department of the treasury int ernal revenue service washington d c o f f i c e o f c h i e f c o u n s e l date number cc pa apjp1 release date pref-166637-01 uilc internal_revenue_service national_office service_center advice memorandum for cc sb phi from procedure and administration administrative provisions and judicial practice branch subject 1040nr - signature_authority this chief_counsel_advice responds to your memorandum dated january in accordance with sec_6110 this chief_counsel_advice should not be cited as precedent issue sec_1 whether the preparer’s address should be entered onto the master_file when the address shown on the return is that of the preparer and if answered in the affirmative what if any are the disclosure implications if subsequent notices or correspondence are sent to the preparer’s address for tax years other the one specified on the form_2848 whether the service can issue statutory notices of deficiency using the preparer’s address for either the year covered on form_2848 or other years whether the service may send refunds to the preparer for years other than the year covered in form_2848 conclusion sec_1 when the address for the taxpayer shown on the return is that of the preparer the preparer’s address is properly entered onto the master_file disclosures to a taxpayer’s representative in connection with practice before the service are governed by the power_of_attorney rules not by the sec_6103 consent pref-166637-01 rules and implementing regulations where there is a valid power_of_attorney the directive of the taxpayer regarding notices and other written communications as indicated on line of form_2848 is to be respected only for the year s covered by the power_of_attorney where a form_2848 is submitted for the limited purpose of authorizing an agent to sign the return pursuant to sec_1_6012-1 such communications should be sent to the taxpayer’s last_known_address where there is a valid power_of_attorney the directive of the taxpayer regarding notices and other written communications as indicated on line of form_2848 is to be respected only for the year s covered by the power_of_attorney statutory notices of deficiency for years other than those covered by the power_of_attorney should be sent to the taxpayer’s last_known_address where a form_2848 is submitted for the limited purpose of authorizing an agent to sign the return pursuant to sec_1_6012-1 statutory notices of deficiency should be sent to the taxpayer’s last_known_address where specifically authorized by a valid power_of_attorney refund checks may be sent to a taxpayer’s recognized representative for the year or years covered by the power_of_attorney facts scenario the service received a large number of form sec_1040nr-ez prepared and filed by a return preparer the forms were all prepared in the following manner the taxpayer’s name appears at the top of the return with the preparer’s address underneath the preparer signed the return attaching a form_2848 power_of_attorney in accordance with sec_1_6012-1 the form_2848 taxpayer authorized the preparer to sign the return due to the taxpayer’s absence from the united_states line did not contain a statement limiting the agents actions to signing of the return no address es other than the preparer’s appeared on either the return or the form_2848 section of form_2848 providing authorization for sending refund checks to the taxpayer’s representative was left blank section of form_2848 which provides that original notices and other communications will be sent to the taxpayer with a copy to the first designated representative unless another checkbox option is chosen was also left blank scenario cid cid cid cid cid cid cid pref-166637-01 the service received a large number forms 1040-nr prepared and filed by a return preparer the forms were all prepared in the following manner the taxpayer’s name appears at the top of the return with the preparer’s address underneath the preparer signed the return attaching forms power_of_attorney in accordance with sec_1_6012-1 the form_2848 authorized the preparer to sign the return due to the taxpayer’s’ absence from the united_states the return also listed the taxpayer’s foreign address as the country of taxpayer’s permanent residence the address listed on the form_2848 is the taxpayer’s foreign address section of form_2848 indicated that refund checks were to be sent to the taxpayer’s representative section of form_2848 which provides that original notices and other communications will be sent to the taxpayer with a copy to the first designated representative unless another checkbox option is chosen was also left blank last_known_address law and analysis sec_6212 requires the secretary to mail statutory notices of deficiency to taxpayers at their last_known_address this address is also used for sending other notices to taxpayers such as a notice of intention to levy and for refunds of overpayments it is this address that is input into the appropriate computer master_file as the taxpayer’s last_known_address while the phrase last_known_address is not defined in either the code it has now been defined in sec_301_6212-2 this definition has its origin in 91_tc_1019 acq 1989_2_cb_1 aod cc-1989-009 date wherein the tax_court held that the address on the taxpayer's most recently filed and properly processed return is the taxpayer's last_known_address unless the service has been given clear and concise notification by the taxpayer of a different address thus the phrase last_known_address does not necessarily mean the taxpayer's actual address but instead means the last address that the taxpayer makes known to the service indeed in concluding that each of the joint filer’s had a different last_known_address the court in abeles found that taxpayer-wife’s last_known_address was the address of her tax advisor in revproc_90_18 1990_1_cb_491 the internal_revenue_service adopted the rule announced in abeles that the taxpayer's last_known_address is generally the address on the most recently filed and properly processed return absent clear and concise notification by the taxpayer of a different address the revenue_procedure defines clear cid cid cid cid cid cid cid pref-166637-01 and concise written notification as a statement signed by the taxpayer informing the service that the taxpayer wishes the address of record changed to a new address in addition to containing the taxpayer’s full name signature old address and social_security or employer_identification_number it must be specific as to a change_of address the express purpose of the revenue_procedure is to explain how a taxpayer informs the service of a change_of address prior to the promulgation of the regulation the service on date issued a notice informing the public of a licensing agreement between the service and the united_states postal service whereby the service will be using the postal service’s national change_of address database to update our master_file addresses on a weekly basis notice ir-2001-14 further instructs that in addition to providing written notification of a new address when filing a tax_return or sending a form_8822 change_of address the service will also accept a verbal notification if an irs employee has contacted a taxpayer about his or her account when informed that there is a change_of address the service processes the return or notification and updates the taxpayer's address on the appropriate computer master_file eg individual_master_file imf or business_master_file bmf with the new address in both the scenarios presented the preparer’s address is shown on line of the return as the taxpayer’s address indeed in scenario no address other than the preparer’s is provided on either the return or the form accordingly as the preparer’s address is what appears on the most recently filed and processed return and the service has received no notification of a wish to change the address of record to a new address the address of the preparer is the taxpayer’s last_known_address having determined that the preparers’ addresses were properly inputted into the master_file as taxpayers’ last_known_address we turn to the questions raised as to the appropriate action to be taken by the service as discussed below that determination will depend upon whether the forms are valid powers of attorney or are employed for the limited purpose of authorizing an agent to sign a return pursuant to treas reg section a power_of_attorney a power_of_attorney is a taxpayer’s written authorization to have an another individual act on the taxpayer’s behalf in tax matters form_2848 is designed for taxpayers to use to grant such authority to a representative and for representatives to use in making the requisite declaration of representation a power_of_attorney is valid if 1however to prevent unauthorized change the service will not accept new addresses from taxpayer-initiated telephone calls pref-166637-01 the representative listed on the line of form_2848 is an individual who is eligible to practice the form contains all the information required by the conference and practice requirements as provided in sec_601_503 this includes taxpayer’s name address social_security_number name and address of representative type of tax tax form number tax_year s covered clear and concise expression of the taxpayer’s intention as to the scope of the authority being granted to the representative and the signatures of the taxpayer and the representative in addition to a more general power_of_attorney there is regulatory provision for granting another individual the limited authority to sign a return on the taxpayer’s behalf where the taxpayer is unable to make the return by reason of continuous absence from the united_states for a period of at least days prior to the date prescribed for the making of the return a return may be made by an agent sec_1_6012-1 when the return is made by an agent it must be accompanied by a power_of_attorney authorizing the agent to represent the taxpayer in making executing or filing the return a form_2848 may be used for this limited delegation of authority indeed the regulation expressly provides that a properly completed form_2848 is sufficient to authorize an individual to sign an income_tax return for the taxpayer eligibility to practice as to the first criteria that the individual be eligible to practice it is important to be aware that there are two categories of practice before the internal_revenue_service attorneys certified public accountants enrolled agents and enrolled actuaries may practice before the service as a recognized representative an individual other than an attorney certified_public_accountant enrolled_agent or enrolled_actuary who prepares and signs a return as the preparer referred to as an unenrolled preparer is eligible to engage in limited practice an unenrolled_return_preparer may represent the taxpayer concerning the tax_liability for the year or period covered by the return prepared an unenrolled_return_preparer is limited to representing taxpayers at the examination level he or she is not authorized to represent taxpayers before appeals collection or any other irs function information contained other unenrolled individuals are also recognized to practice however as not germane to facts presented we simply refer you to pub rev date pref-166637-01 where a form_2848 is adopted for the sole purpose of granting an agent the authority to sign a return it will not contain all the information necessary for a valid power_of_attorney it will not be a valid power_of_attorney even if the agent is eligible to practice or engage in limited practice when form_2848 used to grant more general powers of attorney it may also on line grant the representative the authority to sign the return as permitted by sec_1_6012-1 because forms can serve different purposes the next inquiry is whether the forms are valid powers of attorney or whether they were submitted solely to authorize the preparer to sign for them section a says that a properly completed form_2848 is sufficient to authorized an individual to sign an income_tax return for the taxpayer however the instructions for form_2848 rev date state that a taxpayer may authorize an agent to sign his or her return on a form_2848 that is not properly completed to authorize a representative someone with eligibility to practice before the service or engage in limited practice to sign a return all required elements must be present including the representative’s signature on the declaration to authorize an agent to sign a return the taxpayer is supposed to include the following on line of the form this power_of_attorney is being filed pursuant to regulations a by reason of insert reason which requires a power_of_attorney to be attached to a return if a return is signed by an agent no other acts on behalf of the taxpayer are authorized the agent does not sign the declaration if the preparer does not sign the form_2848 it may be valid as authorization to sign the return but it is not a valid power_of_attorney in like fashion if the form_2848 contains the statement that no other acts on behalf of the taxpayer are authorized it is not a valid power_of_attorney accordingly if a form_2848 is used solely to appoint an agent to sign a return as permitted by treas reg section a it will not contain all the information needed for a valid power_of_attorney and it will not be a valid power_of_attorney even if the agent is eligible to practice or engage in limited practice if it is not a valid power_of_attorney the service should ignore any directives indicated on lines and and send communications to the taxpayer’s last_known_address statutory notices of deficiency and other subsequent notices and correspondence we have been advised that in scenario the forms contained the preparer's signature on line the forms contained the statement this power_of_attorney is being filed pursuant to sec_1_6012-1 by reason of insert reason which requires a power_of_attorney to be attached to a return if a return is signed by an we assume the same facts for scenario in the event this is not the case please advise so that we may offer supplemental guidance pref-166637-01 agent and on line the forms did not contain the statement no other acts on behalf of the taxpayer are authorized we conclude that these forms constitute valid powers of attorney accordingly it would be appropriate to follow the delegation of authority in line however in both these scenarios line was left blank accordingly as line has been left blank the default procedure specified on the form_2848 controls form_2848 advises the taxpayer that when left blank original notices and other written communications will be sent to you and a copy to the first representative listed issuance of refunds sec_601_506 provides that a check drawn on the united_states treasury for example a refund check will be mailed to the recognized representative of a taxpayer provided that a power_of_attorney is filed containing specific authorization for this to be done in applying this regulatory provision we have as stated above assumed that the preparers are recognized representatives and concluded that the forms constitute valid powers of attorney in scenario the taxpayers have not authorized the service to send refund checks to the preparer as section was left blank accordingly refund checks should be sent to the taxpayer’s last_known_address which under these facts is the preparer’s address in scenario line specifies that the refund check be sent to the preparer accordingly the refund check should be sent to the preparer for the year s covered by the power_of_attorney please call branch of administrative provisions and judicial practice at if you have any further questions curt g wilson by pamela wilson fuller senior technician reviewer branch administrative provisions and judicial practice procedure and administration


t c summary opinion united_states tax_court stephan bartsch and eva bartsch a k a eva pott bartsch commissioner of internal revenue respondent petitioners v docket no 18872-02s filed date stephan bartsch pro_se margaret s rigg for respondent armen special_trial_judge this case was heard pursuant to the provisions of sec_7463 of the internal_revenue_code in effect at the time that the petition was filed the decision to unless otherwise indicated all subsequent section references are to the internal_revenue_code in effect for the taxable_year in issue and all rule references are to the tax_court rules_of_practice and procedure be entered is not reviewable by any other court and this opinion should not be cited as authority respondent determined a deficiency in petitioners’ federal_income_tax for the taxable_year in the amount of dollar_figure after a concession by respondent the sole issue for decision is whether petitioners are entitled to a moving_expense_deduction in excess of the amount allowed by respondent we hold that they are to the extent provided herein background some of the facts have been stipulated and they are so found petitioners resided in berkeley california at the time that their petition was filed with the court stephan bartsch petitioner and eva bartsch3 mrs bartsch are a married couple petitioner is a citizen of switzerland mrs bartsch is a citizen of germany before petitioner and mrs bartsch lived in a rented apartment in zurich switzerland in petitioner earned a ph d degree in molecular respondent concedes that petitioners are entitled to a lifetime_learning_credit under sec_25a based on a payment in the amount of dollar_figure petitioner eva bartsch did not appear at trial and did not execute the stipulation of facts accordingly the court will dismiss this action as to her see rule b however decision will be entered against petitioner eva bartsch consistent with the decision entered against petitioner stephan bartsch as to the deficiency in tax biology and genetics from a university in zurich during that time mrs bartsch attended medical school at the university of zurich on date after completing his ph d degree petitioner came to the united_states from zurich to work as a postdoctoral research scientist at columbia university in new york city petitioner entered the united_states on a j-1 visa petitioner’s job at columbia university was indefinite in duration petitioner lived in an apartment while in new york city while petitioner lived and worked in new york city mrs bartsch remained in zurich and continued to attend classes at the university of zurich mrs bartsch visited petitioner on several occasions while he lived in new york city in mrs bartsch was accepted into a clinical residency program beginning in date at stanford university in palo alto california mrs bartsch incurred tuition expenses in the amount of dollar_figure for the clinical residency program as a result of mrs bartsch’s residency at stanford university petitioner accepted a position as a research associate at the university of california in berkeley california before date petitioner traveled to zurich to assist mrs bartsch with her move to the united_states petitioner and mrs bartsch rented a truck and moved most of their household goods and personal effects from their zurich apartment into a storage_facility in saigans switzerland on date petitioner and mrs bartsch flew from zurich to new york city mrs bartsch entered the united_states on a j-2 visa petitioner and mrs bartsch brought some personal effects with them from zurich petitioner and mrs bartsch then packed their possessions in the new york city apartment and the items brought from zurich on date petitioner and mrs bartsch flew from new york city to san francisco at that time a professional moving company moved by truck boxes of household goods and personal effects from petitioner’s new york city apartment to berkeley during the move to berkeley the moving company lost one of petitioner’s boxes according to petitioner the box contained in-line skates and outdoor gear petitioner filed a claim with the moving company in the amount of dollar_figure the moving company denied petitioner’s claim on date petitioner entered into a rental agreement for storage space with aaaaa rent-a-space aaaaa storage in berkeley petitioner placed the household goods moved from new york city into storage for a short time petitioner incurred a monthly storage expense in the amount of dollar_figure petitioner and mrs bartsch jointly filed a form_1040 u s individual_income_tax_return for the income reported on the return consisted solely of wages earned by petitioner in the amount of dollar_figure petitioner claimed a moving_expense_deduction in the amount of dollar_figure on the return petitioner’s moving_expense_deduction included the cost of moving the household goods and personal effects from new york city to berkeley the cost of moving household goods from zurich to saigans the cost of petitioner’s travel from zurich to san francisco the cost of mrs bartsch’s travel from zurich to san francisco the costs of storage in both saigans and berkeley and the cost or value of the contents of the box lost by the moving company in the notice_of_deficiency respondent allowed petitioners a moving_expense_deduction of dollar_figure respondent contends that petitioners are not entitled to a moving_expense_deduction in any amount greater than that allowed by respondent discussion in general the determinations of the commissioner in a notice_of_deficiency are presumed correct and the burden is on the taxpayer to show that the determinations are incorrect see rule a 503_us_79 290_us_111 sec_7491 does not apply in this case to shift the burden_of_proof to respondent if for no other reason than that petitioner failed to establish that he fully complied with the substantiation requirements of sec_7491 deductions are strictly a matter of legislative grace and a taxpayer bears the burden of proving his or her entitlement to the claimed deductions rule a see 292_us_435 welch v helvering supra cf sec_7491 taxpayers are required to maintain records sufficient to substantiate their claimed deductions see sec_6001 sec_1_6001-1 income_tax regs this includes the burden of substantiating the amount and purpose of the items claimed see sec_6001 sec_1_6001-1 income_tax regs if claimed deductions are not adequately substantiated we may estimate them provided we are convinced that the taxpayer incurred such expenses and we have a basis upon which to make an estimate 39_f2d_540 2d cir 85_tc_731 without such a basis any allowance would amount to unguided largesse 245_f2d_559 5th cir sec_217 provides a deduction for moving_expenses paid_or_incurred during the taxable_year in connection with the commencement of work by the taxpayer as an employee at a new principal_place_of_work deductible moving_expenses under sec_217 include only the reasonable costs of moving a taxpayer’s household goods and personal effects from the former residence to the new residence and of traveling including lodging from the former residence to the new place of residence sec_217 a cost of moving household goods from zurich to saigans for purposes of sec_217 former residence refers to the taxpayer’s principal_residence before his departure for his new principal_place_of_work sec_1_217-2 income_tax regs principal_residence does not include other residences owned or maintained by the taxpayer or members of the taxpayer’s family id whether property is used by the taxpayer as his principal_residence depends upon all the facts and circumstances in each case id before his date move to berkeley petitioner lived in new york city petitioner had lived and worked in new york city since completing his ph d degree in additionally petitioner’s employment at columbia university was not a temporary position on the basis of the record we find that petitioner’s former residence before his move to berkeley was new york city not zurich therefore we hold that petitioner is not entitled to deduct the cost of moving any household goods from zurich to saigans see sec_217 b petitioner’s cost of traveling from zurich to san francisco the travel cost from the former residence to the new place of residence is a deductible moving expense see sec_217 as discussed above petitioner’s former residence for purposes of sec_217 was new york city therefore we hold that petitioner is not entitled to deduct his travel_expenses from zurich to san francisco see sec_217 c cost of travel for mrs bartsch from switzerland to san francisco mrs bartsch moved to berkeley to enroll in a clinical residency program at stanford university mrs bartsch did not move to berkeley in connection with the commencement of work as an employee accordingly mrs bartsch’s travel cost from zurich to san francisco is not deductible under sec_217 in addition sec_217 provides that a taxpayer may deduct the expenses_incurred in moving a member of the taxpayer’s household if such individual has both the former residence and the new residence as his principal_place_of_abode see also sec_1_217-2 income_tax regs a member of the taxpayer’s household includes any individual residing at the taxpayer’s residence who is neither a tenant nor an employee of the although petitioner’s travel_expenses from new york city to san francisco might otherwise be a deductible expense under sec_217 petitioner has failed to substantiate such an expense petitioner offered no documentary_evidence such as a canceled check receipt credit card statement or airline ticket nor does the record negate the possibility that some portion of petitioner’s travel_expenses might have been subject_to reimbursement accordingly we decline to invoke the rule in 39_f2d_540 2d cir to estimate the travel expense to which petitioner might be entitled because the record provides no basis for making such an estimate taxpayer id in paguio v commissioner tcmemo_1981_2 the cost of transporting the taxpayer’s two children from the philippines to the united_states was not a deductible moving expense under sec_217 because before their move the two children did not share the taxpayer’s former residence in the united_states as their principal_place_of_abode mrs bartsch lived in zurich when petitioner moved to new york city in mrs bartsch continued to live and attend school in zurich until petitioner moved to berkeley in date although mrs bartsch visited petitioner while he lived in new york city she did not make petitioner’s residence in new york city her principal_place_of_abode before petitioner’s move to berkeley therefore petitioner is not entitled to a moving_expense_deduction under sec_217 for mrs bartsch’s travel cost from zurich to san francisco d storage costs expenses of moving household goods and personal effects include the costs of in-transit storage sec_1_217-2 income_tax regs storage expenses are in-transit if they are incurred within any consecutive 30-day period after the day such goods are moved from the taxpayer’s former residence and prior to delivery at the taxpayer’s new residence id the storage cost in saigans was not incurred within the applicable 30-day period see id additionally the storage cost in saigans was not incurred as petitioner’s goods were moved between new york city petitioner’s former residence and berkeley petitioner’s new residence therefore the storage cost incurred by petitioner in saigans was not incurred in transit during petitioner’s move from new york city to berkeley accordingly the saigans storage cost is not a deductible moving expense for purposes of sec_217 however petitioner’s aaaaa storage expense was incurred during the 30-day period after the goods were moved from petitioner’s former residence new york city and before delivery at petitioner’s new residence berkeley accordingly we hold that petitioner is entitled to an additional moving_expense_deduction under sec_217 in the amount of dollar_figure for the in- transit storage expense e cost of box lost in transit petitioner has failed to substantiate the claimed loss of dollar_figure with respect to the box lost in transit from new york city to berkeley petitioner did not offer any evidence other than his testimony with respect to the cost or value of the contents of the box there is no basis in the record for the court to estimate such an expense under the cohan_rule as such we need not decide whether the value of the box that petitioner claims was lost by the moving company is a deductible moving expense for purposes of sec_217 accordingly we hold that petitioner is not entitled to a moving_expense_deduction for the box lost while in transit f conclusion we hold that petitioner is entitled to an additional moving_expense_deduction in the amount of dollar_figure we have considered all of the other arguments made by the parties and to the extent that we have not specifically addressed them we find them to be without merit and or irrelevant reviewed and adopted as the report of the small_tax_case division to reflect the foregoing an order of dismissal as to petitioner eva bartsch will be entered and decision will be entered under rule


-- number release date id office uilc cca-227122-09 -------------- from -------------------- sent date to ------------------- cc ---------------------------- subject ---------------------- -------- -- insomuch as the exam is still ongoing information we received in the course of the exam can be withheld under foia subsection b as gathered for law enforcement purposes the disclosure of which may impair the government's law enforcement abilities to some extent the ability to withhold information under b is temporal and lasts only so long as the law enforcement proceeding remains open or live as such if the examination concludes and there is no change or the taxpayer agrees to the change or if litigation is commenced and settled or otherwise decided the law enforcement exception to disclosure under the foia may terminate requiring the irs to disclose the information if requested --------------------- -------------------------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------- subsection b allows us generally to withhold information that would not be available in discovery as it is privileged subsections b and b also allow for withholding based on some kind of privacy expectation this may be personal privacy that does not apply to information pertaining to or received from businesses i am not in the office today and therefore do not have access to my foia stuff but will be back on tuesday let me take a look at these additional foia provisions when i return to the office on tuesday and get back to you


t c summary opinion united_states tax_court lance a landers petitioner v commissioner of internal revenue respondent docket no 13406-03s filed date lance a landers pro_se scott e fink for respondent pajak special_trial_judge this case was heard pursuant to the provisions of sec_7463 of the internal_revenue_code in effect at the time the petition was filed unless otherwise indicated section references are to the internal_revenue_code in effect for the year in issue the decision to be entered is not reviewable by any other court and this opinion should not be cited as authority respondent determined a deficiency of dollar_figure in petitioner’s federal_income_tax and an addition_to_tax under sec_6651 of dollar_figure the issues for decision are whether dollar_figure of income received by petitioner is subject_to ordinary_income tax whether the income is subject_to self-employment_tax and whether petitioner is liable for an addition_to_tax under sec_6651 some of the facts in this case have been stipulated and are so found petitioner resided in new york new york at the time he filed his petition sec_7491 does not affect the outcome because petitioner’s liability for the deficiency is decided on the preponderance_of_the_evidence petitioner untimely filed his form_1040 u s individual_income_tax_return on date petitioner reported the dollar_figure at issue on schedule d capital_gains_and_losses attached to his return he reported that amount as long- term capital_gains and losses-assets held more than one year this amount was offset in full by petitioner’s capital losses respondent determined that the dollar_figure was nonemployee compensation subject_to self-employment_tax during all relevant times petitioner was an attorney licensed to practice law in the state of new york petitioner was associated with the law firm of weiner millo firm prior to at the firm petitioner had a colleague jonathan tolpin mr tolpin another attorney petitioner left the firm in late mr tolpin left the firm in in petitioner referred two clients to mr tolpin the property damage client contacted petitioner during his time at the firm petitioner referred the personal injury client to mr tolpin while petitioner was in the process of closing petitioner’s law practice petitioner received dollar_figure from mr tolpin this represented petitioner’s portion of the fee from the date settlement of the property damage client’s claim petitioner also received dollar_figure from mr tolpin this represented petitioner’s portion of the fee in the date settlement of the personal injury client’s claim during petitioner received a total of dollar_figure rounded from mr tolpin mr tolpin reported the dollar_figure he paid to petitioner as nonemployee compensation on form 1099-misc miscellaneous income petitioner contended that the dollar_figure was not paid for services performed but for transfer of goodwill which qualifies for capital_gains treatment sec_1401 imposes a self-employment_tax on the self- employment income of every individual for each taxable_year sec_1402 in relevant part defines self-employment_income as the net_earnings_from_self-employment derived by an individual during any taxable_year sec_1402 defines net_earnings_from_self-employment as the gross_income derived by an individual from any trade_or_business carried on by such individual less the deductions allowed by this subtitle which are attributable to such trade_or_business sec_1402 excludes from net_earnings_from_self-employment any gain_or_loss from the sale_or_exchange of a capital_asset sec_1402 provides that in the context of self-employment_income or net_earnings_from_self-employment the term trade_or_business has the same meaning as when used in sec_162 relating to trade_or_business_expenses there is no question that during the taxable_year in issue petitioner was in the trade_or_business of practicing law for example petitioner attached to his federal_income_tax return a schedule c profit or loss from business on which he described his business as legal services on that schedule c he reported dollar_figure he received from the firm nothing in the record indicates that petitioner was to receive any payment for goodwill rather the closing statements signed by mr tolpin and filed with the office of court administration in new york for each client state that the amounts paid to petitioner were paid to him as an attorney participating in the contingent_compensation moreover the retainer statements signed by mr tolpin and filed with the office of court administration in new york new york for each client list petitioner as the attorney referring the client the retainer statement for the property damage client states that petitioner is entitled to one-third of the attorney’s fees the retainer statement for the personal injury client is silent as to petitioner’s fee we note that although petitioner claims that he received one-third of the legal fees recovered for each client the closing statements reflect that petitioner actually received approximately one-half of the legal fees recovered petitioner reported the dollar_figure received from mr tolpin on his schedule d as a long-term_capital_gain petitioner listed the date acquired as date and the date sold as date these dates do not comport with the evidence in the record for example for the property damage client the retainer statement signed by petitioner on date lists the date of damage as date and the date of agreement as to retainer as date the retainer agreement signed by mr tolpin on date lists the date of agreement as to retainer as date the closing statement signed by mr tolpin on date indicates that the property damage claim was settled on date similar discrepancies are in the documents relating to the personal injury client other than his own testimony petitioner presented no evidence that the dollar_figure received from mr tolpin for petitioner’s percentage of the legal fees recovered was for goodwill and therefore entitled to capital_gains treatment this was merely a fee-splitting arrangement between two attorneys on this record we find that petitioner mischaracterized the dollar_figure as capital_gains on his return we conclude that the dollar_figure received by petitioner was ordinary_income subject_to self-employment_tax accordingly we sustain respondent’s determination on this issue sec_6651 imposes an addition_to_tax for failure to timely file a tax_return unless failure to do so is due to reasonable_cause and not willful neglect the taxpayer must prove both reasonable_cause and lack of willful neglect 92_tc_899 reasonable_cause requires the taxpayer to demonstrate that he exercised ordinary business care and prudence 469_us_241 willful neglect is defined as a conscious intentional failure or reckless indifference id pincite because petitioner stipulated that he filed his tax_return on date respondent has met his burden of production with respect to the addition_to_tax under sec_6651 sec_7491 116_tc_438 petitioner requested and was granted two filing extensions until date and then until date but did not file his return until date petitioner provided no evidence that his failure to timely file his tax_return was due to reasonable_cause and not willful neglect on this record we conclude that petitioner is liable for the addition_to_tax under sec_6651 as determined by respondent contentions we have not addressed are irrelevant moot or without merit reviewed and adopted as the report of the small_tax_case division decision will be entered for respondent


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 ------------------------- ------------------- telephone number -------------------- refer reply to cc psi b02 plr-104322-07 date date legend x ------------------------------------------------------------------------------------------------------ ------------------------ state ---------- d1 d2 ------------------------- ---------------------- dear ---------------- this responds to the letter dated date and subsequent correspondence submitted on behalf of x by x's authorized representative requesting a ruling under sec_1362 of the internal_revenue_code the information submitted states that x was incorporated in state on d1 it was intended for x to be an s_corporation effective d2 however no form_2553 election by a small_business_corporation was timely filed for x accordingly x requests a ruling that it will be treated as an s_corporation effective d2 sec_1362 provides that a small_business_corporation may elect to be an s sec_1362 provides the rule on when an s election will be effective generally if an s election is made within the first two and one-half months of a corporation's taxable_year then the corporation will be treated as an s_corporation for the year in which the election is made sec_1362 provides that if an s election is made after the first two and one-half months of a corporation's taxable_year then the corporation plr-104322-07 corporation will not be treated as an s_corporation until the taxable_year after the year in which the s election is made sec_1362 provides that if a an election under sec_1362 is made for any taxable_year after the date prescribed by sec_1362 for making the election for the taxable_year or no sec_1362 election is made for any taxable_year and b the secretary determines that there was reasonable_cause for the failure to timely make the election then the secretary may treat the election as timely made for such taxable_year and sec_1362 shall not apply based solely on the facts and the representations submitted we conclude that x has established reasonable_cause for failing to make a timely election to be an s_corporation effective d2 accordingly provided that x makes an election to be an s_corporation by filing a completed form_2553 with the appropriate service_center effective d2 within days following the date of this letter then such election will be treated as timely made for x's taxable_year beginning d2 a copy of this letter should be attached to the form_2553 except as specifically set forth above no opinion is expressed concerning the federal tax consequences of the facts described above under any other provision of the code including whether x was or is a small_business_corporation under sec_1361 this ruling is directed only to the taxpayer who requested it sec_6110 provides that it may not be used or cited as precedent pursuant to a power_of_attorney on file with this office a copy of this letter is being sent to x's authorized representative sincerely bradford r poston senior counsel branch office of the associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes


internal_revenue_service department of the treasury number release date index number washington dc person to contact telephone number refer reply to cc psi plr-140806-02 date date legend company property shareholder state a b c d e f g h i k plr-140806-02 dear this letter responds to your letter received date as well as subsequent correspondence requesting a ruling that the rental income received by company from the property is not passive_investment_income within the meaning of sec_1362 of the internal_revenue_code facts company was incorporated under the laws of state in a and elected under sec_1362 to be an s_corporation effective b it has subchapter_c_earnings_and_profits company owns leases and operates an apartment building with residential and commercial tenants the property through its c employees d part-time a property manager and third-party contractors including the building superintendent company provides various services with respect to the property these services include regular property inspection common area maintenance and repair interior and exterior maintenance and repair of building structural and mechanical components operation of the building’s mechanical plant appliance servicing or replacement installation and maintenance of window guards common janitorial services including refuse collection maintenance and repair of sidewalks including cleaning and snow removal grounds maintenance provision of certain utilities and repair services to tenants and maintenance of a system for emergency repairs in addition to the services provided to tenants company handles the usual leasing and administrative functions involved in managing real_estate company received or accrued approximately e in rents and paid_or_incurred approximately f in relevant expenses for g on the property the rental income and expense figures for h are i and k respectively law and analysis except as provided in sec_1362 sec_1362 provides that a small_business_corporation may elect in accordance with the provisions of sec_1362 to be an s_corporation sec_1362 provides that an election under sec_1362 terminates whenever the corporation i has accumulated_earnings_and_profits at the close of each of three consecutive tax years and ii has gross_receipts for each of such tax years more than percent of which are passive_investment_income plr-140806-02 except as otherwise provided in sec_1362 sec_1362 provides that the term passive_investment_income means gross_receipts derived from royalties rents dividends interest annuities and sales or exchanges of stock_or_securities sec_1_1362-2 of the income_tax regulations provides that rents means amounts received for_the_use_of or the right to use property whether real or personal of the corporation sec_1_1362-2 provides that rents does not include rents derived in the active trade_or_business of renting property rents received by a corporation are derived in an active trade_or_business of renting property only if based on all the facts and circumstances the corporation provides significant services or incurs substantial costs in the rental business generally significant services are not rendered and substantial costs are not incurred in connection with net leases whether significant services are performed or substantial costs are incurred in the rental business is determined based upon all the facts and circumstances including the number of persons employed to provide the services and the types and amounts of costs and expenses_incurred other than depreciation conclusion based on the facts and representations submitted by company we conclude that the rents company receives from the property are not passive_investment_income under sec_1362 except for the specific ruling above we express or imply no opinion concerning the federal tax consequences of the facts of this case under any other provision of the code specifically we express or imply no opinion regarding company's eligibility to be an s_corporation further the passive_investment_income rules of sec_1362 are completely independent of the passive_activity rules of sec_469 unless an exception under sec_469 applies the rental_activity remains passive for purposes of sec_469 under a power_of_attorney on file with this office we are sending a copy of this letter to your authorized representative plr-140806-02 this ruling is directed only to the taxpayer who requested it according to sec_6110 this ruling may not be used or cited as precedent sincerely s james a quinn senior counsel branch office of associate chief_counsel passthroughs and special industries enclosure copy for sec_6110 purposes


number release date id office uilc cca_2009071712262240 -------------- from ---------------------- sent friday date pm to -------------------------- cc --------------------- subject llc liability ----------------- ------- - this is to advise you that i’ve reviewed your memo to the --------------------------------------------- concerning the personal tax_liability of a owner of an llc i concur with your conclusion that the sole owner cannot be held personally liable for the employment_taxes incurred by the llc while it was a multi-member llc treated as a partnership for federal tax purposes in particular i agree that this question of liability is governed by sec_301_7701-2 under that regulation a single-member llc is not disregarded for the purposes of federal tax_liabilities incurred during taxable periods in which the entity was not disregarded although the llc here is currently a disregarded_entity it was not at the time the employment_tax liabilities were incurred --------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------ if you have any questions about my comments or edits please give me a call thanks-- ------------ -------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- ---------- attachment redacted


internal_revenue_service department of the treasury number release date index number washington dc person to contact telephone number refer reply to cc psi 2-plr-116458-01 date date legend x a d1 d2 year dear this letter responds to your letter dated date and subsequent correspondence submitted on behalf of x requesting a ruling under sec_1362 of the internal_revenue_code the represented facts are as follows x was incorporated on d1 a the sole shareholder of x on d1 intended x to be an s_corporation effective for the year taxable_year but form_2553 election by a small_business_corporation was not filed timely this intent is evidenced by correspondence between x’s accountant and x’s president which states that x will elect to be taxed under subchapter_s accordingly x requests a ruling that it will be treated as an s_corporation effective d2 sec_1362 of the code provides that if -- a an election under sec_1362 is made for any taxable_year after the date prescribed by sec_1362 for making such election for such taxable_year or no such election is made for any taxable_year and b the secretary determines that there was reasonable_cause for the failure to timely make such election the secretary may treat such an election as timely made for such taxable_year based solely on the facts and the representations submitted we conclude that x has established reasonable_cause for failing to make a timely election to be an s_corporation for x’s year taxable_year accordingly provided that x makes an election plr-116458-01 to be an s_corporation by filing a completed form_2553 with the appropriate service_center effective for its year taxable_year within days following the date of this letter then such election will be treated as timely made for x’s year taxable_year a copy of this letter should be attached to the form_2553 except as specifically set forth above no opinion is expressed concerning the federal tax consequences of the facts described above under any other provision of the code including whether x was or is a small_business_corporation under sec_1361 of the code 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 sincerely yours jeanne m sullivan acting senior technician reviewer branch office of the associate chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes


internal_revenue_service number release date index number 468b --------------------------------- ------------------------------------------- ------------------------ ---------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ------------------------ id no ---------- telephone number --------------------- refer reply to cc ita b07 plr-103890-09 date july legend x trust y z court date a state p --------------------------------------------------------------------- ---------------------------------------------------------------------- ------------- ---------------------------------------------------------------------- -------------------------------- ------------- ---------------------------------------------------------------------- ------------- -------------------------- ------------- dear ----------------- this responds to your letter requesting certain rulings concerning the application of various sections of the internal_revenue_code to transfers made by x to trust by letter dated date trust joined your request for these rulings facts x and its subsidiaries are engaged in the trade_or_business of y x has been named as a defendant in numerous actions involving personal injury or death claims caused by exposure to z-containing products for which x its predecessors successors and assigns has legal liability x uses an accrual_method of accounting for federal_income_tax purposes x emerged from a chapter bankruptcy proceeding pursuant to a confirmation order issued by court dated date a the confirmation order inter alia confirmed a plan_of_reorganization and approved the creation of the trust the plan provides that the plr-103890-09 court retains jurisdiction over any matter arising under or related to the plan including the trust the purpose of trust was to resolve or satisfy present and future z-related personal injury claims brought against x pursuant to a permanent channeling injunction the sole recourse of a holder of a z-related personal injury claim against x was permanently channeled to trust and such holder would not have any further recourse against x or certain other specified parties trust was created on date a x represents that trust is a_trust under the law of state p the plan provided that trust was to be funded by the transfer of the equity of x other assets of x such as insurance proceeds and future payments to be funded by the operations of the business of x the plan defined these future payments as excess cash in general the plan defined excess cash as the earnings_of x reduced by certain amounts law and analysis status as qualified_settlement_fund the first requested ruling is that the trust is a qualified_settlement_fund under sec_1_468b-1 for federal_income_tax purposes sec_468b of the code provides in part that nothing in any provision of law shall be construed as providing that an escrow account settlement fund or similar fund is not subject_to current income_tax sec_1_468b-1 through 468b-5 of the regulations provide guidance regarding qualified settlement funds sec_1_468b-1 provides that a qualified_settlement_fund is a fund account or trust that satisfies all three requirements of sec_1_468b-1 first sec_1_468b-1 requires that the fund account or trust is established pursuant to an order of or is approved by the united_states any state including the district of columbia territory possession or political_subdivision thereof or any agency_or_instrumentality including a court of law of any of the foregoing and is subject_to the continued jurisdiction of that governmental authority second sec_1_468b-1 requires that the fund account or trust is established to resolve or satisfy one or more contested or uncontested claims that have resulted or may result from an event or related series of events that has occurred and that has given rise to at least one claim asserting liability i under the comprehensive environmental response compensation and liability act of ii arising out of a tort breach of contract or violation of law or iii designated by the commissioner in a revenue_ruling or revenue_procedure third sec_1_468b-1 provides that the fund account or trust must be a_trust under applicable state law or its assets must be otherwise segregated from other assets of the transferor and related_persons based on the facts presented and representations made the three requirements of sec_1_468b-1 are satisfied and as such the trust is a qualified_settlement_fund for plr-103890-09 federal_income_tax purposes first the trust has been approved pursuant to an order of the court dated date a and the court retains jurisdiction over the trust during the trust’s complete administration see sec_1_468b-1 second the trust was established to resolve or satisfy claims brought against x for damages allegedly sustained as a result of exposure to z see sec_1_468b-1 third it is represented that the trust is a_trust under the law of state p see sec_1_468b-1 modified gross_income the second requested ruling is that excess cash transferred by or on behalf of x to the trust is excluded from the trust’s modified gross_income sec_1_468b-2 provides that the modified gross_income of a qualified_settlement_fund is its gross_income as defined in sec_61 computed with certain modifications under sec_1 468b- b amounts transferred to the qualified_settlement_fund by or on behalf of a transferor to resolve or satisfy a liability for which the fund is established are excluded from the modified gross_income of the fund however dividends on stock of a transferor or a related_person are not excluded from modified gross_income sec_301 provides that a distribution_of_property made by a corporation to a shareholder with respect to its stock shall be treated as a dividend to the extent of its current or accumulated_earnings_and_profits sec_1_301-1 provides that sec_301 is not applicable to an amount_paid by a corporation to a shareholder unless the amount is paid to the shareholder in his capacity as such based on the facts presented and representation made excess cash transferred by or on behalf of x to the trust is transferred to resolve or satisfy the liabilities for which the trust is established ie x’s z-related liabilities as such excess cash transferred by or on behalf of x to the trust is not a distribution by x with respect to stock within the meaning of sec_301 accordingly pursuant to sec_1_468b-2 excess cash transferred by or on behalf of x to the trust is excluded from the trust’s modified gross_income x’s deductions for transfers to the trust the third requested ruling is that to the extent the requirements of sec_162 and sec_461 are otherwise met x may deduct the amount of excess cash transferred to the trust in the taxable_year or years of the transfers sec_162 allows as a deduction all the ordinary and necessary expenses paid_or_incurred during the taxable_year in carrying_on_a_trade_or_business payments made in settlement of a lawsuit or potential lawsuits are generally deductible under sec_162 if the acts that gave rise to the litigation were performed in the ordinary course of the taxpayer’s business see 372_us_39 revrul_80_211 1980_2_cb_57 even though a particular taxpayer may incur an expense only plr-103890-09 once in the lifetime of its business the expense may qualify as ordinary and necessary if it is appropriate and helpful in carrying on that business is commonly and frequently incurred in the type of business conducted by the taxpayer and is not a capital_expenditure 383_us_687 308_us_488 sec_461 provides that a deduction shall be taken for the taxable_year that is the proper taxable_year under the method_of_accounting used in computing taxable_income sec_1_461-1 provides that under an accrual_method of accounting a liability is incurred and generally is taken into account for federal_income_tax purposes in the taxable_year in which all the events have occurred that establish the fact of the liability the amount of the liability can be determined with reasonable accuracy and economic_performance has occurred with respect to the liability sec_461 provides that in determining whether an amount has been incurred with respect to any item during any taxable_year the all_events_test shall not be treated as met any earlier than when economic_performance with respect to the item occurs sec_1_468b-1 provides that a transferor is a person that transfers or on behalf of whom an insurer or other person transfers money or property to a qualified_settlement_fund to resolve or satisfy claims described in sec_1_468b-1 against that person sec_1_468b-3 provides that except as otherwise provided in that section for purposes of sec_461 economic_performance occurs with respect to a liability described in sec_1_468b-1 determined with regard to sec_1_468b-1 and g to the extent the transferor makes a transfer to a qualified_settlement_fund to resolve or satisfy the liability however sec_1_468b-1 provides that economic_performance does not occur with respect to transfers to a qualified_settlement_fund for non-allowable claims sec_1_468b-3 provides that no deduction is allowed to a transferor for a transfer to a qualified_settlement_fund to the extent the transferred amounts represent amounts received from the settlement of an insurance claim and are excludable from gross_income under sec_1_468b-3 economic_performance occurs in the taxable_year or years in which x transfers excess cash to the trust to the extent that the transfers are allocable to liabilities described in sec_1_468b-1 to the extent x transfers excess cash to the trust x’s liability is fixed and determinable with reasonable accuracy no later than the time when x makes such transfers finally x’s liability arose from the conduct of its business and therefore represents an expense deductible under sec_162 accordingly based on the facts presented and representations made x may deduct plr-103890-09 under sec_162 the amount of excess cash transferred to the trust in the taxable_year or years of the transfers but only to the extent that i the transfers are allocable to liabilities described in sec_1_468b-1 and ii the transferred amounts do not represent amounts received from the settlement of an insurance claim which is excludable from x’s gross_income except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter this ruling is directed only to the taxpayer requesting it sec_6110 of the code provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative 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 the rulings contained in this letter are based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in support of the request for rulings it is subject_to verification on examination sincerely martin scully jr senior counsel branch income_tax accounting cc


internal_revenue_service number release date index number ------------------------- ------------------------------------------------- --------------------- ------------------------------ --------------------------- - department of the treasury washington dc third party communication none date of communication not applicable_person to contact ------------------------ id no ------------- telephone number --------------------- refer reply to cc corp b04 plr-149163-04 date january legend target sub sub sub sub sub sub sub --------------------- ------------------------------- ----------------------- ----------------------- ----------------------- -------------------------------------- ----------------------- ---------------------------- ----------------------- -------------------------------------- ----------------------- --------------------------------------------- ----------------------- -------------------------------------- ----------------------- ------------------------------------------------- ----------------------- plr-149163-04 sub sub sub sub sub sub sub sub sub sub sub sub sub sub sub ----------------------------------------------- --------------------- ----------------------------------- ----------------------- ------------------------------------------------ ----------------------- ------------------ ----------------------- ---------------------------------------------- ----------------------- ------------------------------------- ----------------------- --------------------------------- ----------------------- ------------------------------------------------------------ ----------------------- -------------------------------------------------- ----------------------- --------------------- ----------------------- --------------------------- ----------------------- -------------------------------------- ----------------------- ------------------- ----------------------- ----------------- ----------------------- ---------------------------------------------------- ----------------------- plr-149163-04 sub sub sub sub sub sub sub acquiring acquisition sub sub sub sub purchaser date a date b date c --------------------------------------------- ----------------------- ----------------------------- ----------------------- ------------------------------------------------ ----------------------- ------------------------ ----------------------- ------------------------- ----------------------- ------------------------------------------ ----------------------- ---------------------------------- ----------------------- --------------------------------------------- ----------------------- --------------------------- ----------------------- -------------------------- ----------------------- --------------------------------------- ----------------------- ---------------------- ----------------------- ----------------------------- ----------------------- ------------------------- -------------------------- ------------------------- ------ -------------- --------------- ----------------- ----------------- ------------------------- -------------------------- plr-149163-04 date d date e date f a b c d dear ------------------ pursuant to sec_1504 of the internal_revenue_code that the secretary waive the general_rule set forth in sec_1504 additional information was received in letters dated date and date the information submitted indicates that prior to date a target was the common parent of an affiliated_group_of_corporations that filed a consolidated_return the target group on a calendar_year basis the target group consisted of target and subs the historic subsidiaries consolidated_return the acquiring group on date a acquisition sub a wholly owned subsidiary of acquiring acquired a percent of target’s outstanding common_stock and all of target’s outstanding series b preferred_stock pursuant to a tender offer shortly thereafter on date b acquisition sub merged with and into target with target surviving this is in response to a letter dated date requesting a ruling acquiring is the common parent of another affiliated_group that files a as a result of the date a stock acquisition the target group was terminated pursuant to sec_1_1502-75 and was required to join in the filing of the acquiring group’s consolidated_return pursuant to sec_1501 and sec_1 b beginning the day after date a and for several years thereafter target and the historic subsidiaries joined with acquiring and its subsidiaries in the filing of the acquiring group’s consolidated_return during this period a number of target’s historic subsidiaries ceased to be members of the acquiring group as follows in separate transactions sub sub sub and sub each merged with and into target with target surviving and sub merged with and into sub with sub surviving sub sub sub sub and sub each converted to a single-member limited_liability_company treated as a disregarded_entity for federal_income_tax purposes in addition plr-149163-04 target represents that sub and sub were shell_corporations formed by a third party that were not owned by target and never engaged in business and thus were erroneously included in the affiliations schedule filed by target with its consolidated_return also during this period sub sub and sub became affiliated subsidiaries of target the new subsidiaries for what are represented to be valid business reasons on date c the acquiring target wishes to file a consolidated federal_income_tax return with its sec_1504 provides that if a corporation is included in a consolidated_group disposed of its interest in target through a sale of all the target stock to purchaser an unrelated entity treated as a partnership for federal_income_tax purposes as a result target the historic subsidiaries and the new subsidiaries ceased to be members of the acquiring group also on date c sub ceased to be a member of the affiliated_group when group members’ ownership of sub 15’s stock dropped below percent as a result of a transfer intended to qualify under sec_351 subsequently on date d sub merged with and into target with target surviving subsidiaries including the historic subsidiaries for the short_period from date e through date f the short_period and for subsequent taxable years because target and the historic subsidiaries are outside the scope of revproc_2002_32 2002_1_cb_959 which grants an automatic waiver of sec_1504 in certain circumstances target and the historic subsidiaries are seeking a waiver under sec_1504 in the interim target and its subsidiaries have timely filed a consolidated_return for the short_period without first receiving a waiver under sec_1504 federal_income_tax return filed by an affiliated_group_of_corporations and such corporation ceases to be a member of such group such corporation or any successor of such corporation may not be included in any consolidated_return filed by the affiliated_group or by another affiliated_group with the same common parent or a successor of such common parent before the 61st month beginning after its first taxable_year in which it ceased to be a member of such affiliated_group thus target and its historic subsidiaries would be prevented from filing a consolidated_return however sec_1504 allows the secretary to waive the application of sec_1504 to any corporation for any period subject_to such conditions as the secretary may prescribe the conference_report states that the rule prohibiting consolidation after deconsolidation was an anti-abuse rule h_r conf_rep no pincite sec_1504 for taxpayers who meet its requirements sec_5 of revproc_2002_32 specifies the information and representations to be included in a request for an automatic waiver section dollar_figure of revproc_2002_32 provides that the request must include a representation that the disaffiliation and subsequent consolidation has not provided and will not provide a benefit of a reduction in income increase in loss or any sec_1504 was enacted by section a of the tax reform act of revproc_2002_32 grants an automatic waiver of the general_rule of plr-149163-04 other deduction credit or allowance a federal tax savings that would not otherwise be secured or have been secured had the disaffiliation and subsequent consolidation not occurred including but not limited to the use of a net_operating_loss or credit that would otherwise have expired or the use of a loss recognized on a disposition of stock of the deconsolidated corporation or a predecessor of such corporation section dollar_figure of revproc_2002_32 further provides that in determining whether the disaffiliation and subsequent consolidation provided or will provide a federal tax savings the net tax consequences to all parties taking into account the time_value_of_money are considered section of revproc_2002_32 provides that if a deconsolidated corporation cannot qualify for an automatic waiver a waiver under sec_1504 may only be obtained through a letter_ruling request section of revproc_2002_32 further provides that the ruling_request should include the information set forth in sec_5 of revproc_2002_32 section of revproc_2002_32 further provides that to the extent that the representations set forth in dollar_figure or dollar_figure of revproc_2002_32 cannot be made the letter_ruling request must contain information establishing that federal tax savings was not a purpose of the disaffiliation and that the amount of any federal tax savings attributable to the disaffiliation or a subsequent consolidation is not significant and state whether the deconsolidated corporation or a predecessor of such corporation was at any time during the period of disaffiliation in the effective_control of any member or successor of any member of the current group or the former group losses of the acquiring group to offset approximately dollar_figureb of taxable_income of the target group during the period of their affiliation the deconsolidation and reconsolidation of the target group has not provided and will not provide a benefit of a reduction in income increase in loss or any other deduction credit or allowance that would not otherwise be secured or have been secured had the disaffiliation and subsequent consolidation not occurred including but not limited to the use of a net_operating_loss or credit that would have otherwise expired or the use of a loss recognized on a disposition of stock of the deconsolidated corporation or a predecessor of such corporation target took into account an excess_loss_account as defined in sec_1 of dollar_figurec in sub and a substantial excess_loss_account of dollar_figured in sub as a result of the acquiring group’s sale of target’s stock to purchaser on date c moreover under the facts presented it does not appear that the deconsolidation of the target group on date a and the reconsolidation of target with the historic subsidiaries on date e were motivated by tax considerations because the deconsolidation and reconsolidation occurred largely or entirely as a result of actions undertaken by third parties above we rule that pursuant to sec_1504 the application of sec_1504 is in support of this representation target has submitted information indicating that it is represented that except for obtaining a tax_benefit in the form of the use of based solely on the information submitted and the representations set forth the ruling contained in this letter is based upon information and representations plr-149163-04 waived provided that target the historic subsidiaries and the new subsidiaries constitute an affiliated_group_of_corporations within the meaning of sec_1504 target the historic subsidiaries and the new subsidiaries may file a consolidated federal_income_tax return for the short_period and for subsequent tax years submitted by the taxpayer and accompanied by a penalties 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 concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter the code provides that it may not be used or cited as precedent this ruling is directed only to the taxpayer requesting it sec_6110 of except as expressly provided herein no opinion is expressed or implied sincerely ______________________ sean p duffley assistant to the chief branch office of associate chief_counsel corporate