock of sub8 to sub9 in exchange for a new class of sub9 non-voting preferred_stock vii on date a but after the completion of steps v and vi sub11 transferred all of the stock of sub13 and sub10 to sub9 in exchange for newly issued sub9 common_stock viii on date d sub9 transferred all the stock of sub13 and sub10 to sub8 in exchange for sub8 common_stock following the completed transaction on date e sub18 distributed approximately m units of country d currency to sub11 proposed transactions the following transactions have been proposed i sub12 will sell approximately b percent of the stock of sub14 the transferred sub14 stock to sub20 in exchange for cash equal to the fair_market_value of that stock the sub14 sale ii sub12 will declare and distribute a dividend that should not exceed approximately n units in country a currency with respect to its class a preference shares the sub12 distribution plr-119586-11 iii after the completion of the sub14 sale and the sub12 distribution sub12 will adopt a plan_of_liquidation solely for u s federal_income_tax purposes the plan_of_liquidation pursuant to the plan_of_liquidation sub12 will make a check-the-box election under sec_301_7701-3 the ctb election pursuant to which it will be deemed solely for u s federal_income_tax purposes to distribute all of its assets and liabilities to its shareholders in liquidation the sub12 liquidation under sec_301_7701-3 the sub12 liquidation will be deemed to occur immediately before the close of the day before the ctb election is effective the sub12 liquidation effective date representations cross-chain stock sales parent makes the following representations with respect to the cross-chain stock sales a the fair_market_value of the stock of the controlled_subsidiaries deemed transferred to sub11 approximately equaled the fair_market_value of the portion of the sub13 sale consideration deemed exchanged for such stock b there is no plan or intention to liquidate any controlled subsidiary or sub11 c none of the controlled_subsidiaries is or has been a passive_foreign_investment_company a pfic within the meaning of sec_1297 d the notice requirements of sec_1_367_b_-1 will be satisfied for the deemed sec_351 contribution of the stock of the controlled_subsidiaries from sub12 to sub11 e sub12 has not at any time directly owned stock of sub11 prior to the cross- chain stock sales sub14 sale parent makes the following representations with respect to the sub14 sale f the fair_market_value of the transferred sub14 stock will approximately equal the fair_market_value of the consideration that will be exchanged for such stock g there is no plan or intention to liquidate sub14 or sub4 h sub14 is not and has not been a pfic within the meaning of sec_1297 plr-119586-11 i j sub14 will be a controlled_foreign_corporation within the meaning of sec_957 immediately before and after the sub14 sale parent and sub1 will each be a sec_1248 shareholder within the meaning of sec_1_367_b_-2 with respect to sub14 immediately before the sub14 sale and parent and sub1 will each be a sec_1248 shareholder with respect to sub4 immediately after the sub14 sale sub12 distribution parent makes the following representations with respect to the sub12 distribution k the sub12 distribution will be declared and paid prior to the adoption of the plan_of_liquidation l the sub12 distribution will not be conditioned in any respect upon the ctb election sub12 liquidation parent makes the following representations with respect to the sub12 liquidation m the sub12 class b preference shares and the sub12 ordinary shares were not worthless within the meaning of sec_165 at any time prior to the year in which the sub12 liquidation will occur n the fair_market_value of sub12’s assets taking into account sub12’s intangible assets such as goodwill and going_concern_value will exceed the sum of sub12’s liabilities the sub12 net asset value both on the date of the adoption of the plan_of_liquidation and at the time of the sub12 liquidation o the full amount of the sub12 class a liquidation preference is entitled to a priority claim on sub12’s assets in an actual liquidation that takes precedence over the claim on such assets embodied in the sub12 class b preference shares and the sub12 ordinary shares and thus the sub12 class a liquidation preference must be satisfied in full in an actual liquidation of sub12 before any payment or distribution can be made with respect to any claim in liquidation on sub12’s assets that is attributable to the sub12 class b preference shares or the sub12 ordinary shares p the full amount of the sub12 class b liquidation preference is entitled to a priority claim on sub12’s assets in an actual liquidation that takes precedence over the claim embodied in the sub12 ordinary shares and thus the sub12 class b liquidation preference must be satisfied in full in an actual liquidation of sub12 before any payment or distribution can be made with respect to any plr-119586-11 claim in liquidation on sub12’s assets that is attributable to the sub12 ordinary shares q sub12 will not have acquired any property other than cash or stock that was sold prior to the sub12 liquidation in a transaction to which sec_351 would have applied or as a contribution_to_capital during the five-year period ending on the sub12 liquidation effective date r no property will have been contributed to sub12 as part of a plan a principal purpose of which is to recognize a loss by sub12 with respect to such property in connection with its complete_liquidation s no formal or informal plan_of_liquidation has ever been adopted by sub12 except for the plan_of_liquidation which will be adopted prior to the sub12 liquidation t other than in the completed transaction or the sub14 sale the liquidation of sub12 will not be preceded or followed by the reincorporation in or transfer or sale to a recipient corporation recipient of any of the business or assets of sub12 if persons holding more than percent in value of the stock in sub12 also hold more than percent in value of the stock in recipient for purposes of this representation ownership will be determined by application of the constructive_ownership rules of sec_318 as modified by sec_304 u by virtue of the transaction that will be deemed to occur as a result of the ctb election all assets of sub12 will be distributed in complete_liquidation of sub12 within the 12-month_period beginning on the date of the adoption of the plan_of_liquidation v if the sub12 class a liquidation preference exceeds the sub12 net asset value no part of the consideration to be received by any shareholder of sub12 will be received by the shareholder as a creditor employee or in some capacity other than that of a shareholder of sub12 if the sub12 net asset value exceeds the sub12 class a liquidation preference but not the aggregate of the sub12 class a liquidation preference and the sub12 class b liquidation preference no part of the consideration to be received by any shareholder of sub12 other than sub7 will be received by the shareholder as a creditor employee or in some capacity other than that of a shareholder of sub12 w no distribution of assets representing earned but unreported income will be made by sub12 to its shareholders in the liquidation x sub12 does not maintain a reserve for bad_debts rulings cross-chain stock sales plr-119586-11 based solely on the information submitted and the representations set forth above we rule as follows with respect to the cross-chain stock sales sec_304 will apply to the cross-chain stock sales the portion of the sub13 sale consideration deemed exchanged for the stock of the controlled_subsidiaries held through sub13 will be treated as a distribution in redemption of sub11’s stock sec_304 the deemed_distribution in redemption of sub11’s stock will be treated as a distribution_of_property to which sec_301 applies sec_302 sub12 and sub11 will be treated in the same manner as if sub12 had transferred the stock of the controlled_subsidiaries to sub11 in exchange for sub11 stock in a transaction to which sec_351 applies and then sub11 had redeemed the corresponding portion of stock it was treated as issuing sec_304 the deemed contribution of the stock of the controlled_subsidiaries from sub12 to sub11 will be an exchange to which sec_1 b - c and b -4 a apply the exception of sec_1_367_b_-4t e applies to the deemed sec_351 contribution no amount will be included in income as a deemed_dividend equal to the amount under sec_367 as a result of the deemed sec_351 contribution sec_1 b - b and b -4 b sub14 sale based solely on the information submitted and the representations set forth above we rule as follows with respect to the sub14 sale sec_304 will apply to the sub14 sale the consideration exchanged for the stock of sub14 in the sub14 sale will be treated as a distribution in redemption of sub4’s stock sec_304 the deemed_distribution in redemption of sub4’s stock will be treated as a distribution_of_property to which sec_301 applies sec_302 sub12 and sub4 will be treated in the same manner as if sub12 had transferred the stock of sub14 to sub4 in exchange for sub4 stock in a plr-119586-11 transaction to which sec_351 applies and then sub4 had redeemed the stock it was treated as issuing sec_304 the deemed sec_351 contribution of the stock of sub14 from sub12 to sub4 will be an exchange to which sec_1_367_b_-1 and sec_1_367_b_-4 apply no amount will be included in income as a deemed_dividend equal to the sec_1248 amount under sec_367 as a result of the deemed sec_351 contribution sec_1_367_b_-1 and sec_1_367_b_-4 notice_2012_15 sub12 distribution based solely on the information submitted and the representations set forth above we rule as follows with respect to the sub12 distribution the sub12 distribution will be treated as a distribution_of_property to which sec_301 applies sub12 liquidation based solely on the information submitted and the representations set forth above we rule as follows with respect to the sub12 liquidation if the sub12 class a liquidation preference exceeds the sub12 net asset value at the time of the sub12 liquidation the holders of the sub12 class a preference shares will be treated as having received a distribution in complete_liquidation of sub12 in full payment in exchange for their sub12 class a preference shares sec_331 in that case the sub12 class a preference shareholders will recognize gain_or_loss on their sub12 class a preference shares in an amount equal to the difference between the net fair_market_value of the property treated as distributed with respect to those shares and the shareholders’ adjusted bases in those shares sec_1001 if the sub12 class a liquidation preference exceeds the sub12 net asset value at the time of the sub12 liquidation the holders of the sub12 class b preference and the sub12 ordinary shares will be treated as having received no payment for their sub12 class b preference shares or their sub12 ordinary shares in the sub12 liquidation in that case the sub12 class b preference shareholders and the sub12 ordinary shareholders may claim a worthless_stock deduction under sec_165 with respect to their sub12 class b preference shares and their sub12 ordinary shares upon the sub12 liquidation revrul_2003_125 plr-119586-11 if the sub12 net asset value exceeds the sub12 class a liquidation preference but not the aggregate of the sub12 class a liquidation preference and the sub12 class b liquidation preference the holders of the sub12 class a preference shares and the sub12 class b preference shares will be treated as having received a distribution in complete_liquidation of sub12 in full payment in exchange for their sub12 class a preference shares and their sub12 class b preference shares sec_331 in that case the sub12 class a preference shareholders and the sub12 class b preference shareholders will recognize gain_or_loss on the sub12 class a preference shares and the sub12 class b preference shares as the case may be in an amount equal to the difference between the net fair_market_value of the property treated as distributed with respect to those shares and the shareholders’ adjusted bases in those shares sec_1001 if the sub12 net asset value exceeds the sub12 class a liquidation preference but not the aggregate of the sub12 class a liquidation preference and the sub12 class b liquidation preference the holders of the sub12 ordinary shares will be treated as having received no payment for those shares in the sub12 liquidation in that case the sub12 ordinary shareholders may claim a worthless_stock deduction under sec_165 with respect to their sub12 ordinary shares upon the sub12 liquidation revrul_2003_125 any loss recognized by a sub12 shareholder or any worthless_stock deduction otherwise allowable to a sub12 shareholder will not be disallowed under sec_267 or deferred under sec_267 sub12 will recognize gain_or_loss on its deemed_distribution of property in the sub12 liquidation in an amount equal to the difference between the fair_market_value of such property on the date of the deemed_distribution or if greater the amount of any sub12 liabilities to which the property is subject and its adjusted_basis in the property on such date sec_336 b the gain_or_loss will be computed on a property-by-property basis any loss recognized by sub12 under sec_336 will not be disallowed under sec_267 or deferred under sec_267 caveats the rulings contained in this letter are based upon facts and representations submitted by the taxpayer and accompanied by a penalties of perjury statement executed by an appropriate party this office has not verified any of the material submitted in support of the request for rulings verification of the information representations and other data may be required as part of the audit process plr-119586-11 we express no opinion as to the treatment of the proposed transactions under other provisions of the code and regulations or the treatment of any conditions existing at the time or as a result of the proposed transactions that are not specifically covered by the rulings in particular no opinion is expressed to the extent not specified or as specifically ruled on above upon any other consequence under sec_367 on any internal restructuring transaction in this letter_ruling and whether any or all of the above referenced corporations are pfics within the meaning of sec_1297 if it is determined that any such corporations are pfics no opinion is expressed with respect to the application of sec_1291 through to the proposed transactions in particular in a transaction in which gain otherwise is not recognized regulations under sec_1291 may require gain recognition notwithstanding any other provisions of the code procedural statements this ruling is directed only to the taxpayer requesting it sec_6110 provides that it may not be used or cited as precedent a copy of this letter must be attached to any income_tax return to which it is relevant alternatively taxpayers filing their returns electronically may satisfy this requirement by attaching a statement to their return that provides the date and control number of the letter_ruling in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representatives sincerely _gerald b fleming_____________ gerald b fleming senior technician reviewer branch office of associate chief_counsel corporate cc


significant index number department of the treasury internal_revenue_service washington d c apr sec_2012 oo o tax_exempt_and_government_entities_division tep ra az taxpayer dear for the above-named plan which are described in sections this letter constitutes notice that approval has been granted for your request for a 5-year automatic_extension for amortizing the unfunded liabilities as of january b b and b of the internal_revenue_code code and sec_304 and sec_304 of the employee_retirement_income_security_act_of_1974 erisa this extension is effective with the plan_year beginning january bases as identified in your application submission established as of january this extension applies to the eligible amortization charge the extension of the amortization periods of the unfunded liabilities of the plan was granted in accordance with sec_431 of the code sec_431 of the code requires the secretary to extend the period of time required to amortize any unfunded_liability of a plan for a period of time not in excess of years if the plan submits an application meeting the criteria stated in sec_431 the plan has submitted the required information to meet the criteria in sec_431 including a certification from the plan’s actuary that i absent the extension under subparagraph a the plan would have an accumulated_funding_deficiency in the current plan_year or any of the succeeding plan years ii the plan_sponsor has adopted a plan to improve the plan's funding status iii the plan is projected to have sufficient assets to timely pay expected benefits and anticipated expenditures over the amortization period as extended and iv the notice required under paragraph a has been provided 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 this ruling is directed only to the taxpayer that requested it sec_6110 of the internal_revenue_code provides that it may not be used or cited by others as precedent if you require further assistance in this matter please contact sincerely yours cm david m ziegler manager ep actuarial group


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 b01 plr-152003-05 date date ------------------ --------------------- -------------------------------------- legend legend x -------------------------------------------------- country d dear -------------- correspondence written on behalf of x requesting an extension of time under ' and ' of the procedure and administration regulations to elect to be treated as a partnership for federal tax purposes this letter responds to the letter dated date and related facts the information submitted states that x was incorporated under the laws of country on d x intended to file a form_8832 entity classification election to be treated as a partnership for federal tax purposes effective d however the election was not timely filed 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 elections are necessary only when an plr-152003-05 eligible_entity does not want to be classified under the default classification or when an eligible_entity chooses to change its classification sec_301_7701-3 provides that except for certain existing entities described in sec_301_7701-3 unless a foreign eligible_entity elects otherwise the entity is a a partnership if it has two or more members and at least one member does not have limited_liability b an association if all members have limited_liability or c disregarded as an entity separate from its owner if it has a single member that does not have limited_liability sec_301_7701-3 provides that an eligible_entity may elect to be classified other than as provided under ' b by filing form_8832 with the appropriate service_center under ' c iii this election will be effective on the date specified by the entity on form_8832 or on the date filed if no such date is specified the date specified on form_8832 cannot be more than days prior to the date on which the election is filed under sec_301_9100-1 the commissioner may grant a reasonable extension of time to make a regulatory election or a statutory election but no more than six months except in the case of a taxpayer who is abroad under all subtitles of the code except e g h and i sec_301_9100-1 defines the term regulatory election as including an election whose deadline is prescribed by a regulation published in the federal_register commissioner will use to determine whether to grant an extension of time to make an election sec_301_9100-2 provides automatic extensions of time for making certain elections sec_301_9100-3 provides extensions of time for making elections that do not meet the requirements of sec_301_9100-2 requests for relief under sec_301_9100-3 will be granted when the taxpayer provides evidence to establish that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government sec_301_9100-1 through provide the standards the conclusion based solely on the facts submitted and representations made we conclude that x has satisfied the requirements of and and therefore it is granted an extension of time of sixty days from the date of this letter to file a form_8832 to elect to be treated as a partnership for federal tax purposes effective d a copy of this letter should be attached to the election a copy is enclosed for that purpose plr-152003-05 except as specifically set forth above we express no opinion concerning the federal tax consequences of the facts described above under any other provision of the internal_revenue_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 mailed to your authorized representative sincerely heather c maloy associate chief_counsel passthroughs and special industries enclosures copy of this letter copy for ' purposes cc


internal_revenue_service department of the treasury number release date index number washington dc person to contact telephone number refer reply to cc psi b01- plr137128-02 date august legend x state date dear this private_letter_ruling responds to your request dated date on behalf of x for a written_determination granting relief under sec_1362 of the internal_revenue_code facts x was incorporated under the laws of state on date the shareholders of x intended that x elect to be treated as a s_corporation effective date however the election to be treated as a s_corporation was not timely filed law and analysis sec_1362 of the code provides that a small_business_corporation can elect to be treated as an s_corporation sec_1362 of the code provides guidance on when the s election becomes effective if an s election is made within the first two and one-half months of a corporation’s taxable_year then that corporation will be treated as an s_corporation for the year in which the election was made if the corporation makes an election after the first two and one-half months of a corporation’s taxable_year then the corporation will generally not be treated as an s_corporation until the following taxable_year sec_1362 of the code provides that if no election is made pursuant to sec_1362 or if the election is made after the date prescribed for making such an election and the secretary determined reasonable_cause existed for the failure to timely make the election then the secretary can treat such an election as being timely made for that taxable_year and effective as of the first day of that taxable_year x did not file a timely election to be treated as a s_corporation under sec_1362 x has however established reasonable_cause for not making a timely s election therefore x is entitled to relief under sec_1362 conclusion based solely on the facts submitted and representations made and provided that x otherwise qualifies as a subchapter_s_corporation we conclude that x will be recognized as an s_corporation effective date an original form_2553 along with a copy of this letter must be forwarded to the relevant service_center within sixty days from the date of this letter 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 s requesting it sec_6110 of the code provides that it may not be used or cited as precedent pursuant to the power_of_attorney on file with this office we will send a copy of this ruling to your representative s dianna k miosi sincerely dianna k miosi chief branch office of associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes


internal_revenue_service number release date index number --------------------------------------------------------- -------------------------------------------- ------------------------------------ re ------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact -------------------------- id no ---------------- ---------------- telephone number -------------------- refer reply to cc psi b04 plr-100531-16 date date legend decedent spouse date date ------------------------------------------------------------ ----------------------- ----------------------- ----------------------- dear -------------- this letter responds to your personal representative’s letter of date requesting an extension of time pursuant to sec_301_9100-3 of the procedure and administration regulations to make the election under sec_2010 of the internal_revenue_code portability election to allow a decedent’s surviving_spouse to take into account that decedent’s deceased spousal unused exclusion dsue amount the facts and representations are as follows decedent died on date survived by spouse date is a date after the effective date of the amendment to sec_2010 which provides for portability of a dsue amount to a surviving_spouse to obtain the benefit of portability of decedent’s dsue amount to spouse decedent’s estate was required to file form_706 united_states estate and generation-skipping_transfer_tax return on or before the date that is nine months after decedent’s date of death or the last day of the period covered by an extension decedent’s form_706 was due on date but the estate did not file a form_706 to make the portability election the estate discovered its failure to elect portability after the due_date for making the election plr-100531-16 it is represented that the value of decedent’s gross_estate is less than the basic exclusion amount in the year of decedent’s death including any taxable_gifts made during his lifetime you request an extension of time pursuant to sec_301_9100-3 to elect portability of decedent’s dsue amount pursuant to sec_2010 law and analysis sec_2001 imposes a tax on the transfer of the taxable_estate of every decedent who is a citizen or resident_of_the_united_states sec_2010 provides that a credit of the applicable credit_amount shall be allowed to the estate of every decedent against the tax imposed by sec_2001 sec_2010 provides that the applicable credit_amount is the amount of the tentative_tax that would be determined under sec_2001 if the amount with respect to which such tentative_tax is to be computed were equal to the applicable_exclusion_amount on date congress amended sec_2010 effective for estates of decedents dying and gifts made after date to allow portability of a decedent’s unused applicable_exclusion_amount between spouses tax relief unemployment insurance reauthorization and job creation act of pub_l_no sec_303 124_stat_3296 sec_2010 provides that the applicable_exclusion_amount is the sum of the basic exclusion amount and in the case of a surviving_spouse the dsue amount sec_2010 generally provides that the basic exclusion amount is dollar_figure to be adjusted for inflation annually after calendar_year sec_2010 defines the dsue amount to mean the lesser_of a the basic exclusion amount or b the excess of -- i the applicable_exclusion_amount of the last deceased spouse of the surviving_spouse over ii the amount with respect to which the tentative_tax is determined under sec_2001 on the estate of such deceased spouse sec_2010 provides that a dsue amount may not be taken into account by a surviving_spouse under sec_2010 unless the executor of the estate of the deceased spouse files an estate_tax_return on which such amount is computed and makes an election on such return that such amount may be so taken into account the election once made shall be irrevocable no election may be made if such return is filed after the time prescribed by law including extensions for filing such return plr-100531-16 sec_2010 provides that the secretary shall prescribe regulations as may be necessary or appropriate to implement sec_2010 sec_20_2010-2t a of the estate_tax regulations as in effect on date provides that to allow a decedent’s surviving_spouse to take into account that decedent’s dsue amount the executor of the decedent’s estate must elect portability of the dsue amount on a timely-filed form_706 under sec_20_2010-2t a the due_date of an estate_tax_return required to elect portability is nine months after the decedent’s date of death or the last day of the period covered by an extension if an extension of time for filing has been granted under sec_20_2010-2t a the portability election is made by timely filing a complete and properly prepared estate_tax_return unless the executor satisfies the requirements for the election not to apply in sec_20_2010-2t a i 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 taxpayer who is abroad under all subtitles of the code except subtitles e g h and i sec_301_9100-1 provides that the term statutory election means an election whose due_date is prescribed by statute the term regulatory election means an election whose due_date is prescribed by a regulation published in the federal_register or a revenue_ruling revenue_procedure notice or announcement published in the internal_revenue_bulletin sec_301_9100-3 provides the standards the commissioner will use to determine whether to grant an extension of time to make an election whose due_date is prescribed by a regulation and not expressly provided by statute a request for relief under sec_301_9100-3 will be granted when the taxpayer provides evidence to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government sec_301_9100-3 provides that a taxpayer is deemed to have acted reasonably and in good_faith if the taxpayer reasonably relied on a qualified_tax professional including a tax professional employed by the taxpayer and the tax professional failed to make or advise the taxpayer to make the election the due_date for the portability election is prescribed by statute in the case of an estate required to file an estate_tax_return under sec_6018 see sec_2010 sec_6075 and sec_6018 in the case of an estate that is not required to file an estate_tax_return under sec_6018 the due_date is prescribed by regulation see sec_20_2010-2t a see also sec_20_2010-2 and revproc_2014_18 2014_7_irb_513 sec_2 plr-100531-16 accordingly in the latter case a taxpayer may seek an extension of time to elect portability under the provisions of sec_301_9100-3 sec_6018 requires the filing of an estate_tax_return in all cases where the gross_estate exceeds the basic exclusion amount in effect under sec_2010 for the calendar_year which includes the date of death for purposes of this determination under sec_6018 the basic exclusion amount is reduced but not below zero by the sum of -- a the amount of the adjusted_taxable_gifts within the meaning of sec_2001 made by the decedent after date plus b the aggregate amount allowed as a specific exemption under sec_2521 as in effect before its repeal by the tax reform act of with respect to gifts made by the decedent after date it is represented that based on the value of the gross_estate and taking into account any taxable_gifts decedent’s estate is not required to file an estate_tax_return under sec_6018 under these facts the commissioner has discretionary authority under sec_301_9100-3 to grant to decedent’s estate an extension of time to elect portability based on the facts submitted and the representations made we conclude that the requirements of sec_301_9100-3 have been satisfied accordingly we grant an extension of time of days from the date of this letter in which to elect portability under sec_2010 the election should be made by filing a complete and properly-prepared form_706 and a copy of this letter within days from the date of this letter to the cincinnati service_center at the following address internal_revenue_service cincinnati service_center stop cincinnati oh for purposes of electing portability a form_706 filed by decedent’s estate within days from the date of this letter will be considered to be timely filed 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 if it is later determined that based on the value of the gross_estate and taking into account any taxable_gifts decedent’s estate is required to file an estate_tax_return pursuant to sec_6018 the commissioner is without authority under sec_301_9100-3 to grant to decedent’s estate an extension of time to elect portability and the grant of the extension referred to in this letter is deemed null and void this ruling is directed only to the taxpayer requesting it sec_6110 provides that it may not be used or cited as precedent plr-100531-16 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 associate chief_counsel passthroughs special industries by lorraine e gardner lorraine e gardner senior counsel branch passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes cc


t c memo united_states tax_court fredie lynn charlton petitioner v commissioner of internal revenue respondent sarah k hawthorne f k a sarah k charlton petitioner v commissioner of internal revenue respondent’ docket nos filed date in 114_tc_333 we held that income from medi-task a transcription service is self-employment_income attributable to hawthorne h charlton’s c’s former spouse expenses related to rental cabins are not deductible and c qualifies under sec_6015 i r c for limitation of liability for tax resulting from the medi-task income we ordered c and respondent r to compute c’s liability under sec_6015 i r c as part of the rule_155_computations after we filed our opinion in charlton v commissioner supra r determined that h is entitled to relief under sec_6015 c disagrees with r’s determination this memorandum opinion supplements 114_tc_333 held deductions related to medi-task are allocable to h see sec_6015 i r c held further r’s determination that h was entitled to relief under sec_6015 i r c was not an abuse_of_discretion fredie lynn charlton pro_se sarah k hawthorne pro_se carl d inskeep sheila r pattison deborah h delgado and lewis j hubbard for respondent supplemental memorandum opinion colvin judge this matter is before us to resolve a dispute arising in the rule 155' computations submitted by petitioner fredie lynn charlton charlton and respondent charlton sought relief under sec_6015 ’ following concessions we must decide the following issues 1‘ rule references are to the tax_court rules_of_practice and procedure section references are to the internal_revenue_code in effect during except sec_6015 which was enacted in docket no the case of sarah k hawthorne formerly known as sarah k charlton and now known as sarah k mayor was consolidated with this case for trial briefing and opinion the parties agree that the total deficiency is dollar_figure they dispute whether dollar_figure of that amount should be allocable to charlton hawthorne or jointly to both of them under sec_6015 whether unclaimed medi-task expenses totaling dollar_figure are allocable to hawthorne we hold that they are whether the self-employment_tax deduction resulting from self-employment_tax attributable to the unreported medi-task income is allocable to hawthorne we hold that it is whether respondent’s determination that hawthorne is entitled to relief under sec_6015 was an abuse_of_discretion we hold that it was not background charlton and hawthorne were married in they filed a joint tax_return for on which they reported income from a medical transcription business called medi-task and deducted rental cabin expenses respondent determined a deficiency for based in part on unreported medi-task income self-employment_tax related to medi- task a dollar_figure deduction for medi-task expenses which charlton and hawthorne had not deducted and rental cabin expense deductions which respondent denied charlton and hawthorne were divorced in hawthorne received medi-task and charlton received the rental cabins as a part of their divorce settlement charlton and hawthorne filed petitions disputing respondent’s determination and alleging that they each qualified for relief under sec_6015 we held that medi-task income was self-employment_income allocable to hawthorne under sec_6017 -4-- and a a see 114_tc_333 we denied rental cabin deductions because they were preoperational expenses see id pincite we held that charlton gualifies for limitation of liability under sec_6015 to the extent that the unreported medi-task income is allocable to hawthorne see id pincite charlton improperly netted the medi-task income and expenses petitioners had reported with expenses of the rental cabins to compute self-employment_income that error caused a self-employment_tax deficiency an additional self-employment_tax deficiency occurred because charlton and hawthorne underreported medi-task income we accepted respondent’s unopposed suggestion that the parties allocate items under sec_6015 as part of the rule_155_computations see id pincite after we filed our opinion in charlton v commissioner supra respondent determined that hawthorne is entitled to relief under sec_6015 discussion respondent contends that the tax on medi-task income and the increase in self-employment_tax attributable to the unreported medi-task income are allocable to hawthorne and that the deficiency to the extent that it was attributable to denied rental cabin deductions is allocable to charlton charlton contends that deductions for dollar_figure of unclaimed medi-task -5- expenses and for self-employment_tax related to medi-task are allocable jointly to hawthorne and charlton a whether the dollar_figure of unclaimed medi-task expenses are allocable solely to hawthorne charlton contends that the unclaimed medi-task expenses are allocable both to him and hawthorne we disagree items giving rise to a deficiency on a joint_return are allocated to the individuals filing the return in the same manner as if the individuals had filed separate returns see sec_6015 a internal_revenue_service restructuring and reform act of publaw_105_206 112_stat_734 h conf rept pincite 1998_3_cb_747 the allocation of business deductions is expected to follow the ownership of the business s rept pincite 1998_3_cb_537 thus medi-task deductions are allocable solely to hawthorne because only she owned medi-task sec_6015 provides that only items giving rise to the deficiency are allocated as if the individuals had filed separate returns for the taxable_year see sec_6015 a sec_6015 a provides d allocation of deficiency for purposes of subsection c -- allocation of items giving rise to the deficiency ---for purposes of this subsection -- a in general except as provided in -6- charlton contends that the unclaimed medi-task deductions are not items giving rise to the deficiency because unclaimed deductions reduce and do not cause a deficiency charlton points out that we said in charlton v commissioner supra pincite that the only medi-task item causing a deficiency in this case is omitted income consistent with the requirement that we allocate items under sec_6015 as if the spouses had filed separate returns see sec_6015 a we believe items giving rise to the deficiency include items that affect the calculation of the deficiency we conclude that the unclaimed medi-task deductions are items giving rise to the deficiency for purposes of sec_6015 and that the separate_return rule applies under sec_6015 d a married individuals who file separate returns must each report their own income and deductions see 337_us_733 income must be taxed to him who earns it 308_us_488 taxpayer must deduct own expense and not that of paragraphs and any item giving rise toa deficiency on a joint_return shall be allocated to individuals filing the return in the same manner as it would have been allocated if the individuals had filed separate returns for the taxable_year see discussion of married individuals filing separate returns bittker lokken federal taxation of income estates and gifts par pincite and 2d ed _7- another if hawthorne had filed a separate_return hawthorne could have deducted medi-task expenses because she owned medi- task and because charlton may not deduct hawthorne’s business_expenses see deputy v dupont supra 70_tc_904 hawthorne could have deducted medi-task expenses because she used medi-task income all of which is allocated to hawthorne to pay medi-task’s expenses see johnson v commissioner tcmemo_1980_9 husband cannot deduct taxes or mortgage interest that he paid on a house that his wife owned where the mortgage was her obligation and he was liable for the debt only as a guarantor affd 652_f2d_54 2d cir finney v commissioner tcmemo_1976_ the spouse providing funds may deduct interest_paid on jointly owned property charlton contends that one-half of the medi-task deductions are attributable to him under texas community_property_laws we disagree allocation under sec_6015 1s made without regard to community_property_laws see sec_6015 flush language we conclude that the dollar_figure of unclaimed medi-task expenses are allocable to hawthorne under sec_6015 a b whether the self-employment_tax deduction relating to medi- task is allocable solely to hawthorne charlton contends that the self-employment_tax relating to medi-task is allocable solely to hawthorne but that the - resulting self-employment_tax deduction is allocable both to him and hawthorne we disagree the self-employment_tax deduction resulting from the self-employment_tax due to hawthorne’s self- employment income from medi-task is allocable to hawthorne under the separate_return rule for reasons discussed in paragraph a above c whether respondent’s determination that hawthorne is entitled to relief under sec_6015 was an abuse_of_discretion after we issued our opinion in these cases at 114_tc_333 respondent determined that hawthorne was entitled to equitable relief under sec_6015 for the deficiency in income_tax attributable to the denied deductions for the rental cabins and the deficiency in self- employment_tax attributable to improper netting due to the fact that charlton netted medi-task income and expenses with rental cabin expenses charlton disagrees with respondent’s determination we apply an abuse_of_discretion standard to review the commissioner’s determinations under sec_6015 see 115_tc_183 114_tc_324 114_tc_276 charlton contends the improper characterization of costs for the rental cabins and self-employment_tax netting errors are partially attributable to hawthorne hawthorne knew or had reason to know of the -9- improper characterization and netting and hawthorne significantly benefited from the improper characterization and netting charlton does not cite anything in the record to support his contentions and the record shows that some of his contentions are incorrect first charlton contends that hawthorne is partially responsible for improperly characterizing rental property costs and self-employment_tax netting errors however the record shows that charlton prepared the tax_return for we believe that the improper characterization of the rental property expenses and self-employment_tax netting errors were his errors and that hawthorne did not know of those errors second charlton contends that hawthorne significantly benefited from the improper characterization of rental property expenses it appears that charlton and not hawthorne benefited from the errors on the tax_return relating to the rental property because he received and used the income_tax refund for and hawthorne did not costs of improvements to the rental properties are added to the basis in the properties because we held that they are capital expenses charlton will benefit from the fact that the basis was increased because he received the rental property in the divorce hawthorne testified that she did not read the return but her testimony on this point does not establish that respondent’s determination that hawthorne is --10- entitled to relief under sec_6015 is an abuse_of_discretion charlton questions the gualifications of the revenue_agent who prepared the form 886a explanation of items which detail respondent’s reasons for granting hawthorne relief under sec_6015 however there is no indication that the revenue_agent was unqualified and respondent is not reguired to establish the gualifications of the revenue_agent who prepared the form 886a see 62_tc_324 charlton states that he does not know what information the revenue_agent used to support the findings on the form 886a that he did not have the opportunity to question witnesses or examine evidence that the revenue_agent considered and that he did not have the opportunity to rebut hawthorne’s statements however charlton neither offered any evidence nor made any convincing argument that respondent’s determination that hawthorne was entitled to relief under sec_6015 was an abuse_of_discretion similarly he has not identified any new evidence that he wishes to offer see rodman v commissioner 542_f2d_845 2d cir unsupported allegations do not establish an abuse_of_discretion affg in part revg in part on another ground and remanding tcmemo_1973_277 526_f2d_1349 9th cir same at trial hawthorne contended that she was entitled to relief under sec_6015 to be entitled to relief under sec_6015 a taxpayer must show that it is inequitable to be held liable for tax due on a joint_return see sec_6015 d under sec_6015 the secretary may grant relief from joint liability if it is inequitable to hold the individual liable for any unpaid tax or deficiency charlton was present at trial thus he had the opportunity to present evidence relating to whether or to what extent it was equitable to hold hawthorne jointly liable for tax he did not establish that it was an abuse_of_discretion for respondent to relieve hawthorne from joint liability to the extent determined by respondent under sec_6015 based on the form 886a and the trial record in these cases we conclude that respondent’s grant of relief to hawthorne under sec_6015 was not an abuse_of_discretion thus we sustain that determination for the foregoing reasons decision will be entered consistent with agreed computations submitted under rule by respondent and hawthorne in docket no and consistent with --12 - respondent’ s computations under rule in docket no


significant index no department of the treasury internal_revenue_service washington d c coveinineny eats nov to pe pt ai in re this letter is in response to a request by your authorized representative for rulings on the excise_tax applicable to a reversion of surplus assets to the company on account of the termination of the db plan and the transfer of a portion of the surplus to the 401_k_plan letters dated date and date modified the request the db plan a defined_benefit_plan was established by the company effective january the db plan was amended to provide that future benefit accruals would cease as of date the db plan has been terminated and the service issued a favorable determination_letter with respect to the termination all benefits have been distributed to the participants from the db plan the db plan includes a provision under which any assets remaining in the trust after the satisfaction of all accrued_benefits under the plan and after payment of termination expenses of the plan will be returned to the company in connection with the termination of the db plan there will be an amount of surplus assets ‘the surplus an amount equal to of the maximum reversion available to the company determined after the satisfaction of all liabilities of the db plan but prior to any transfers of surplus assets to the 401_k_plan or reversion to the company will be transferred to the 401_k_plan the company established the 401_k_plan effective date the 401_k_plan is a non-standardized prototype profit sharing plan that includes a cash_or_deferred_arrangement under sec_401 of the intemal revenue code the 401_k_plan has been amended to provide for a suspense_account for the transfer of the surplus the 401_k_plan as amended is intended to be a qualified_replacement_plan under sec_4980 under the 401_k_plan the participants may elect to defer a percentage of their compensation on a pre-tax basis and the company will make a matching_contribution based on a certain percentage of each participant's pre-tax contributions it was represented in the date letter that an amount equal to of the surplus which i sec_25 of the maximum reversion to the company from the db plan will be transferred to the 401_k_plan and placed in a suspense_account under the terms of the 401_k_plan amounts held in the suspense_account including income thereon will be allocated to the accounts of participants in the 401_k_plan as matching employer contributions the amounts plus earnings will be allocated to participant accounts no less rapidly than ratably over seven years from the date of transfer the company has stated that as of date there were active employees covered by the db plan of those employees there are employees who are still currently employed by the company of the remaining employees there are employees that are active participants benefiting under the 401_k_plan amounts released from the suspense_account in the 401_k_plan attributable to the amount transferred from the db plan and income thereon will be treated as employer contributions for purposes of sec_401 sec_401 and sec_415 of the code the k pian further provides that all such amounts aliocated from the suspense_account will be treated as annual_additions for the plan_year in which the amounts are allocated to the accounts of participants based on the foregoing the following rulings are requested the 401_k_plan constitutes a qualified_replacement_plan within the meaning of code sec_4980 the assets transferred directly from the db plan to the 401_k_plan are not includible in the company's gross_income the transfer of assets directly from the db plan to the 401_k_plan will not be treated as an employer_reversion under code sec_4980 and will not subject the company to an excise_tax under code sec_4980 with respect to those assets the company will be subject_to an excise_tax equal to rather than of the amount of the reversion of the residual assets to the company under code sec_4980 the use of the amounts transferred from the db plan to the 401_k_plan and the earnings thereon to make employer discretionary matching_contributions under the 401_k_plan satisfies the allocation requirements under code sec_4980 c sec_401 of the code provides that matching_contributions are considered as employer contributions on behalf of an employee sec_4980 of the code provides for a excise_tax on the amount of any reversion from a qualified_plan sec_4980 provides in general that the excise_tax under sec_4980 shall be increased to with respect to any employer_reversion from a qualified_plan unless the employer either establishes or maintains a qualified_replacement_plan or the plan provides for certain benefit increases which take effect immediately on the termination_date sec_4980 of the code provides that the term employer_reversion means the amount of cash and the fair_market_value of other_property received directly or indirectly by an employer from the qualified_plan sec_4980 of the code in relevant part defines a qualified_replacement_plan as a qualified_plan established or maintained by the employer in connection with a qualified_plan termination for which a b c atleast of the active participants in the terminated plan who remain as employees of the employer after the termination are active participants in the replacement plan and adirect transfer is made from the terminated plan to the replacement plan before any employer_reversion and the transfer is an amount equal to of the maximum amount the employer could receive as an employer_reversion without regard to that section and meets the allocation requirements described below sec_4980 in general provides that in the case of a transfer to a qualified_replacement_plan in an amount equal to of the maximum amount which the employer could receive as an employer_reversion such amount transferred shall not be includible in the gross_income of the employer and such transfer shall not be treated as an employer_reversion for purposes of sec_4980 sec_4980 of the code provides that if the replacement plan is a defined_contribution_plan the amount transferred to the replacement plan must be i cd allocated under the plan to the accounts of participants in the plan_year in which the transfer occurs or credited to a suspense_account and allocated from such account to accounts of participants no less rapidly than ratably over the seven- plan-year period beginning with the year of the transfer sec_4980 of the code provides in part that the allocation of any amount or income allocable thereto to any account under sec_4980 shall be treated as an annual_addition for purposes of sec_415 of the employees who were participants in the db plan and are still employed by the company of them are active participants in the 401_k_plan the percentage of the active participants in the db plan the terminated plan who remain employees of the company after the termination and who are active participants in the 401_k_plan is thus at least of the active participants in the db plan who remain as employees of the company after the termination are active participants in the 401_k_plan the db plan provides that of the maximum amount that could revert to the company will be transferred to the 401_k_plan prior to any reversion to the company the service has issued a favorable determination_letter with respect to the 401_k_plan under the terms of the 401_k_plan as amended the amount transferred to the 401_k_plan from the db plan will be allocated no less rapidly than ratably over the seven-year- period beginning with the year of the transfer therefore with regards to your first ruling_request the 401_k_plan constitutes a qualified_replacement_plan within the meaning of sec_4980 of the code however the 401_k_plan will cease to be a qualified replacement plan’ in any year in which less than of the active participants in the db plan who remain as employees of the company after the termination are active participants in the 401_k_plan as stated above the 401_k_plan is a qualified replacement plan’ the amount transferred to the 401_k_plan equal sec_25 of the surplus amount therefore with regards to your second ruling_request the assets transferred directly from the db plan to the 401_k_plan are not includible in the company's gross_income furthermore with regards to your third ruling_request the company will not be subject_to the excise_tax under sec_4980 with respect to the transfer of of the surplus from the db plan with regards to your fourth ruling_request because the 401_k_plan is a qualified_replacement_plan the excise_tax on the reversion of assets from the db plan to the company will be imposed at a tax_rate of of the reversion amount the reversion amount is determined after the transfer of assets equal to of the surplus to the 401_k_plan code sec_4980 does not specify a method for allocating amounts from a suspense_account to participant accounts thus with regards to your fifth ruling_request the use of amounts transferred from the db plan to the 401_k_plan to make employer discretionary matching_contributions satisfies the requirements of sec_4980 accordingly with respect to your five ruling requests the 401_k_plan constitutes a qualified_replacement_plan within the meaning of sec_4980 of the code however the 401_k_plan will cease to be a qualified_replacement_plan in any year in which less than of the active participants in the db plan who remain as employees of the company after the termination are active participants in the 401_k_plan the assets transferred directly from the db plan to the 401_k_plan are not includible in the company’s gross_income the company will not be subject_to the excise_tax under sec_4980 with respect to the transfer of of the surplus from the db plan the excise_tax on the reversion of assets from the db plan to the company will be imposed at a tax_rate of of the reversion amount the reversion amount is determined after the transfer of assets equal to of the surplus to the 401_k_plan the use of amounts transferred from the db plan to the 401_k_plan to make employer discretionary matching_contributions satisfies the requirements of sec_4980 this ruling letter is directed only to the taxpayer that requested it sec_61 k of the code provides that it may not be used or cited by others as precedent these rulings are based on the assumptions that the db plan and the 401_k_plan are qualified under sec_401 of the code and that their related trusts are tax-exempt under sec_501 at all times relevant to this ruling we have sent a copy of this letter to your authorized representative pursuant to a form_2848 power_of_attorney on file with our office me or you may contact if you have any questions please contact sincerely rer b and james e holland jr manager employee_plans actuarial group tax_exempt_and_government_entities_division


t c summary opinion united_states tax_court patrick t mcguinness petitioner v commissioner of internal revenue respondent docket no 19382-05s filed date patrick t mcguinness pro_se laura a price for respondent armen special_trial_judge this case was heard pursuant to the provisions of sec_7463 of the internal_revenue_code in effect when the petition was filed pursuant to sec_7463 the decision to be entered is not reviewable by any unless otherwise indicated all subsequent section references are to the internal_revenue_code as amended and all rule references are to the tax_court rules_of_practice and procedure other court and this opinion shall not be treated as precedent for any other case this matter is before the court on respondent’s motion to dismiss for lack of jurisdiction filed date a hearing on respondent’s motion was held in jacksonville florida on date thereafter at the court’s direction respondent filed a supplement to his motion on date and petitioner filed a notice of objection on date in his motion respondent’s moves to dismiss this case for lack of jurisdiction under sec_6512 and sec_6511 because petitioner’s claim_for_refund of an overpayment of income taxes for tax_year was filed more than three years after petitioner paid such income taxes for reasons discussed hereinafter we shall recharacterize respondent’s motion as one for summary_judgment and as recharacterized we shall grant it background at the time that the petition was filed patrick t mcguinness petitioner resided in jacksonville florida for the taxable_year in issue petitioner did not file a request for an extension of time for filing a return see sec_6081 nor did petitioner timely file a return see sec_6072 during the period of petitioner’s delinquency respondent prepared a substitute for return under sec_6020 thereafter on date respondent sent petitioner a notice_of_deficiency in the notice respondent determined a deficiency in petitioner’s federal_income_tax for of dollar_figure together with additions to tax under sec_6651 for failure_to_file of dollar_figure under sec_6651 for failure to pay of dollar_figure and under sec_6654 for failure to pay estimated_tax of dollar_figure respondent’s deficiency determination was principally attributable to petitioner’s failure to report wages in the amount of dollar_figure on date petitioner filed a petition with the court for redetermination of deficiency in the petition petitioner contested respondent’s determinations petitioner also claimed that he had overpaid his income_tax and was entitled to a refund in the amount of dollar_figure the date that the substitute for return was prepared is unclear in the record a transcript of account form indicates that the substitute for return was prepared in the month of date in contrast the sec_6020 asfr certification is dated date however the date that the substitute for return was prepared is of no moment see 115_tc_316 discussed infra in the notice respondent credited petitioner for the amount withheld from his wages dollar_figure insofar as petitioner’s ultimate tax_liability is concerned however we note that the determination of a statutory deficiency does not take such withheld amount into account see sec_6211 on date respondent’s appeals_office in jacksonville florida received petitioner’ sec_2001 return for filing the return which is a joint_return by petitioner and his wife includes the couple’s income specifically including petitioner’s wages as determined by respondent in the date notice_of_deficiency deductions credits and payments in sum the return reported a tax_liability of dollar_figure and claimed federal_income_tax withheld of dollar_figure thereby resulting in an overpayment and a request for refund of dollar_figure respondent accepted petitioner’s return as filed and on date assessed additional tax against petitioner and his spouse in the amount of dollar_figure ie the amount reported on the delinquently filed return however respondent did not refund_or_credit the dollar_figure overpayment rather respondent transferred the overpayment into an excess collections account on the ground that the statute_of_limitations barred refund_or_credit deficiency jurisdiction discussion in an action for the redetermination of a deficiency the court’s jurisdiction under sec_6213 depends on the issuance by the commissioner of a valid notice_of_deficiency to the return was prepared by a c p a affiliated with an accounting firm the taxpayer and the timely filing of a petition by the taxpayer sec_6212 sec_6213 sec_7502 rule a c 81_tc_42 in the present case respondent sent petitioner a valid notice_of_deficiency on date and petitioner timely filed a petition for redetermination on date thus the jurisdictional prerequisites are satisfied and the court has jurisdiction in this deficiency proceeding recharacterization of respondent’s motion in view of the filing of petitioner’s delinquent_return and respondent’s acceptance thereof as well as the assessment of the tax reported on that return respondent concedes that there is no deficiency in income_tax nor any addition_to_tax due from petitioner for however respondent contends that refund_or_credit of the dollar_figure overpayment is barred by the statute_of_limitations because this is an action for the redetermination of a deficiency over which we have jurisdiction we have pendant jurisdiction to determine the amount of any overpayment sec_6512 in so doing we necessarily consider whether refund the validity of a notice_of_deficiency does not turn on the substantive merits of the commissioner’s determination ie the correctness of that determination rather validity contemplates that the commissioner did in fact make a determination in a notice_of_deficiency that is mailed to the taxpayer at the taxpayer’s last_known_address or credit may be barred by the statute_of_limitations cf sec_7459 because the statute_of_limitations constitutes an avoidance or a defense see 547_us_198 126_sct_1675 a statute_of_limitations defense is not ‘jurisdictional’ see also 540_us_443 we shall recharacterize respondent’s motion to dismiss for lack of jurisdiction as a motion for summary_judgment and proceed accordingly allowance of refund_or_credit as previously stated sec_6512 authorizes us to determine the amount of the overpayment_of_tax for that is to be refunded or credited to petitioner however sec_6512 imposes a limit on the amount of any overpayment that may be credited or refunded as relevant herein sec_6512 provides as follows sec_6512 overpayment determined by tax_court -- limit on amount of credit or refund --no such credit or refund shall be allowed or made of any portion of the tax unless the tax_court determines as part of its decision that such portion was paid- b within the period which would be applicable under sec_6511 if on the date of the mailing of the notice_of_deficiency a claim had been filed whether or not filed stating the grounds upon which the tax_court finds that there is an overpayment sec_6511 is entitled limit on amount of credit or refund in a case such as the present one where the date of the mailing of the notice_of_deficiency date is beyond the third year after the due_date for filing the return date and no return was filed by the taxpayer before that date ie date sec_6511 applies to limit the amount of any refund_or_credit that may be made or allowed see 516_us_235 115_tc_316 cf sec_6512 flush language 123_tc_132 sec_6511 provides that the amount of the credit or refund shall not exceed the portion of the tax paid during the years immediately preceding the filing of the claim therefore because petitioner’s claim_for_refund is deemed to have been filed on date see sec_6512 then only tax paid during the immediately- preceding 2-year period may be refunded or credited in the present case petitioner paid no income_tax other than through withholding on his wages income_tax withheld by a taxpayer’s employer is deemed to have been paid_by the taxpayer on april of the year immediately following the calendar_year for which the tax was withheld sec_6513 therefore petitioner is deemed to have paid the tax for which he seeks a refund on date but because petitioner did not pay any income_tax during the years immediately preceding date the date of his deemed claim petitioner is not entitled to a refund or a credit of hi sec_2001 overpayment sec_6511 petitioner contends that the substitute for return under sec_6020 should be counted as his return however this court has expressly held that a substitute for return prepared by the commissioner pursuant to sec_6020 does not constitute a return filed by the taxpayer for purposes of sec_6511 healer v commissioner supra pincite petitioner also contends that his delinquency was caused principally by his confusion regarding how a dollar_figure option payment on a movie contract should be reported although we are well aware of the intricacies of the internal_revenue_code the fact remains that at the very least petitioner could have timely filed his return and amended it later when he had resolved the reporting matter particularly given that the option payment was less than percent of his total income finally petitioner contends that it would be unfair particularly in view of respondent’s acceptance of his delinquent_return and complete concession of the deficiency and additions to tax to bar payment of his refund suffice it to say that the united_states supreme court has clearly instructed that limitations on allowance of refunds and credits prescribed by we recall that petitioner’s return was prepared by a c p a affiliated with an accounting firm sec_6511 and sec_6512 shall be given effect consistent with congressional intent without regard to an individual’s perceived notion of fairness commissioner v lundy supra to give effect to our disposition of the disputed matter as well as respondent’s concessions an order granting respondent’s motion as recharacterized and decision will be entered deciding that there is no deficiency nor any addition_to_tax due from nor overpayment due to petitioner for the taxable_year


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 b01 plr-152111-05 date date --------------------- -------------------------- ------------------------------ legend legend x -------------------------------------------------- country d dear -------------- correspondence written on behalf of x requesting an extension of time under ' and ' of the procedure and administration regulations to elect to be treated as a partnership for federal tax purposes this letter responds to the letter dated date and related facts the information submitted states that x was incorporated under the laws of country on d x intended to file a form_8832 entity classification election to be treated as a partnership for federal tax purposes effective d however the election was not timely filed 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 elections are necessary only when an plr-152111-05 eligible_entity does not want to be classified under the default classification or when an eligible_entity chooses to change its classification sec_301_7701-3 provides that except for certain existing entities described in sec_301_7701-3 unless a foreign eligible_entity elects otherwise the entity is a a partnership if it has two or more members and at least one member does not have limited_liability b an association if all members have limited_liability or c disregarded as an entity separate from its owner if it has a single member that does not have limited_liability sec_301_7701-3 provides that an eligible_entity may elect to be classified other than as provided under ' b by filing form_8832 with the appropriate service_center under ' c iii this election will be effective on the date specified by the entity on form_8832 or on the date filed if no such date is specified the date specified on form_8832 cannot be more than days prior to the date on which the election is filed under sec_301_9100-1 the commissioner may grant a reasonable extension of time to make a regulatory election or a statutory election but no more than six months except in the case of a taxpayer who is abroad under all subtitles of the code except e g h and i sec_301_9100-1 defines the term regulatory election as including an election whose deadline is prescribed by a regulation published in the federal_register commissioner will use to determine whether to grant an extension of time to make an election sec_301_9100-2 provides automatic extensions of time for making certain elections sec_301_9100-3 provides extensions of time for making elections that do not meet the requirements of sec_301_9100-2 requests for relief under sec_301_9100-3 will be granted when the taxpayer provides evidence to establish that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government sec_301_9100-1 through provide the standards the conclusion based solely on the facts submitted and representations made we conclude that x has satisfied the requirements of and and therefore it is granted an extension of time of sixty days from the date of this letter to file a form_8832 to elect to be treated as a partnership for federal tax purposes effective d a copy of this letter should be attached to the election a copy is enclosed for that purpose plr-152111-05 except as specifically set forth above we express no opinion concerning the federal tax consequences of the facts described above under any other provision of the internal_revenue_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 mailed to your authorized representative sincerely heather c maloy associate chief_counsel passthroughs and special industries enclosures copy of this letter copy for ' purposes cc