internal_revenue_service department asury significant index nos washington dc contact person telephone number in reference to op e eo t date nov legend o we dear sir or madam this is in response to m’s request for certain rulings under sec_507 code hereafter code and of the internal revenue m has been recognized exempt under sec_501 of the a private_foundation under section_509 a code and classified as m was established by a bequest from its founder w now deceased m’s purposes include using its funds for charitable scientific literary educational or religious purposes within the meaning of sec_501 u and vv governing body also includes three members and u are the children of w m‘s trustees are r m’s founder of the code t m’s t s s n and p have been recognized as exempt under section of the code and classified as private_foundations under s01 c sec_509 exclusively for charitable educational literary or scientific purposes within the meaning of sec_501 and p are organized and operated n o jos m proposes to transfer all of its assets in equal and p amounts to n terminate after the transfer of assets has been completed states that it may or may not have met the distribution_requirements of sec_4942 of the code in the year of its liquidation transfers or the immediately previous year m proposes to wind up its operations and m r t v and x will serve as the initial trustees for n after the transfer of assets and liquidation of m resign as trustees of n of n after m’s liquidation and the transfer of assets has been completed t and x will serve as the sole trustees r and v will r s and v will serve as the directors for after the transfer of assets and liquidation m has been substantially completed r and v will resign as directors of o's president and will name the successor directors s serves as p s board_of directors is composed of six persons the directors for p include u and y who are permitted under p’s organizing document to serve an unlimited number of successive terms who are the only directors for p y serves as p’s president m states that the members of its board_of directors have determined to pursue courses of charitable giving independently of one another objectives m’s board proposes to transfer all of m’s assets percent to foundations n which represents the separate philanthropic interests of the family_member trustees as indicated above in order to accomplish these in equal amounts each of and p m states that it will effectively terminate its private_foundation_status and corporate existence after the transfer of assets is completed sec_507 of the code of its intent to terminate its private_foundation_status after the transfer is completed m states that it has no pre-existing charitable pledges or grants which require the exercise of expenditure_responsibility described in sec_4945 h m will provide the notice described in sec_507 of the code provides that except as provided in sec_507 the status of any private_foundation shall be terminated only if such organization notifies the secretary of its intent to accomplish such termination or with respect to such organization there have been either willful or repeated acts or a willful and flagrant act giving rise to liability for tax under chapter and the secretary notifies the organization that because of such act the organization is liable for the tax imposed by sec_507 and either the organization pays the iho tax or the entire amount of the tax is abated under sec_507 sec_507 of the code provides that in the case of a transfer of assets of any private_foundation to another private_foundation pursuant to any liquidation merger redemption recapitalization or other adjustment organization or reorganization the transferee foundation shall not be treated as a newly created organization sec_507 of the code imposes an excise_tax on each terminating private_foundation equal to the lower_of the aggregate tax_benefit resulting from such termination or the value of its net assets sec_507 of the code provides that for purposes of sec_507 c the value of the net assets shall be determined at whichever time such value is higher the first day on which action is taken which culminates in its ceasing to be a private_foundation or the date on which it ceases to be a private_foundation sec_4940 of the code provides for the imposition of a tax on the net_investment_income of private_foundations sec_4941 e of the code states that the term self dealing means any direct or indirect transfer to for the benefit of of a private_foundation a disqualified_person of the income or assets or use by or sec_4942 of the code imposes an excise_tax on the undistributed_income_of_a_private_foundation for any taxable_year which has not been distributed before the first day of the second or any succeeding taxable_year following such taxable_year if such first day falls within the taxable_period as defined in paragraph c the term distributed means distributed as qualifying distributions under sec_4942 for purposes of sec_4942 of this section sec_4943 of the code imposes an excise_tax on the excess_business_holdings of a private_foundation sec_4943 of the code states that excess_business_holdings means with respect to the holdings of any private_foundation in any business_enterprise the amount of stock or other interest in the enterprise which the foundation would have to dispose_of order for its remaining holdings in the enterprise to be permitted holdings a person other than a disqualified_person in to sec_4944 of the code imposes a tax on a private_foundation that invests any amount in such manner as to jeopardize the carrying out of any of its exempt purposes sec_4945 of the code provides that the term taxable_expenditure means any amount_paid or incurred by a private_foundation as a grant to an organization unless such organization is described in paragraph sec_509 or is an exempt_operating_foundation or the private_foundation exercises expenditure_responsibility with respect to such grant or of sec_4945 of the code provides that the term taxable_expenditure does not include amounts paid_or_incurred by a private_foundation as a grant to another organization for purposes specified in sec_170 b sec_4945 of the code provides that the expenditure_responsibility referred to in subsection d means that the private_foundation is responsible to exert all reasonable efforts to establish adequate procedures to see that the grant is spent solely for the purpose for which made to obtain full and complete reports from the grantee on how the funds are spent and to make full and detailed reports with respect to such expenditures to the secretary sec_4946 of the code provides in part that the term disqualified_person shall not include any organization which is described in sec_501 organization described in sec_509 other than an sec_4946 b of the code defines a disqualified_person to include with respect to a private_foundation a foundation_manager sec_4946 b of the code states that the term foundation_manager includes a trustee of a foundation having authority or responsibility over the activities of the foundation sec_1_507-3 of the income_tax regulations of the code the terms other adjustment organization hereafter regulations provides that for purposes of sec_507 or reorganization shall include any partial_liquidation or any other significant disposition of assets to one or more private_foundations other than transfers for full and adequate_consideration or distributions out of current income b h sec_1_507-3 of the regulations provides that the term significant disposition of assets to one or more private_foundations shall include any disposition for a taxable_year where the aggregate of the dispositions to one or more private_foundations for the taxable_year percent or more of the fair_market_value of the net assets of the foundation at the beginning of the taxable_year is sec_1_507-3 of the regulations provides that in a significant disposition of assets to one or more the case of private_foundations within the meaning of paragraph c section the transferee organization shall not be treated as newly created organization this paragraph applies shall be treated as possessing those attributes and characteristics of the transferor organization a transferee organization to which of this a sec_1_507-3 i of the regulations provides that a transferee organization to which sec_507 applies shall succeed to the aggregate tax_benefit of the transferor organization in an amount equal to the amount of aggregate tax_benefit multiplied by a fraction the numerator of which is the fair_market_value of the assets less encumbrances transferred to such transferee and the denominator of which is the fair market of the assets of the transferor less encumbrances immediately before the transfer shall be determined as of the time of the transfer of the code fair_market_value sec_1_507-3 of the regulations provides that of this paragraph a except as provided in subparagraph private_foundation is required to meet the distribution_requirements of sec_4942 for any taxable_year in which it makes a sec_507 transfer of all or part of its net such transfer shall itself assets to another private_foundation be counted toward satisfaction of such requirements to the extent the amount transferred meets the requirements of sec_4942 however where the transferor has disposed of all of its assets the recordkeeping requirements of sec_4942 b apply during any period in which it has no assets requirements are applicable for any taxable_year other than a taxable_year during which the transferor has no assets shall not such sec_1_507-1 of the regulations provides that a private_foundation which transfers all of its net assets is required to file the annual information_return required by sec_6033 the annual report of a private_foundation required by sec_6056 however neither such foundation nor its foundation managers will be required to file such returns for any taxable_year following for the taxable_year in which such transfer occurs and the foundation managers are required to file - - the taxable_year in which the last of any such transfers occurred if at no time during the subsequent taxable years in question the foundation has either legal or equitable_title to any assets or engages in any activity sec_1_507-3 of the regulations provides that of this paragraph where except as provided in subparagraph the transferor has disposed of all of its assets during any period in which the transferor has no assets sec_4945 d and h shall not apply to the transferee or the transferor with respect to any ‘expenditure responsibility’ grants made by the transferor subparagraph shall not apply with respect to any information reporting requirements imposed by sec_4945 and the regulations thereunder for any year in which any such transfer is made however the exception contained in this sec_1_507-3 of the regulations provides that unless a of the a transfer of assets described in sec_507 will private_foundation gives notice under sec_507 code not constitute a termination of the transferor’s private_foundation_status sec_1_507-3 a ii of the regulations provides that the provisions enumerated in subparagraphs a through g apply to a transferee foundation to the same extent and in the same manner that they would have applied to the transferor foundation had the transfer described in sec_507 been effected the rules for determining the basis_of_property pursuant to sec_507 in particular sec_1_507-3 ii a refers to of the code not the transfer of all of m's assets to foundations n o and p under the circumstances described will constitute a transfer as described in sec_507 p will not be treated as newly created organizations transfer does not constitute a willful or flagrant act described in sec_507 notifies the secretary of intention to terminate its private_foundation_status there will be no tax imposed under sec_507 assuming m has no assets at the time m therefore n the of the code and n and p as transferee foundations will be treated as possessing those attributes and characteristics of m transferor pursuant to sec_1 regulations they were m for purposes of the chapter excise_tax provisions and sec_507 and sec_509 in the proportion which the net fair_market_value of the transferred assets bears to the net fair and p will each be treated as a of the therefore n the if rit market_value of all of m‘s assets immediately before the transfers assets pursuant to the transfer each succeed to one-third of m’s tax_attributes under chapter including sec_4940 through and p will each receive one-third of all of m's and sec_507 and sec_509 therefore n and p will n m will transfer all of its assets to n o and p because and p are described in sec_501 n are not disqualified persons with respect to m pursuant to sec_4946 not constitute an act of self-dealing within the meaning of sec_4941 of the code therefore the transfers will of the code of the code they the assets transferred from m to n o and p do not constitute the operation of a business_enterprise within the meaning of sec_4943 n and p will not be subject_to the tax imposed on excess_business_holdings under sec_4943 therefore m of the code assets transferred by m to n and p will be transferred of the regulations pursuant to a plan_of_liquidation under sec_1_507-3 and transfers described in sec_507 therefore not considered investments for purposes of the tax on jeopardy investments imposed by sec_4944 the transfer of assets constitute of the code and are the transferee private_foundations will use the assets of the code and c b transferred from m to accomplish charitable purposes described in sec_501 transfer of assets by m will not be considered a taxable_expenditure described in sec_4945 pursuant to sec_1_507-3 of the regulations existing grants for which it has to exercise expenditure_responsibility m will not be required to exercise expenditure_responsibility as described in sec_4945 of the code during any period in which it has no assets pursuant to sec_1 a of transfer of the regulations that is for any year after the year since m has no obligations or therefore the m has not given notice of a termination of private_foundation_status pursuant to sec_507 therefore the transfer of all of m’s assets to n not terminate m's status a sec_507 m will be required to file the annual information_return required by pursuant to sec_1_507-1 of the regulations after the transfer of all of its assets to n addition m’s foundation managers are required to file the annual report of and for purposes of the tax imposed by sec_507 a private_foundation required by sec_6056 a private_foundation under section of the code and p will for the and p in o - taxable_year in which such transfer occurs sec_1 b foundation managers will be required to file such returns for any taxable_year following the taxable_year in which the last of any such transfers occurred if at no time during the subsequent taxable years in question the foundation has either legal or equitable_title to any assets or engages in any activity of the regulations neither m nor its however pursuant to based on the above we rule as follows the transfer of all of m’s assets to n described above constitutes a transfer described in sec_507 b of the code and p as as a transfer described in sec_507 the proposed transaction will not result in a termination of m’s private_foundation_status under sec_507 and therefore will not cause the imposition of the termination_tax under sec_507 of the code when m notifies the service after the transfer of all of assets to n private_foundation_status pursuant to sec_507 tax under sec_507 will be imposed on m o and p that it intends to terminate its its no pursuant to sec_507 a as newly-created organizations of the regulations n of the code and sec_1 and p will not be treated since the proposed transfer will be made pursuant to sec_507 of the code c status of m it will not affect the section n and p o the proposed transfer will not constitute a willful and flagrant act for tax under chapter or failure to act giving rise to liability - in any event none of the foundations will and p will succeed to one-third of m’s aggregate tax n benefit but succeed to an aggregate tax_benefit in excess of the fair_market_value at the time of the transfer of the assets that the respective foundations receive under sec_1_507-3 not effectively controlled by the same persons who control m ii of the regulations because n and p are for purposes of the chapter private_foundation_excise_tax provisions and sec_507 through each be treated as and p will but only in the proportion if it is m n o which the net fair_market_value of the assets transferred to each of the organizations bears to the net fair_market_value of all of m’s assets immediately before the transfers since each of the successor foundations will receive one-third of all of m’s assets n to one-third of m's tax_attributes under chapter and sec_507 through including the following o and p will each succeed a o and p will be apportioned to n for purposes of sec_4940 one-third of the net_investment_income of m for the taxable_year of the transfers to n p and will be includable in the computation of the net_investment_income of n o and p in the taxable_year of the transfers appropriate credits for estimated payments of the tax imposed by sec_4940 which have been made by m and for any overpayments of such tax paid o and p will each be entitled to n o and the transfers to n events giving rise to net_investment_income pursuant to sec_4940 themselves will not give rise to tax under sec_4940 and p will not be realizable therefore such transfers and p will each be responsible for satisfying n one-third of m’s sec_4942 distribution requirement for its taxable_year in which the transfers are made to the extent that such distribution_requirements have not fully been satisfied as of the transfers to n o and p in the event that there remains any undistributed_income for m’s taxable_year immediately preceding the taxable_year of the transfers by m one-third of such remaining undistributed_income will be allocated to n oo and p must distribute their allocable one-third share of such remaining undistributed_income not later than the end of their taxable_year in-which the transfer is made to them by m sec_4942 of the code n respective distributable_amount by their share of any excess qualifying_distribution carryover of m and p may reduce their for purposes of and p wn o for purposes of determining the assumed distribution requirement responsibilities of n taxable_year of the transfers one-third of the value of m’s assets calculated on a monthly basis as of the end of each calendar month falling within the taxable_year of the transfers from m and then expressed as monthly average will be attributed to n o and p will each be deemed to have held net assets and p for m’s and p a vn -10- equal to one-third of such monthly average as last day of the each month during the successor foundations’ taxable_year of the transfers extending through the last day of the month immediately preceding the transfer transfers are made during more than one month appropriate adjustments will be made if of the the proposed transfer of m’s assets to n constitute self-dealing under sec_4941 and will not subject m or any foundation_manager of m oo and p to tax under sec_4941 and p n o and p will not n the proposed transfer of m’s assets to n involve the application of sec_4943 concerning excess_business_holdings o and p will not the proposed transfer of m's assets to n constitute a jeopardizing investment with respect to m o and p under sec_4944 o and p will not n the proposed transfer of m’s assets will not constitute taxable_expenditures within the meaning of sec_4945 and m will not be required to exercise expenditure_responsibility as the term is defined in sec_4945 h with respect to the transferred assets any exercise expenditure_responsibility imposed on m by sec_4945 with respect to grants made before the transfer proposed transfers to n m to tax under sec_4945 and will not subject n to tax under sec_4945 provided that n expenditure_responsibility or the successor foundations assumes m’s duties with respect to the expenditure_responsibility grant and exercises such expenditure_responsibility and p and p exercise in the alternative one of and p will not subject ii of the under sec_1_507-1 and a regulations m will not be required to comply with periodic reporting return and notice provisions under sec_6033 and sec_6104 of the code for any taxable_year following the taxable_year in which the proposed transfer occurs but only if during the subsequent taxable years in question m has neither legal nor equitable_title to any assets and it engages in no activity required to comply with the notice and public inspection provisions under d return in connection with its final however m will be -u- -200007037 this ruling is directed only to the organization that requested it may not be used or cited as precedent sec_6110 of the code provides that it we are informing your key district_director of this ruling sincerely yours ribets c leys robert c harper chief exempt_organizations technical branch mae


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 ita plr-110800-12 date date re request for extension of time to make the election provided in sec_3 b re request for extension of time to make the election provided in sec_3 b of revproc_2011_26 ----------------------------------------------------------- ----------------------------------------------------------------- p s state1 ------------ date1 -------------------------- date2 -------------------- year1 ------- dear ------------- this letter responds to a letter dated date submitted by p on behalf of s requesting an extension of time pursuant to sec_301_9100-3 of the procedure and administration regulations to make the election provided in sec_3 b of revproc_2011_26 2011_16_irb_664 to deduct the 100-percent additional first year depreciation for components of a larger self-constructed property placed_in_service in the taxable_year ended date1 the year1 taxable_year facts p represents that the facts are as follows p is the holding_company for a number of operating companies engaged in energy-related businesses p is also the parent of s a regulated public electric and gas utility serving areas of state1 p and s are members of an affiliated_group_of_corporations that is headed by p and files consolidated federal_income_tax returns the consolidated federal_income_tax return for the taxable_year ended date1 was timely filed on date2 and was prepared by p plr-110800-12 on this return s claimed the 100-percent additional first year depreciation deduction under sec_168 of the internal_revenue_code for components that are eligible under the limited election provided in sec_3 b of revproc_2011_26 and placed_in_service by s during the year1 taxable_year p and s however inadvertently failed to attach the election statement to the consolidated federal_income_tax return for the year1 taxable_year with respect to the eligible components ruling requested s requests an extension of time pursuant to sec_301_9100-3 of the procedure and administration regulations to make the election provided in sec_3 b of revproc_2011_26 to deduct the 100-percent additional first year depreciation for components of a larger self-constructed property placed_in_service in the taxable_year ended date1 the year1 taxable_year for purposes of sec_168 and sec_3 a of revproc_2011_26 law and analysis sec_168 provides that in the case of qualified_property acquired by the taxpayer under rules similar to the rules of sec_168 and iii after date and before date and which is placed_in_service by the taxpayer before date date in the case of property described in sec_168 or c a 100-percent additional first year depreciation deduction for the taxable_year in which such qualified_property is placed_in_service by the taxpayer is allowable section dollar_figure of revproc_2011_26 provides that depreciable_property is eligible for the 100-percent additional first year depreciation deduction if the property is qualified_property as defined in sec_168 and also meets the additional requirements in section dollar_figure of revproc_2011_26 further it provides that for purposes of determining whether depreciable_property is qualified_property rules similar to the rules in sec_1_168_k_-1 of the income_tax regulations for qualified_property or for 30-percent additional first year depreciation deduction apply sec_3 of revproc_2011_26 provides that for purposes of sec_168 qualified_property is eligible for the 100-percent additional first year depreciation deduction if the property meets all of the following requirements in the first taxable_year in which the property is subject_to depreciation by the taxpayer whether or not depreciation_deductions for that property are allowable a the taxpayer acquires the qualified_property after date and before date before date in the case of qualified_property described in sec_168 or c solely for purposes of sec_168 and sec_3 a of revproc_2011_26 a taxpayer acquires the qualified_property plr-110800-12 when the taxpayer pays or incurs the cost of the property qualified_property that a taxpayer manufactures constructs or produces as defined under sec_1 k - b iii a and modified by sec_3 a of revproc_2011_26 solely for purposes of sec_168 for use in its trade_or_business or for its production_of_income is acquired by the taxpayer for purposes of sec_168 and sec_3 a of revproc_2011_26 when the taxpayer begins constructing manufacturing or producing that property as determined under sec_1_168_k_-1 b the taxpayer places the qualified_property in service after date and before date before date in the case of qualified_property described in sec_168 or c c the original_use of the qualified_property commences with the taxpayer after date sec_3 a of revproc_2011_26 provides in relevant part that if a taxpayer manufactures constructs or produces qualified_property for use by the taxpayer in its trade_or_business or for its production_of_income rules similar to the self- constructed property rules in sec_1_168_k_-1 apply for determining whether this property meets the acquisition requirement of sec_3 a of revproc_2011_26 sec_3 b of revproc_2011_26 however provides a limited exception to sec_1_168_k_-1 and for certain components of a larger self- constructed property solely for purposes of sec_168 and sec_3 a of revproc_2011_26 if before date a taxpayer begins the manufacture construction or production of the larger self-constructed property that is qualified_property for use in its trade_or_business or for its production_of_income but this larger self-constructed property meets the requirements of sec_3 b and c of revproc_2011_26 the taxpayer may elect to treat any acquired or self-constructed component of that larger self-constructed property as being eligible for the 100-percent additional first year depreciation deduction if the component is qualified_property and is acquired or self-constructed by the taxpayer after date and before date before date in the case of qualified_property described in sec_168 or c the taxpayer may make this election for one or more components that are described in sec_3 b of revproc_2011_26 the taxpayer must make the election in sec_3 b of revproc_2011_26 by the due_date including extensions of the federal tax_return for the taxpayer’s taxable_year in which the larger self-constructed property is placed_in_service by the taxpayer and by attaching a statement to that return indicating that the taxpayer is making the election provided in sec_3 b of revproc_2011_26 and whether the taxpayer is making the election for all or some of the components described in sec_3 b of revproc_2011_26 plr-110800-12 under sec_301_9100-1 the commissioner of internal revenue has discretion to 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 sec_301_9100-1 through provide the standards the 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 sec_301_9100-3 provides that requests for relief under sec_301_9100-3 will be granted when the taxpayer provides evidence to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and the grant of relief will not prejudice the interests of the government conclusions based solely on the facts and representations submitted we conclude that the requirements of sec_301_9100-1 and sec_301_9100-3 have been satisfied accordingly s is granted calendar days from the date of this letter to make the election provided in sec_3 b of revproc_2011_26 to deduct the 100-percent additional first year depreciation for components of a larger self-constructed property placed_in_service in the taxable_year ended date1 the year1 taxable_year for purposes of sec_168 and sec_3 a of revproc_2011_26 this election must be made by p filing an amended consolidated federal tax_return for that taxable_year with a statement indicating that s is making the election provided in sec_3 b of revproc_2011_26 for all or some of the components described in sec_3 b of revproc_2011_26 placed_in_service by s during that taxable_year except as specifically set forth above we express no opinion concerning the federal_income_tax consequences of the facts described above under any other provisions of the code specifically no opinion is expressed or implied on whether any item of depreciable_property placed_in_service by s during the taxable_year ended date1 is qualified_property as defined in sec_168 and sec_1_168_k_-1 or is eligible for the 100-percent additional first year depreciation deduction or when s began the manufacture construction or production of any item of depreciable_property including components of a larger self-constructed property placed_in_service by s during the taxable_year ended date1 in accordance with the power_of_attorney we are sending a copy of this letter to p’s authorized representative we are also sending a copy of this letter to the appropriate operating division director plr-110800-12 this ruling is directed only to the taxpayer requesting it sec_6110 provides that it may not be used or cited as precedent sincerely kathleen reed kathleen reed branch chief branch office of associate chief_counsel income_tax and accounting 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 corp plr-112281-00 date date distributing sec_1 sec_1 sec_2 controlled business x business y business z state x date asset a this letter is in response to your letter dated date for rulings concerning the federal_income_tax consequences of a proposed transaction additional information was submitted in letters dated date and date the material information submitted for consideration is summarized below distributing a publicly traded domestic company is the common parent of an affiliated_group_of_corporations filing a consolidated_return distributing has a single class of common_stock and a single class of preferred_stock outstanding distributing is engaged directly and indirectly through various subsidiary corporations partnerships plr-112281-00 and other entities in business x business y and business z distributing wholly owns sec_1 which is a holding_company formed on date in anticipation of the transaction described below we have received financial information indicating that distributing’s businesses x y and z each have had gross_receipts and operating_expenses representative of an active_conduct_of_a_trade_or_business for each of the past five years regulatory constraints have affected the efficiency of the distributing group and its ability to resolve its managerial financial and other intra-group conflicts in response to the overall restructuring of the state x industry that distributing is in and in furtherance of legislation intended to promote restructuring and competition within this industry the following transaction is proposed the shareholders of distributing holding common_stock will exchange all of their shares of distributing for all of the shares of sec_1 stock after this exchange sec_1 will own an amount of distributing stock meeting the requirements of sec_1504 of the internal_revenue_code distributing will form controlled and contribute the assets of business y and business z to controlled such assets include i operating_assets ii the stock of various subsidiaries and ownership interests in various partnerships limited_liability companies and other entities engaged in business y and business z and iii distributing’s rights in asset a controlled will assume certain liabilities associated with business y and business z from distributing controlled will have a single class of voting common_stock outstanding distributing will distribute the stock of controlled to sec_1 controlled will form sec_1 and sec_2 which will be single member llcs that are disregarded as separate entities for federal tax purposes and contribute the assets of business y and business z respectively to sec_1 and sec_2 respectively the following representations have been made in connection with the proposed transaction a no part of the consideration to be distributed by distributing will be received by a shareholder as a creditor employee or in any capacity other than that of a shareholder of distributing b the years of financial information submitted on behalf of distributing’s business x business y and business z are representative of distributing’s present operations and there have been no substantial changes since the date of the last financial statements submitted plr-112281-00 c following the transaction distributing and controlled will each continue the active_conduct of their respective businesses independently and with their separate employees d the distribution of the stock of controlled is carried out to effect a separation of business y and business z from business x which will resolve managerial systematic and other problems resulting from operating in the current regulated entity structure and improve the competitive position of business y and business z by moving them out from the regulated business x umbrella the transaction is motivated in whole or substantial part by the above corporate business_purpose e there is no plan or intention by sec_1 to sell exchange transfer by gift or otherwise dispose_of any stock in or securities of either distributing or controlled after the transaction f there is no plan or intention by either distributing or controlled directly or through any subsidiary_corporation to purchase any of its outstanding_stock after the transaction g there is no plan or intention to liquidate either distributing or controlled to merge either corporation with any other corporation or to sell or otherwise dispose_of the assets of either corporation after the transaction except in the ordinary course of business and as described in step above h the total adjusted_basis and the fair_market_value of the property to be transferred to controlled by distributing will equal or exceed the sum of liabilities assumed as determined under sec_357 by controlled the liabilities assumed as determined under sec_357 were incurred in the ordinary course of business and are associated with the assets being transferred i to the extent applicable the income_tax_liability for the taxable_year in which investment_credit_property including any building to which sec_47 applies is transferred will be adjusted pursuant to sec_50 or sec_50 or sec_47 as in effect before amendment to reflect an early disposition of the property j no intercorporate debt will exist between distributing and controlled at the time of or subsequent to the proposed transaction k neither distributing nor controlled is an investment_company as defined in sec_368 and iv l payments made in connection with all continuing transactions if any between plr-112281-00 distributing and controlled will be for fair_market_value based on terms and conditions arrived at by the parties bargaining at arm’s length or as provided by applicable regulatory authorities governing such transactions m immediately before the distribution items of income gain loss deduction and credit will be taken into account as required by the applicable intercompany regulations furthermore distributing’s excess_loss_account if any with respect to the controlled common_stock will be included in income immediately before the distribution to the extent required by sec_1_1502-19 of the income_tax regulations n the distribution is not part of a plan or series of related transactions within the meaning of sec_355 pursuant to which one or more persons will acquire directly or indirectly stock possessing percent or more of the total combined voting power of all classes of stock of either distributing or controlled or stock possessing percent or more of the total value of all classes of stock of distributing or controlled based solely on the information submitted and the representations as set forth above it is held as follows the transfer by distributing of certain assets and liabilities to controlled solely in exchange for all of the stock of controlled and the assumption by controlled of certain liabilities of distributing followed by the distribution of the controlled stock to sec_1 will constitute a reorganization within the meaning of sec_368 distributing and controlled will each be a_party_to_a_reorganization within the meaning of sec_368 distributing will recognize no gain_or_loss upon the transfer of assets and liabilities to controlled in exchange for controlled stock and the assumption by controlled of certain liabilities sec_361 and sec_357 controlled will recognize no gain_or_loss on the receipt of the distributing assets received in exchange for controlled stock sec_1032 controlled’s basis in each asset received from distributing will equal the basis of such asset in the hands of distributing immediately prior to the transaction sec_362 controlled’s holding_period for each asset received from distributing will include the period during which distributing held such asset sec_1223 distributing will recognize no gain of loss on the distribution of the controlled stock to sec_1 sec_361 sec_1 will recognize no gain_or_loss and no amount will be included in the plr-112281-00 income of sec_1 upon receipt of the controlled stock sec_355 the aggregate basis of the distributing stock and the controlled stock including any fractional share interests held by sec_1 immediately after the distribution of the controlled stock will equal the basis of the distributing stock held immediately before the distribution allocated in proportion to the fair_market_value of the distributing and controlled stock in accordance with sec_1_358-2 sec_358 the holding_period of the controlled stock including any fractional share interests held by sec_1 will include the holding_period of the distributing stock on which the distribution is made provided that the distributing stock is held as a capital_asset on the date of the distribution sec_1223 as provided in sec_312 proper allocation of earnings_and_profits between distributing and controlled will be made under sec_1_312-10 and sec_1_1502-33 except as specifically set forth above no opinion is expressed concerning the federal tax consequences of the proposed transaction under any other provision of the code and regulations or about the tax treatment of any conditions existing at the time of or effects resulting from the proposed transaction a copy of this letter should be attached to the federal_income_tax returns of the taxpayer s involved for the taxable_year in which the transaction covered by this ruling letter is consummated 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 sincerely yours associate chief_counsel corporate by assistant to the chief branch


internal_revenue_service department of the treasury number release date index number washington dc person to contact telephone number refer reply to cc fip 2-plr-138713-01 date date legend old parent new parent company date a date b date c date d date e state a a on date a this office issued a private_letter_ruling plr initial ruling concluding that the issuance of a financing order by the state a public_utility commission puc authorizing the collection of special charges to offset stranded costs and the transfer to the company of proceeds from the issuance of notes did not result in gross_income to company and that the notes issued to investors by a special purpose entity spe would be obligations of the company in a letter dated date you have requested a supplemental ruling that certain intervening factual developments do not alter the conclusions reached in the original ruling except as described below all facts and representations cited in the initial ruling are incorporated for purposes of this letter any terms defined or legended in the initial ruling have the same meaning in this letter plr-138713-01 after submission of company’s original ruling_request a number of persons intervened in the administrative proceedings under which company sought to obtain a financing order from the puc public hearings were held with respect to company’s original financing order application compromise and settlement agreements were entered into modifying company’s original financing order application and on date b company’s original financing order application as modified was approved in part and denied in part by the puc on date e the supreme court of state a affirmed the puc’s date b financing order as a result the amount of net regulatory assets and other qualified_costs approved by the puc to be securitized by company was reduced to dollar_figurea at the time company submitted its original ruling_request old parent and new parent were in the process of obtaining certain state federal and foreign regulatory approvals in connection with a merger agreement that had been approved as of date c these regulatory approvals have since been obtained and the merger was completed on date d as a result of the merger old parent became a wholly owned subsidiary of new parent but this fact did not affect old parent’s ownership of company company’s taxable_income will continue to be reported on a consolidated basis as part of a consolidated_group of which new parent is now the common parent_corporation the issuance of a financing order by the puc allowing company to securitize an amount of stranded costs different from that originally requested and the merger described above do not adversely affect the analysis in the initial ruling accordingly the conclusions reached in the initial ruling issued on date a that the issuance of the financing order and the transfer of the rights under the financing order to the spe will not result in gross_income to company the issuance of notes and the transfer of the proceeds to company will not result in gross_income to company and the notes will be obligations of the company are not affected 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 cc sincerely william e coppersmith chief branch office of associate chief_counsel financial institutions products


internal_revenue_service department of the treasury number release date index numbers washington dc person to contact telephone number refer reply to cc corp - plr-132694-01 date date legend parent sub purchaser target seller date a date b date c company official this letter responds to a letter dated date submitted on behalf of parent requesting an extension of time under sec_301_9100-1 through of the procedure and administration regulations to file an election parent as the common parent of the consolidated_group of which sub the united_states_shareholder of purchaser the foreign purchasing_corporation is a member is requesting an extension to file a sec_338 election under sec_338 with respect to purchaser’s acquisition of the stock of target sometimes hereinafter referred to as the election on date b all citations in this letter to regulations under sec_338 are to regulations in effect on date b additional information was received in letters dated date and date the material information is summarized below parent is the common parent of a consolidated_group parent wholly owns sub sub wholly owns purchaser a foreign_corporation purchaser is a controlled_foreign_corporation as defined in sec_957 and is not required under sec_1_6012-2 other than sec_1_6012-2 to file a united_states income_tax return for its taxable_year that includes the acquisition_date plr-132694-01 on date a purchaser and seller entered into a purchase agreement for purchaser to acquire all of the target stock from seller on date b purchaser acquired all of the stock of target from seller in exchange for cash pursuant to the purchase agreement it is represented that purchaser’s acquisition of the stock of target qualified as a qualified_stock_purchase as defined in sec_338 prior to the acquisition target did not file a united_states income_tax return was not subject_to united_states income_taxation nor was required under sec_1_6012-2 to file a united_states income_tax return in addition target was not a controlled_foreign_corporation within the meaning of sec_957 a passive_foreign_investment_company for which an election under sec_1295 was in effect or a foreign_investment_company or a foreign_corporation the stock ownership of which is described in sec_552 the election was due on date c but for various reasons a valid election was not filed after the due_date for the election it was discovered that the election had not been filed subsequently this request was submitted under sec_301_9100-1 for an extension of time to file the election the period of limitations on assessment under sec_6501 has not expired for parent’s consolidated group’s or target’s taxable years in which the acquisition occurred the taxable years in which the election should have been filed or any taxable years that would have been affected by the election had it been timely filed sec_338 permits certain stock purchases to be treated as asset acquisitions if the purchasing_corporation makes or is treated as having made a sec_338 election or a sec_338 election and the acquisition is a qualified_stock_purchase under sec_301_9100-1 the commissioner has discretion to grant a reasonable extension of time to make a regulatory election or a statutory election but no more than six months except in the case of a taxpayer who is abroad under all subtitles of the internal_revenue_code except subtitles e g h and i sec_301_9100-1 through provide the standards the commissioner will use to determine whether to grant an extension of time to make a regulatory election sec_301_9100-1 sec_301_9100-2 provides automatic extensions of time for making certain elections requests for relief under sec_301_9100-3 will be granted when the taxpayer provides evidence to establish that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government sec_301_9100-3 in this case the time for filing the election is fixed by the regulations ie sec_1_338-1 therefore the commissioner has discretionary authority under sec_301_9100-1 to grant an extension of time for parent to file the election provided parent acted reasonably and in good_faith the requirements of sec_301_9100-1 and sec_301_9100-3 are satisfied and granting relief will not prejudice the interests of the plr-132694-01 government information affidavits and representations submitted by parent and company official explain the circumstances that resulted in the failure to timely file a valid election the information establishes that the request for relief was filed before the failure to make the election was discovered by the internal_revenue_service and that the interests of the government will not be prejudiced if relief is granted see sec_301_9100-3 based on the facts and information submitted including the representations made we conclude that parent has shown it acted reasonably and in good_faith the requirements of sec_301_9100-1 and sec_301_9100-3 are satisfied and granting relief will not prejudice the interests of the government accordingly an extension of time is granted under sec_301_9100-1 until days from the date on this letter for parent to file the election with respect to the acquisition of the stock of target as described above the above extension of time is conditioned on the filing within days of the date on this letter of all returns and amended returns if any necessary to report the transaction in accordance with the election and the taxpayers' parent's consolidated group’s and target’s tax_liability if any being not lower in the aggregate for all years to which the election applies than it would have been if the election had been timely made taking into account the time_value_of_money no opinion is expressed as to the taxpayers’ tax_liability for the years involved a determination thereof will be made by the applicable director’s office upon audit of the federal_income_tax returns involved further no opinion is expressed as to the federal_income_tax effect if any if it is determined that the taxpayers’ tax_liability is lower sec_301_9100-3 parent must file the election in accordance with sec_1_338-1 and g that is a new election on form_8023 must be executed on or after the date on this letter which grants an extension and filed in accordance with the instructions to the form a copy of this letter must be attached to the election form parent must file or amend as applicable its returns to report the transaction as a sec_338 transaction for the taxable_year in which the transaction was consummated and for any other affected_taxable_year and to attach to the returns a copy of this letter and a copy of the election we express no opinion as to whether the acquisition of the target stock qualifies as a qualified_stock_purchase under sec_338 or any other tax consequences arising from the election in addition we express no opinion as to the tax consequences of filing the election late under the provisions of any other section of the code and regulations or as to the tax treatment of any conditions existing at the time of or resulting from filing the election late that are not specifically set forth in the above ruling for purposes of granting relief under sec_301_9100-1 we relied on certain statements and representations plr-132694-01 made by the taxpayers however the director should verify all essential facts in addition notwithstanding that an extension is granted under sec_301_9100-1 to file the election penalties and interest that would otherwise be applicable if any continue to apply this letter is directed only to the taxpayer s who requested it sec_6110 provides that it may not be used or cited as precedent pursuant to the power_of_attorney on file in this office a copy of this letter is being sent to your authorized representative sincerely yours ken cohen senior technician reviewer branch office of associate chief_counsel corporate


internal_revenue_service department of the treasury index number washington dc person to contact telephone number refer reply to cc intl br1-plr-119479-97 date date number release date tax_year a country b year c year d date e dear this is in response to your letter dated date requesting a ruling under sec_877 of the internal_revenue_code_of_1986 code that a’s loss of long-term_resident status did not have for one of its principal purposes the avoidance of u s taxes under subtitle a or subtitle b of the code additional information was submitted in a letter dated date the information submitted for consideration is substantially as set forth below the ruling contained in this letter is based upon information and representations submitted by the taxpayer and accompanied by penalty of perjury statements executed by an appropriate party while this office has not verified any of the material submitted in support of the request for rulings it is subject_to verification on examination plr-119479-97 a and his wife were born in country b and they have been citizens of country b since birth a’s parents were also born in country b a moved to the united_states in year c to join a u s firm and became a permanent resident_of_the_united_states in year c a returned to country b in year d and relinquished his u s lawful permanent resident status expatriated on date e a intends to live permanently in country b a is domiciled in country b and is subject_to country b income_tax on his worldwide income at a rate comparable to the applicable u s income_tax base and rate on the date of a's expatriation his net_worth exceeded dollar_figure sec_877 generally provides that a citizen who loses u s citizenship or a long-term_resident who ceases to be taxed as a lawful permanent resident individuals who expatriate within the 10-year period immediately preceding the close of the taxable_year will be taxed on all of his or her u s source income as modified by sec_877 for such taxable_year unless such loss or cessation did not have for one of its principal purposes the avoidance of u s taxes sec_2107 and sec_2501 provide special estate and gift_tax regimes respectively for individuals who expatriate with a principal purpose to avoid u s taxes a former citizen or former long-term_resident will be treated as having expatriated with a principal purpose to avoid u s taxes for purposes of sec_877 sec_2107 and sec_2501 if the individual’s average income_tax_liability or the individual’s net_worth on the date of expatriation exceed certain thresholds see sec_877 sec_2107 and sec_2501 a former u s citizen whose net_worth or average tax_liability exceeds these thresholds however will not be presumed to have a principal purpose of tax_avoidance if that former citizen is described within certain statutory categories and submits a request for a ruling within one year of the date of loss of u s citizenship for the secretary’s determination as to whether such loss had for one of it principal purposes the avoidance of u s taxes see sec_877 sec_2107 and sec_2501 under notice_98_34 1998_27_irb_30 modifying notice_97_19 1997_1_cb_394 a former long-term_resident whose net_worth or average tax_liability exceeds the applicable thresholds will not be presumed to have a principal purpose of tax_avoidance if that former resident is described within certain categories and submits a complete and good_faith request for a ruling as to whether such loss had for one of its principal purposes the avoidance of u s taxes notice_97_19 as modified by notice_98_34 requires that certain information be submitted with a request for a ruling that an individual's expatriation did not have for one of its principal purposes the avoidance of u s taxes plr-119479-97 a is eligible to request a ruling pursuant to notice_98_34 because he became fully liable to tax on his worldwide income in country b the country in which he was born a submitted all of the information required to be submitted by notice_97_19 as modified by notice_98_34 including additional information requested by the service after review of the submission accordingly based solely on the information submitted and the representations made it is held that a has made a complete and good_faith submission in accordance with sec_877 and notice_97_19 as modified by notice_98_34 therefore a will not be presumed under sec_877 to have as one of his principal purposes for expatriating the avoidance of u s taxes it is further held that a will not be treated under sec_877 as having as one of his principal purposes for expatriating the avoidance of u s taxes because the information submitted clearly established the lack of a principal purpose to avoid taxes under subtitle a or b of the code except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter in addition no opinion is expressed as to a’s u s tax_liability for the taxable years prior to expatriation or his united_states tax_liability for periods after his loss of permanent resident status under sections of the code other than sec_877 sec_2107 and sec_2501 a copy of this letter must be attached to a’s u s income_tax return for the year in which a obtained the ruling whether or not a is otherwise required to file a return this ruling is directed only to the taxpayer requesting it sec_6110 of the code provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to a sincerely yours ________________ allen goldstein reviewer office of associate chief_counsel


id office uilc cca_2010081810303838 ---------------- number release date from ------------------------ sent wednesday date am to ------------------ cc --------------------------------------------------------------------------------------------------------------------------- ------------------------ subject cca ------- as you requested here is the cca answering the questions that ------- sent our office a few weeks back if you have any further questions please do not hesitate to contact me at -------- issue sec_1 must the suitable for occupancy requirement of sec_42 be determined on a unit-by-unit basis or can the condition of the exterior components of the building eg wall roof etc be so poor as to lead to a determination that all the units in a building are not suitable for occupancy explain the relationship between hud's uniform physical condition standards upcs and the local health safety and buildings codes as described in sec_1_42-5 law and analysis sec_42 of the internal_revenue_code code provides that a low-income_unit as defined by sec_42 shall not be treated as a low-income_unit unless the unit is suitable for occupancy and used other than on a transient_basis sec_42 of the code provides that the suitability of a unit for occupancy shall be determined under regulations prescribed by the secretary taking into account local health safety and building codes sec_1_42-5 provides compliance monitoring responsibilities required of a state or local housing_credit_agency agency under sec_1_42-5 an agency for on-site inspections of buildings and low-income units must review any local health safety or building code violations reports or notices retained by the owner and must determine i whether the buildings and units are suitable for occupancy taking into account local health safety and building codes or other habitability standards or ii whether the buildings and units satisfy the uniform physical condition standards for public housing established by hud cfr the hud physical conditions standards do not supersede or preempt local health safety and building codes a low-income_housing project under sec_42 must continue to satisfy these codes and if the agency becomes aware of any violation of these codes the agency must report the violation to the service however provided the agency determines by inspection that the hud standards are met the agency is not required to determine by inspection whether the project meets local health safety and building codes conclusion sec_1 the suitable for occupancy requirement of sec_42 does not have to be determined on a unit-by-unit basis if the facts exist that the condition of the exterior components of the building eg wall roof etc are so poor as to lead to a factual determination that all the units in a building are not suitable for occupancy for example if an earthquake created large fissures in the foundation and exterior walls of a building than the building could be determined not suitable for occupancy for safety reasons without having to check each unit under sec_1_42-5 an agency may use the hud uniform physical condition standard to perform an on-site inspection to satisfy the agency’s inspection responsibility a violation of the hud physical condition standard alone is sufficient for a violation of sec_42 however a taxpayer in response to the irs finding a violation may raise an affirmative defense by proving that local health safety or building codes address the specific point in question and after application of the facts local law reaches a taxpayer favorable result where as the hud standard does not reach a taxpayer favorable result under these circumstances the local law would control as respects the violation itself ----------------------------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------------------------- ------------------


o f f i c e o f t h e c h i e f c o u n s e l department of the treasury i n t e r n a l r e v e n u e s e r v i c e w a s h i n g t o n d c date number release date conex-146171-10 uilc ---------------------- ------------------------ -------------------------------------- ----------------------------------------- -------------------------------- dear -------------------- i am responding to your letter dated date to commissioner douglas shulman about the treatment of costs associated with breast pumps and related supplies you request that we reverse our decision to deny reimbursement for the cost of breast pumps and related supplies under a tax-favored health care spending account after reviewing the matter we concluded that breast pumps and supplies that assist lactation are medical_care under sec_213 of the internal_revenue_code the code because they are for the purpose of affecting a structure or function of the body of a lactating woman therefore if taxpayers meet the remaining requirements of sec_213 of the code expenses they paid for breast pumps and supplies that assist lactation are deductible medical_expenses these expenses will qualify as medical_care expenses reimbursable under a flexible health spending account we included these conclusions in announcement which will be published in internal_revenue_bulletin the next revision of publication medical and dental expenses will also include this information conex-146171-10 i hope this information is helpful if you have any questions please contact me or ------------------ at ------------------- sincerely thomas d moffitt branch chief branch office of associate chief_counsel income_tax accounting


cca_2016032309174852 id uilc number release date from sent wednesday date am to cc bcc subject fw restitution question your question was whether a restitution assessment would be premature if at the time the assessment was made there was appeal pending under u s c a u s c motion is a motion to vacate set_aside or correct a sentence presumes that the motion is filed by a prisoner because it is available to a prisoner in custody under a sentence of a court claiming the right to be released upon the grounds that the sentence was in violation of the constitution or u s laws or that the court was without jurisdiction to impose the sentence or that the sentence was in excess of the authority of law or that it was subject_to a collateral attack it for the purposes of a restitution-based assessment however the focus is on an order of restitution sec_6201 provides that the assessment shall not be made before all appeals of such order are concluded and the right to make all such appeals has expired the term such order in the phrase all appeals of such order refers to the restitution order itself not the overall sentence denial of a u s c motion to vacate a prison sentence it is not an appeal of the restitution order that the taxpayer would be released it would not have any effect on the restitution ordered see eg 94_f3d_20 1st cir the principal issue is whether a criminal defendant who is in custody may under u s c collaterally challenge the restitution order imposed as a part of his sentence o nly two circuits to have explicitly addressed this matter we hold he may not therefore the irs is not prohibited from making a restitution assessment while the u s c motion was pending if a motion under u s c is granted the result would be if a defendant is appealing the


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 pa apjp b01 plr-138261-05 date date ----------------------------- legend partnership ----------------------------------------------- user id dear ----- this is in response to your request dated date for a private_letter_ruling under sec_6031 of the internal_revenue_code code specifically you request a ruling that partnership’s delivery in electronic format of substitute schedule k-1s that satisfy the requirements of section of revproc_2004_62 under procedures that satisfy the consent and notification requirements for electronic delivery of statements set forth in sec_4 of revproc_2004_58 will satisfy the requirements of sec_6031 of the code and sec_1_6031_b_-1t facts partnership is a calendar-year taxpayer and files form_1065 with the internal_revenue_service service electronically partnership satisfies its obligations under sec_6031 of the code to furnish information to its members by sending paper schedule_k-1 form_1065 partner’s shares of income deductions credits etc via united_states mail partnership has also provided copies of schedule k-1s to its partners electronically the schedule k-1s are provided via a secure intranet system under this system the partners are notified via e-mail that their schedule k-1s are available for review and downloading each partner then logs into this system using his user id and password and downloads his individual schedule_k-1 in the future partnership would like to furnish substitute schedule k-1s exclusively in electronic format to its partners who consent to electronic delivery under the procedures plr-138261-05 described below the substitute schedule k-1s will meet the requirement for substitute forms set forth in section of revproc_2004_62 2004_44_irb_728 in addition partnership will follow procedures regarding the delivery of substitute schedule k-1s that satisfy the consent and notification requirements for electronic delivery of other forms eg forms w-2 set forth in sec_4 of revproc_2004_58 2004_41_irb_602 specifically partnership will adhere to the following procedures partnership will obtain from the recipient partner an affirmative statement of consent which has not been withdrawn before partnership furnishes the electronic form and which shows that the recipient can access the form in the electronic format in which it will be furnished partnership will obtain this consent by sending each partner an e-mail requesting that the partner log on to the partnership website which will contain an attachment instructing the partner how to consent to receive the schedule_k-1 electronically if partnership changes the hardware or software used to furnish the electronic form partnership will notify the recipient of these changes and obtain a new consent prior to furnishing the schedule_k-1 prior to furnishing the schedule k-1s electronically partnership will provide the recipient partner with a statement that prominently displays the following information a b c d e f g h i that if the recipient does not consent to receive the statement electronically a paper copy will be provided the scope and duration of the consent how to obtain a paper copy of the schedule_k-1 after giving consent how to withdraw the consent that the consent may be withdrawn at any time by furnishing the withdrawal in writing electronically or on paper to the person whose name appears on the statement confirmation of the withdrawal will also be in writing electronically or on paper notice of termination ie under what conditions the statements will no longer be furnished to the recipient procedures to update the recipient’s information a description of the hardware and software required to access print and retain the statement and a date the statement will no longer be available on the partnership website law furnishing of schedule k-1s sec_6031 of the code provides in part that every partnership shall make a return for each taxable_year stating specifically the items of its gross_income and the plr-138261-05 deductions and such other information as the secretary may by forms and regulations prescribe and shall include in the return the names and addresses of the individuals who would be entitled to share in the taxable_income if distributed and the amount of the distributive_share of each individual sec_6031 of the code provides in part that each partnership required to file a return for any partnership taxable_year shall on or before the day on which the return for such taxable_year was required to be filed furnish to each person who is a partner or who holds an interest in such partnership as a nominee for another person at any time during such taxable_year a copy of such information required to be shown on such return as may be required by regulations sec_1_6031_b_-1t of the income_tax regulations regulations provides in part that each partnership required to file a return for any partnership taxable_year shall on or before the day on which the return for such taxable_year is required to be filed furnish to each person who is a partner or who holds an interest in such partnership as a nominee for another person at any time during such taxable_year a copy of such information required to be shown on such return as may be required by regulations the instructions for form_1065 u s return of partnership income provides in part that the partnership furnish a copy of schedule_k-1 to each partner substitute schedule k-1s revproc_2004_62 provides guidance on the requirements for forms accepted as substitutes for official internal_revenue_service forms section of revproc_2004_62 sets forth specific guidelines for substitute schedule k-1s the note to section of revproc_2004_62 provides in part that substitute schedules k-1 should be as close as possible to exact replicas of copies of the official irs schedules the instructions for form_1065 u s return of partnership income provides in part that a partnership does not need irs approval to use a substitute schedule_k-1 if it is an exact copy of the irs schedule electronic furnishing of statements sec_6031 of the code and treasury regulations are silent on whether electronic delivery of schedule k-1s is permitted sec_31_6051-1 of the employment_tax regulations and sec_4 of revproc_2004_58 2004_41_irb_602 set forth procedural consent and notification requirements for furnishing form_w-2 wage and tax statement analysis sec_6031 and sec_1 6031-1t a provide that each partnership must furnish to each person who is a partner or who holds an interest in such partnership as a nominee plr-138261-05 for another person at any time during the taxable_year a copy of information required to shown on the partnership return but does not prescribe the method of furnishing such information the service has issued regulations and revenue procedures authorizing the electronic furnishing of forms w-2 providing for procedural consent and notification that satisfy the needs of tax_administration in ensuring that recipients consent to receive these written statements electronically and that recipients actually receive these statements electronically partnership represents that it will follow the procedures in furnishing electronic schedule k-1s to its partners that satisfy the procedural consent and notification requirements applicable to forms w-2 as set forth in revproc_2004_58 moreover partnership represents that the substitute schedule k-1s furnished to its partners will meet the requirements for substitute forms set forth in section of revproc_2004_62 if the partnership electronically furnishes substitute schedule k-1s that satisfy the requirements of section of revproc_2004_62 under procedures that satisfy the consent and notification requirements for electronic delivery of statements set forth in sec_4 of revproc_2004_58 the partnership will satisfy the requirements of sec_6031 of the code and sec_1_6031_b_-1t conclusion based on the information provided and the representations made we conclude partnership’s delivery in electronic format of substitute schedule k-1s that satisfy the requirements of section of revproc_2004_62 under procedures that satisfy the consent and notification requirements for electronic delivery of statements set forth in sec_4 of revproc_2004_58 will satisfy the requirements of sec_6031 of the code and sec_1_6031_b_-1t the partnership will not need service approval to use a substitute schedule_k-1 if it uses an exact copy of the service’s schedule_k-1 this ruling is directed only to the taxpayer requesting it sec_6110 of the code provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative plr-138261-05 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 james coffey gibbons branch chief administrative provisions judicial practice branch procedure administration cc ---------------------------


t c memo united_states tax_court betty jean steinshouer petitioner v commissioner of internal revenue respondent docket no filed date betty jean steinshouer pro_se randall b childs for respondent memorandum opinion goeke judge ms steinshouer did not file federal_income_tax returns for and respondent determined income_tax deficiencies and additions to tax pursuant to sec_6651 and for and and under sec_6654 for 1all section references are to the internal_revenue_code continued only respondent had previously prepared substitutes for returns pursuant to sec_6020 ms steinshouer in a response to respondent’s pretrial memorandum did not contest the income determinations rather she asserted that she is entitled to deduct additional expenses for her business ms steinshouer executed a stipulation of facts but failed to appear at trial on the basis of the stipulated facts we uphold respondent’s determinations background ms steinshouer resided in florida at the time she filed her petition in ms steinshouer received compensation of dollar_figure and dollar_figure from florida humanities council and broward public library foundation respectively she also received dollar_figure in interest_income from cornerstone community bank in in ms steinshouer received compensation of dollar_figure dollar_figure and dollar_figure from florida humanities council town of south berwick and villages charter school inc respectively ms steinshouer was not an employee of any of these named entities ms steinshouer made estimated_tax payments in date and date for years and respectively but her payment was not sufficient to avoid the application of the continued and all rule references are to the tax_court rules_of_practice and procedure sec_6654 addition_to_tax for failure to make estimated_tax payment she failed to make any other_payments for these years and as stated previously she did not file federal_income_tax returns respondent’s determinations were as follows year deficiency sec_6651 sec_6651 sec_6654 additions to tax dollar_figure dollar_figure dollar_figure -0- big_number dollar_figure dollar_figure dollar_figure ms steinshouer filed a timely petition covering both years discussion pursuant to sec_6020 the commissioner is authorized to prepare a substitute for return for a taxpayer who does not file a return such returns for and resulted in respondent’s deficiency determinations upon which this proceeding is based respondent’s determination of these deficiencies is entitled to a presumption of correctness see 290_us_111 ms steinshouer bears the burden of proving respondent’s determination erroneous see rule a furthermore sec_6001 and the regulations thereunder require the taxpayer to maintain adequate_records submit returns and furnish information as the internal_revenue_service may prescribe sec_61 provides that gross_income includes all income from whatever source derived unless the taxpayer can establish a specific legislative authorization to exclude income from taxation 348_us_426 regarding alleged deductions for business_expenses ms steinshouer has the burden of proving the expenditures and that any such expenses are ordinary and necessary see sec_162 rule a ms steinshouer failed to produce any evidence of expenses or appear at trial and testify respondent has carried the burden of producing evidence as imposed on him by sec_7491 that the additions to tax under sec_6651 and apply for both and because of ms steinshouer’s failure to timely file and to timely pay tax and respondent’s preparation of substitutes for returns ms steinshouer did not establish that her failure to timely file or to timely pay tax was due to reasonable_cause and not willful neglect respondent has asserted that ms steinshouer failed to file a federal_income_tax return for and that ms steinshouer is therefore subject_to the sec_6654 addition_to_tax ms steinshouer has not contested this assertion and we accept that respondent has carried the burden of production regarding the addition_to_tax under sec_6654 for therefore the addition_to_tax under sec_6654 for is appropriate accordingly the court sustains respondent’s determinations to reflect the foregoing decision will be entered for respondent


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 release date uil no gls-157994-01 cc pa cbs b3 memorandum for bernard nelson area_counsel natural_resources - houston from subject joseph w clark chief branch collection bankruptcy summons requests for revenue agents’ personal information as condition for access to audit sites this memorandum is the combined response from collection bankruptcy and summons and general legal services to your request for advice pertaining to conditions being placed on internal_revenue_service employees for access to audit sites it is our understanding that in the wake of the events of date a number of corporate taxpayers are requiring that irs revenue agents provide personal information such as their social_security_number home address and home telephone number as well as their vehicle identification information in order to obtain access to the taxpayers’ sites for audits at least one taxpayer has requested that the irs agents consent to a background check before admission to the site a separate but related matter is the issuance of identification badges by the taxpayer’s security force for use by the irs employee issue sec_1 whether a taxpayer’s requirement that an irs employee provide personal information before granting access to the audit site interferes with the irs’s ability to set the time and manner of the audit whether the employee can use taxpayer issued identification badges for security purposes while auditing the taxpayer on site conclusion a taxpayer’s requirement that irs employees provide personal private information before receiving access to the taxpayer’s audit site contravenes the irs’s authority to set the time and manner for the audit gls-157994-01 a taxpayer-issued badges provided to revenue agents for security purposes may be displayed or worn without violating any legal or ethical restrictions discussion irs has authority under sec_7605 to set time and place for the examination of taxpayer records congress has conferred upon the secretary_of_the_treasury the authority to determine the correct_tax liability and granted to the secretary broad powers to conduct investigations to determine the correctness of a taxpayer’s liability see sec_7801 sec_7601 sec_7601 provides in relevant part the secretary shall to the extent he deems it practicable cause officers or employees of the treasury_department to proceed from time to time through each internal_revenue_district and inquire after and concerning all persons therein who may be liable to pay any internal revenue tax and all persons owing or having care and management of any objects with respect to which any_tax is imposed the commissioner of the internal revenue has been delegated by the secretary the duty_of making inquiries determinations and assessments of all taxes imposed by the internal_revenue_code see sec_7803 400_us_517 treasury order while sec_7601 grants the irs broad authority to make inquiries it is generally sec_7602 which is cited for the irs’s investigatory authority that section provides in relevant part a authority to summon etc -for the purpose of ascertaining the correctness of any return making a return where none has been made determining the liability of any person for any internal revenue tax the secretary is authorized- to examine any books papers records or other data which may be relevant or material to such inquiry sec_7601 provides that b penalties - for penalties applicable to forcible obstruction or hindrance of treasury officers or employees in the performance of their duties see sec_7212 gls-157994-01 to summon the person liable for tax or any officer_or_employee of such person or any person having possession custody or care of books of account containing entries relating to the business if the person liable for the tax or any other person the secretary may deem proper to appear before the secretary at a time and place named in the summons and produce such books papers records or other data and to give such testimony under oath as may be relevant or material to such inquiry and to take such testimony of the person concerned under oath as may be relevant or material to such inquiry courts interpreting this section have consistently held that it empowers the irs with broad information gathering authority to conduct investigations see 465_us_805 951_f2d_1065 9th cir the broad authority of the irs to summons records is delineated in the seminal case of u s v powell 379_us_48 in powell pincite- the court held that the secretary was not required to show probable cause to issue a summons but was required to demonstrate that the investigation will be conducted pursuant to a legitimate purpose that the inquiry may be relevant to the purpose that the information sought is not already within the commissioner’s possession and that the administrative steps required by the code have been followed - in particular that the ‘secretary or_his_delegate ’ after investigation has determined the further examination to be necessary and has notified the taxpayer in writing to that effect the court further noted that the inability of the district_court to determine whether probable cause existed for issuance of the summons does not rob an enforcement proceeding of meaning inasmuch as the district_court still has the authority to determine whether the summons was issued for an improper purpose in order to prevent abuse of the court’s process u s pincite see also 636_f2d_1028 5th cir once the government meets the powell standards the burden shifts to the summonee to disprove one of the four elements or demonstrate that enforcement would constitute an abuse of the court’s process relevance has been described by the supreme court in the summons context as whether there is any information that would throw light on the correctness of the return see arthur young u s pincite n as the supreme court stated in arthur young pincite the language may be in sec_7602 reflects congress’ express intention to allow the irs to obtain items of even potential relevance to an ongoing investigation without reference to its admissibility the purpose of congress is obvious the service can hardly be expected to know gls-157994-01 whether such data will in fact be relevant until they are procured and scrutinized the irs need not accept the word of the summoned party that the records are not relevant it is entitled to make that determination for itself 469_us_310 see also wyatt f 2d pincite taxpayer cannot be judge of what is relevant and restrict the examination of his financial affairs to papers of his choosing just as the taxpayer cannot halt a proper investigation or determine what information is relevant to the irs’s investigation of tax_liability the taxpayer cannot determine the conditions under which the irs can conduct the investigation sec_7605 grants to the secretary the authority to set the time and place of examination sec_7605 provides in relevant part the time and place of examination pursuant to the provision of section shall be such time and place as may be fixed by the secretary and as are reasonable under the circumstances sec_301_7605-1 provides that the time and place of examination pursuant to section are to be fixed by an officer_or_employee of the internal_revenue_service and officers and employees are to endeavor to schedule a time and place that are reasonable under the circumstances emphasis added the regulation further indicates that it is reasonable for the irs to schedule an examination during regular work days for the irs throughout the year regardless of seasonal fluctuations in the taxpayer’s business see sec_301_7605-1 in addition the regulation provides that the irs is to determine whether the audit should occur at the irs office or the taxpayer’s place of business see c d reasonableness of time and place are determined by the circumstances of the case see eg united_states v 156_f2d_872 2d cir requiring taxpayer to take company books to revenue agents office was reasonable after agents were unable to conduct site audit due to harassment by taxpayers’ employees 84_fsupp_481 s d n y in absence of showing by taxpayer that production at irs office was not fair or proper commissioner’s request for production at irs office was deemed reasonable with respect to the identification of the employees congress has legislated that officers and employees of the irs must provide to the taxpayer their name and a unique identifying number this requirement was initiated by section of the irs restructuring and reform act of rra98 that section provides in relevant part rra98 was not codified into title_26 u s c gls-157994-01 a notice -the secretary_of_the_treasury or the secretary’s delegate shall provide that- an internal_revenue_service employee shall give a taxpayer during a telephone or personal contact the employee’s name and unique identifying number no other section of the code requires irs employees to identify themselves to taxpayers no code section requires that employees provide personal private information to taxpayers the internal_revenue_manual which sets forth guidelines for irs employees provides guidance for employees on what material is to be provided to the taxpayer in irm part examination of returns handbook sub sec_1 provides as follows revenue agents and tax auditors must verify during their first contact with the taxpayer either telephone or in-person that the taxpayer has the employee’s correct name telephone number and unique employee identification_number the taxpayer has no right to set any conditions on the time and place of the audit rather the taxpayer is limited to objecting to the irs’s designation of time and place as being unfair or improper see eg united distillers wolrich supra any taxpayer who requires that irs employees provide their personal private information or consent to a background check before being granted access to an audit site is acting in contravention of the secretary’s authority to set the time and place for the audit various subsections of sec_6103 permit irs employees to make certain disclosures to taxpayers and to third parties for tax_administration_purposes and such disclosures would include their name and credentials that code section is beyond the scope of this memorandum and will not be discussed here the collection and criminal investigation functions also have published guidelines for their employees to follow see irm handbook sub sec_5 collection - name telephone number and unique identifying number and irm handbook sub sec_5 criminal investigation - name and credentials federal_law prohibits anyone copying or duplicating the employee’s credentials title u s c sec_701 which provides in relevant part whoever photographs prints or in any other manner makes or executes any engraving photograph print or impression in the likeness of any such badge identification card or other insignia except as authorized under regulations shall be fined under this title or imprisoned not more than six months or both gls-157994-01 the office of personnel management opm has determined that six pieces of information about federal employees can be made available when such information is sought by members of the public irm c f_r generally this information is available from the employees official personnel file opf the items of information are name present and past position titles and series present and past grades present and past annual salary rates including awards present and past duty stations including address and position description and job elements id by determining that these pieces of information about federal employees may be publicized the opm has determined that personal information is not to be publicized and therefore the employees will not be required by the government to provide this information b taxpayer issued identification badges as indicated in area counsel’s memorandum based on increased security concerns taxpayers have requested all audit team personnel to wear company-provided badges and some taxpayers may have required social_security numbers before issuing a badge in the absence of a company-provided badge building security personnel or persons operating adjacent parking facilities have requested agents to present personal identification such as a driver’s license for access to the building or the parking facility and to leave the personal identification with security personnel in our opinion service employees may use or wear taxpayer-issued badges to simplify regular access to the taxpayer’s premises without violating nontax laws or general ethics principles applicable to government employees although such a practice eliminates a clear visual distinction between the irs employee and company employees it is unlikely to create any appearance of a less than objective relationship to the taxpayer a taxpayer-issued badge in the context of security concerns does not present the ethics issues that are raised when a badge is provided for the user’s personal benefit eg if a taxpayer were to provide badges to irs employees that permit access to employee_benefits such as an employee cafeteria employee gym etc see c f_r b employees shall act impartially and not give preferential treatment to any private organization or individual b employees shall avoid actions creating the appearance that they are violating the law or ethical standards employees shall not use public_office for private gain as indicated above we conclude that if a taxpayer conditions an irs employee’s access to its premises on the provision of personal information other than the employee’s name and unique identifying number as required under the irs reform and restructuring act the service may invoke its authority under sec_7605 to move the examination site to an irs office all agents are issued irs pocket the exception to this determination is information pertaining to all occupational series criminal investigators no information pertaining to criminal investigators is to be made public irm gls-157994-01 commissions for use as proof of their authority in the performance of official duties see irm and exhibit therefore although irs employees may accept and use taxpayer badges for access to an audit site taxpayers may not condition access to the audit site including the audit site’s parking facility on receiving personal information or inspecting the employee’s personal identification media such as a driver’s license in addition taxpayers should be advised that agents may not leave their irs credentials with security or other personnel while on the premises nor may copies be made pursuant to u s c sec_701 it is a misdemeanor to possess any department badge identification card or other insignia or photograph or make a copy or other colorable imitation of any such badge except as authorized under regulations although taxpayers may inspect a pocket commission no regulations permit anyone other than an authorized government_official to possess or copy such credentials in order to prevent any misuse of irs credentials in violation of the statute agents may not leave their pocket commissions with taxpayer or security personnel nor may copies be made of their irs credentials recommendation we recommend that if taxpayers obstinately refuse to permit irs employees access to their site without providing personal information such as social_security_number home address and telephone number or private motor_vehicle information then the irs should invoke the secretary’s authority to move an examination from on-site to the local irs office as provided in sec_301_7605-1 g transfers initiated by service nothing in this section shall be interpreted as precluding the service from initiating the transfer of an examination at a particular location if the transfer would promote the effective and efficient conduct of the examination while the irs generally attempts to conduct examinations in a manner to balance the convenience of the taxpayer with the need to conduct an efficient and effective examination if the requirements of sound tax_administration favor moving the location of the audit such transfer is within the irs’s discretion if after initiating a transfer to the irs examiner’s post of duty the taxpayer s refuses to comply with the summons and produce the records it may be necessary to invoke judicial enforcement of the summons under sec_7604 the irs can of course pursue judicial enforcement of if the taxpayer or its representative should continue to refuse to comply with the summons in addition to being held in contempt the irs can recommend that the contumacious party be held criminally liable see sec_7210 any person who being duly summoned to appear and produce records as required under section neglects to appear or to produce such records shall upon gls-157994-01 a summons to conduct an audit on site it will be for management to determine the best procedure to follow obviously we would hope that some arrangement can be made to satisfy the taxpayer’s concerns about security without requiring that the irs transfer the audit to the field_office or resort to judicial enforcement however it also is not necessary for irs employees to jeopardize their own personal privacy - in order to satisfy the taxpayer’s concerns about security - when engaging in sound tax_administration as for taxpayer-issued badges badges provided to revenue agents for security purposes may be displayed or worn without violating any legal or ethical restrictions however taxpayers may not condition access to audit sites on irs employees complying with requests for personal identifying information surrendering their credentials or permitting the credentials to be copied if there is a need for further advice from general legal services with regard to information required by taxpayers from agents prior to granting access to audit sites or parking facilities please contact eva tewel at if you have any questions concerning the matter under sec_7605 feel free to call joseph clark at conviction thereof be fined not more than dollar_figure or imprisoned not more than one year or both together with costs of prosecution recommendations for prosecution under sec_7210 are rare and fall under the jurisdiction of the office of division counsel criminal tax