l tern al revenue service appeals_office capitol street suite fresno ca number release date date certified mail dear department of the treasury employer_identification_number person to contact employee id number tel fax uil this is a final adverse determination regarding your exempt status under sec_501 c of the internal_revenue_code the code it is determined that you do not qualify as exempt from federal_income_tax under sec_501 c of the code our adverse determination was made for the following reason s you failed to establish that you operate exclusively for one or more exempt purposes as required by sec_501 c of the code additionally you operate for a substantial non-exempt commercial purpose of providing residential construction services contributions to your organization are not deductible under sec_170 of the code you are required to file federal_income_tax returns on forms file your return with the appropriate internal_revenue_service center per the instructions for the return for further instructions forms and information please visit www irs gov if you were a private_foundation as of the effective date of the adverse determination you are considered to be taxable private_foundation until you terminate your private_foundation_status under sec_507 of the code in addition to your income_tax return you must also continue to file form_990-pf by the 15th day of the fifth month after the end of your annual_accounting_period processing of income_tax returns and assessments of any taxes due will not be delayed should a petition for declaratory_judgment be filed under sec_7428 of the code we will make this letter and the proposed adverse determination_letter available for public inspection under code sec_6110 after deleting certain identifying information we have provided to you in a separate mailing notice notice of intention to disclose please review the notice and the documents attached that show our proposed deletions if you disagree with our proposed deletions follow the instructions in notice if you decide to contest this determination you may file an action for declaratory_judgment under the provisions of sec_7428 of the code in one of the following three venues united_states tax_court the united_states court of federal claims or the united_states district_court for the district of columbia a petition or complaint in one of these three courts must be filed within days from the date this determination_letter was mailed to you please contact the clerk of the appropriate court for rules for filing petitions for declaratory_judgment to secure a petition form from the united_states tax_court write to the united_states tax_court second street n w washington d c see also publication you also have the right to contact the office_of_the_taxpayer_advocate taxpayer_advocate assistance is not a substitute for established irs procedures such as the formal appeals process the taxpayer_advocate cannot reverse a legally correct_tax determination or extend the time fixed by law that you have to file a petition in a united_states court the taxpayer_advocate can however see that a tax matters that may not have been resolved through normal channels get prompt and proper handling if you want taxpayer_advocate assistance please contact the taxpayer_advocate for the irs office that issued this letter you may call toll-free for the taxpayer_advocate or visit www irs gov advocate for more information if you have any questions please contact the person whose name and telephone number are shown in the heading of this letter sincerely yours acting appeals team manager enclosure publication and or department of the treasury internal_revenue_service washington d c contact person identification_number contact number fax number employer_identification_number uil tax_exempt_and_government_entities_division legend p state r date dear we have considered your application_for recognition of exemption from federal_income_tax under sec_501 a based on the information provided we have concluded that you do not qualify for exemption under code sec_501 c the basis for our conclusion is set forth below issues do you fail to qualify for exemption from federal_income_tax under sec_501 c of the internal_revenue_code due to the commercial nature of your activities yes for the reasons described below do you fail to qualify for exemption from federal_income_tax under sec_501 c of the internal_revenue_code as your activities constitute a substantial non-exempt purpose yes for the reasons described below facts you were incorporated in p on r your articles of incorporation state you are formed for charitable purposes within the meaning of c of the internal_revenue_code and to engage in any lawful act or activity for which corporations may be organized under the non-profit corporation law of your state you will provide affordable residential construction services to the lower economic strata letter cg catalog number 47630w you refer to yourself as a non-profit residential construction company you primarily provide carpentry services but also offer other construction related trades including the following flooring interior trim framing insulation drywall installation and finish painting interior window installation door installation interior exterior cabinet manufacture and or installation hardware installation siding appliance installation pier and cement work weatherization services demolition and site cleanup attic ventilation work mechanical work substantial concrete and foundation work consulting services incidental landscaping incidental shoring roofing you will contract primarily with other non-profits to provide construction services on pre approved projects for which they are requesting bids if selected you enter into a contract with the organization and complete the work you have bid for accepted and completed dozens of these types of jobs over the last one to two years and routinely bid for additional ones you estimate of your work is dedicated towards these types of jobs in describing your marketing plan you state you are able to compete and undercut regular contractors due to using a less experienced workforce smaller infrastructure no profit_motive and paying lower compensation in describing criteria used to determine projects working with non-profits many have already been pre-qualified in terms of need you further evaluate if the financial resources from the non-profit are available and since bids are placed this often is not an issue as you are bidding the job to get the work and provide a service you also letter cg catalog number 47630w evaluate if you support the overall mission of the organization you will work with the remaining of your work is done with private homeowners these are small jobs contracted privately to supplement income you have listed criteria used in evaluating potential clients of this nature including economic status resources age or disability the type of work and if you have the resources to complete the job you indicated informal discussions were held with these clients about financing with most being elderly and or minority you provided a listing of these types of jobs that you have completed to date this list shows jobs included individuals with relations to members of your board and staff including a former colleague a neighbor and an acquaintance ' your long term goal is to build capacity and eventually be able to buy and rehabilitate homes using financing obtained directly rather than subcontracting work as well as build new homes you have paid employees performing services at prevailing rates you subcontract out some mechanical work such as plumbing and electrical that you either do not have the license or expertise to complete sufficiently your labor rates equal the employee salary plus a markup for business overhead there is a project management markup on material and subcontractor bids which has been waived on certain occasions you do provide some pro-bono and donated work the majority of your income will come from fees charged for your services with the remainder expected from gifts grants and contributions law sec_501 c of the internal_revenue_code provides for the exemption from federal_income_tax of corporations organized and operated exclusively for charitable educational and other purposes provided that no part of the net_earnings inure to the benefit of any private_shareholder_or_individual sec_1 c -1 a of the regulations states that in order to be exempt as an organization described in sec_501 c an organization must be both organized and operated exclusively for one or more of the purposes specified in such section if an organization fails to meet either the organizational or operational_test it is not exempt sec_1 c -1 c of the regulations states an organization will be regarded as operated exclusively for one or more exempt purposes only if it engages primarily in activities which accomplish one or more of such exempt purposes specified in sec_501 c an organization will not be so regarded it more than an insubstantial part of its activities is not in furtherance of an exempt_purpose revrul_69_528 c b states that an organization formed to provide investment services on a fee basis exclusively to organizations exempt from federal letter cg catalog number 47630w income_tax under sec_501 c of the code is not exempt under c of the code in revrul_72_369 1972_2_cb_245 an organization formed to provide managerial and consultin fservices at cost to unrelated exempt_organizations did not qualify for exemption under sec_501 c of the code the ruling found that providing managerial and consulting services on a regular basis for a fee was a trade_or_business ordinarily carried on for profit the fact that the services in this case were provided at cost and solely for exempt_organizations was not sufficient to characterize the activity as charitable within the meaning of sec_501 c of the code furnishing the services at cost lacks the donative element necessary to establish an activity as charitable in 326_us_279 the supreme court held that the presence of a single non-exempt purpose if substantial in nature will destroy the exemption regardless of the number or importance of truly exempt purposes in b s w group inc v commissioner i c the tax_court held that an organization did not qualify for exemption under sec_501 c of the code because it was primarily engaged in an activity that was characteristic of a trade_or_business and ordinarily carried on by for-profit commercial businesses the tax_court stated we must agree with the commissioner that petitioner's activities constitutes the conduct of a consulting business of the sort which is ordinarily carried on by commercial ventures organized for profit i in 283_fsupp2d_58 d d c the court relied on the commerciality doctrine in applying the operational_test under sec_501 c because of the commercial manner in which the organization conducted its activities the court found that it was operated for a non-exempt commercial purpose rather than for a tax-exempt purpose the case noted that among the major factors that courts have considered in assessing commerciality are competition with for-profit entities pricing policies the extent and degree of below cost services provided and the reasonableness of financial reserves additional factors include whether the organization uses commercial promotional methods such as advertising and the extent to which the organization receives charitable donations application of law you are not operated exclusively for charitable educational or religious purposes consistent with sec_501 c of the code nor sec_1 c -1 a of the income_tax regulations and therefore fail to meet the operational_test specifically the facts above indicate that you are not operated for exempt purposes but that you are operated in a commercial manner you charge fees that are not substantially below cost but are letter cg catalog number 47630w instead set to cover costs your expenses include overhead and employee compensation paying wages at prevailing rates you offer services to private individuals at market rates your jobs are secured through a competitive bid process alongside other similar companies as a result your services are not distinguishable from any commercial construction company you are not described in sec_1 c -1 c of the regulations because you are not primarily engaged in activities which accomplish one or more of such exempt purposes specified in sec_501 c of the code you are primarily engaged in a business indistinguishable from a commercial operation similar to the organizations denied exemption in revenue rulings and you are operated similar to a trade_or_business ordinarily carried on for profit even though you are serving mostly non-profit entities furnishing services in the manner described lacks the donative element to be considered charitable you are involved in a competitive bid process to win jobs and charge fees that are substantially above cost as noted in b s w group and airlie foundation operations which have a commercial undertone are excluded from exemption under sec_501 c of the code you have received little if any any contributions from private or public sources your primary source_of_income is from fees for services received for subcontracted work while you intend on providing some services at a reduced price or free this does not change the commercial manner in which you operate your operations are distinguishable from other for-profit construction companies only in that you charge slightly lower fees you conduct business with private individuals and derive income from those sources price your services accordingly have a compensated staff are in direct competition with other for-profit companies and even note your ability to under bid them these factors are all indicative of commercial operations since your operations are commercial in nature they are distinguishable from an exclusively charitable and educational program which would be exempt in nature this underlying commercial motive is similar to what caused denial of exemption in better business bureau of washington d c although elements of your proposed operations are aimed at helping those in need through some volunteer and pro-bono work your substantial services are cbmparable to and are in direct competition with other local for profit construction firms this precludes exemption under sec_501 c of the code conclusion based on the facts and information provided you are not organized or operated exclusively for exempt purposes you fail the operational_test and you are operated for substantial non-exempt commercial purposes letter cg catalog number 47630w accordingly you do not qualify for exemption as an organization described in sec_501 c of the code and you must file federal_income_tax returns contributions to you are not deductible under sec_170 you have the right to file a protest if you believe this determination is incorrect to protest you must submit a statement of your views and fully explain your reasoning you must submit the statement signed by one of your officers within days from the date of this letter we will consider your statement and decide if the information affects our determination if your statement does not provide a basis to reconsider our determination we will forward your case to our appeals_office you can find more information about the role of the appeals_office in publication how to appeal an irs decision on tax exempt status types of information that should be included in your protest can be found on page of publication under the heading filing a protest the statement of facts item must be accompanied by the following declaration under penalties of perjury i declare that i have examined this protest statement including accompanying documents and to the best of my knowledge and belief the statement contains all relevant facts and such facts are true correct and complete the declaration must be signed by one of your officers or trustees with personal knowledge of the facts your protest will be considered incomplete without this statement if your representative submits a protest a substitute declaration must be included stating that the representative prepared the protest and accompanying documents and whether the representative knows personally that the statements of facts contained in the protest and accompanying documents are true and correct an attorney certified_public_accountant or an individual enrolled to practice before the internal_revenue_service may represent you during the appeal process if you want representation during the appeal process you must file a proper power_of_attorney form_2848 power_of_attorney and declaration of representative if you have not already done so you can find more information about representation in publication practice_before_the_irs and power_of_attorney all forms and publications mentioned in this letter can be found at www irs gov forms and publications if you do not file a protest within days you will not be able to file a suit for declaratory_judgment in court because the internal_revenue_service irs will consider the failure to appeal as a failure to exhaust available administrative remedies code sec_7428 provides in part that a declaratory_judgment or decree shall not be issued in letter cg catalog number 47630w any proceeding unless the tax_court the united_states court of federal claims or the district_court of the united_states for the district of columbia determines that the organization involved has exhausted all of the administrative remedies available to it within the irs if you do not intend to protest this determination you do not need to take any further action if we do not hear from you within days we will issue a final adverse determination_letter that letter will provide information about filing tax returns and other matters please send your protest statement form_2848 and any supporting documents to the applicable address 'i mail to deliver to internal_revenue_service eo determinations quality assurance room p o box cincinnati oh internal_revenue_service eo determinations quality assurance main street room cincinnati oh you may fax your statement using the fax number shown in the heading of this letter if you fax your statement please call the person identified in the heading of this letter to confirm that he or she received your fax if you have any questions 'please contact the person whose name and telephone number are shown in the haading of this letter 'i sincerely enclosure publication kenneth corbin acting director exempt_organizations rulings and agreements letter cg catalog number 47630w


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-140318-09 date date in re ---------------------------------------------------------------- legend act ------------------------------------------------------------------------------------------- agency --------------------------------------------------- agreement ---------------------------------------- b ------------------------ court -------------------------------------------------------------------------------- department ---------------------------------------------------------------------------- entity1 -------------------------------------------------------- entity2 ----------------------------------- entity2 claimants ------------------- incident ------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------- t -------------------------------------- z ------------------------------------------------ plr-140318-09 c --------- date -------------------- date ---------------------- year ------- year ------- year ------- f ---------------------- dollar_figureq dollar_figure--------------- dollar_figurer dollar_figure--------------- dollar_figuret dollar_figure------------------- dollar_figurev dollar_figure------------------- w ----- dollar_figurey dollar_figure--------------- dear -------------- this is in reply to your request for a ruling that any payment you receive from department for the wrongful death of b your c is excludable from your gross_income under sec_104 of the internal_revenue_code facts your c was one of w individuals killed in incident in year the estates of those killed and their survivors including you entered into a joint prosecution agreement jpa to pursue claims for damages against entity1 and its officials who were responsible for incident the jpa sets forth how the plaintiffs will divide any amounts they recover in litigation or settlement of their claims initial litigation the estates of those killed and their survivors initially sued entity1 in court in year the causes of action included claims for survivorship wrongful death and intentional infliction of emotional distress you sought recovery for intentional infliction of emotional distress caused by the death of your c in year court granted plr-140318-09 summary_judgment for plaintiffs on the issue of liability in year court awarded the plaintiffs an aggregate recovery_of dollar_figurev for compensatory_damages prejudgment_interest and punitive_damages you were awarded an aggregate of dollar_figurey dollar_figurer against t and dollar_figureq against z legislative settlement subsequently on date entity2 passed the act to provide fair compensation to all entity2 claimants who have f claims for wrongful death and physical injury including claims for emotional distress against entity1 through a comprehensive settlement of those claims upon entity1’s payment to entity2 the act voided all prior court proceedings and judgments for f claims by entity2 claimants against entity1 or its officials and permanently precluded entity2 claimants from asserting f claims against entity1 or its officials on date entity1 and entity2 entered into the agreement to resolve all f claims against entity1 entity1 then transferred dollar_figuret to entity2 which will be paid to claimants covered by the agreement thus pursuant to the act court award of damages to the plaintiffs was voided and has been vacated agency has established procedures to compensate victims pursuant to the agreement as a survivor of an individual killed in incident you must file a claim with department to recover damages for claims of wrongful death based on the death of your c you represent that department’s payment will not include interest or punitive_damages law and analysis sec_104 provides that except in the case of amounts attributable to and not in excess of deductions allowed under sec_213 relating to medical etc expenses for any prior taxable_year gross_income does not include the amount of any damages received whether by suit or agreement on account of personal physical injuries or physical sickness sec_1_104-1 of the income_tax regulations provides that the term damages received whether by suit or agreement means an amount received through prosecution of a legal suit or action based upon tort or tort type rights or through a settlement agreement entered into in lieu of such prosecution section of the small_business job protection act of limits the exclusion_from_gross_income provided by sec_104 to amounts received on account of personal physical injuries or physical sickness subject_to one exception in h_r conf_rep no pincite congress expressed its intent concerning the treatment of wrongful death damages and emotional distress damages attributable to a physical injury d amages other than punitive_damages received on account of a claim of wrongful death continue to be excludable from taxable_income as under present law because all damages received on account of physical injury or physical plr-140318-09 sickness are excludable from gross_income the exclusion_from_gross_income applies to any damages received based on a claim of emotional distress that is attributable to physical injury or physical sickness the action you brought in court and the claim you file with department each seek recovery_of damages for emotional distress attributable to a personal physical injury these claims are based in tort under sec_1_104-1 under the act any recovery_of compensatory_damages that department awards you is for the wrongful death of your c this wrongful death recovery as adjusted by the jpa is received on account of a personal physical injury under sec_104 conclusion based strictly on the information submitted and the representations made we conclude that the amount you receive from department as adjusted by the jpa for the wrongful death of your c is excludable from your gross_income under sec_104 except for any amounts attributable to medical_expenses that you in fact deducted on a prior year s ’ federal_income_tax return we do not express or imply an opinion on the federal tax consequences of any aspect of these transactions other than those expressed in the conclusion above this ruling is directed only to the taxpayer requesting it sec_6110 provides that it may not be used or cited as precedent the rulings contained in this letter are based upon information and representations that you submitted under penalties of perjury 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 you must attach to any income_tax return to which it is relevant a copy of this letter or if you file your returns electronically a statement providing the date and control number of this letter_ruling in accordance with the power_of_attorney on file with this office we are sending a copy of this letter to your authorized representative sincerely michael j montemurro branch chief office of associate chief_counsel income_tax accounting cc


internal_revenue_service number release date index number ------------------------------------------------- -------------------- ------------------------------------------------------------ -------------- ---------------------------- ---------------------- - department of the treasury washington dc person to contact ------------------------- id no ------------- telephone number --------------------- refer reply to cc psi b01 - plr-121596-05 date date --------------------- -------------------------- ------------------------------------------------- legend x ------------------------------------------------------------ country date dear --------------- this letter responds to the letter dated date and related correspondence written on behalf of x requesting a ruling that it be granted an extension of time pursuant to sec_301_9100-3 of the procedure and administration regulations in which to elect to be treated as a partnership for federal tax purposes under sec_301_7701-3 facts according to the information submitted x was validly formed under country law on date x represents that as of date x was eligible to make an election under sec_301_7701-3 to be a partnership for federal income purposes however the form_8832 entity classification election inadvertently was not timely filed law and analysis sec_301_7701-3 provides that a business_entity not classified as a corporation under sec_301_7701-2 or an eligible_entity can elect its classification for federal tax purposes sec_301_7701-3 provides that plr-121596-05 except as provided in sec_301_7701-3 unless the entity elects otherwise a foreign eligible_entity is classified as a partnership if it has two or more members and at least one member does not have limited_liability an association if all members have limited_liability or disregarded as an entity separate from its owner if it has a single owner that does not have limited_liability sec_301_7701-3 provides that an eligible_entity may elect to be classified other than as provided under sec_301 b by filing form_8832 entity classification election with the appropriate service_center under sec_301_7701-3 this election will be effective on the date specified by the entity on form_8832 or on the date filed if no such date is specified the date specified on form_8832 cannot be more than days prior to the date on which the election is filed under sec_301_9100-1 the commissioner may grant a reasonable extension of time to make a regulatory election or a statutory election but no more than six months except in the case of a taxpayer who is abroad under all subtitles of the code except 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 an election sec_301_9100-2 provides automatic_extension of time for making certain elections sec_301_9100-3 provides extensions of time for making elections that do not meet the requirements of sec_301_9100-2 requests for relief under sec_301_9100-3 will be granted when the taxpayer provides evidence to establish that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government conclusion based solely on the facts submitted and the representations made we conclude that x has satisfied the requirements of sec_301_9100-3 as a result x is granted an extension of time of sixty days from the date of this letter to file a properly executed form_8832 with the appropriate service_center to elect to be treated as a partnership for federal tax purposes effective date a copy of this letter should be attached to the election a copies is enclosed for that purpose except as specifically set forth above we express no opinion concerning the federal tax consequences of the above described facts under any other provision of the code this ruling is directed only to the taxpayer who requested it sec_6110 provides that it may not be used or cited as precedent plr-121596-05 pursuant to a power_of_attorney on file with this office a copy of this letter is being forwarded to the taxpayer’s authorized representative heather maloy sincerely heather maloy associate chief_counsel passthroughs and special industries enclosures cc copy of this letter copy for sec_6110 purposes


internal_revenue_service number release date index number --------------- ------------------- ------------------------------------------------------- --------------------------------------- ---------------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact -------------------- id no ------------ telephone number -------------------- refer reply to cc corp b04 plr-143643-14 date date parent subsidiaries date date ----------------------------------------------------------------------------------- ----------------------------------------------------------------------------------- --------------------------------------------- ----------------------------------------------------------------------------------- ----------------------------------------------------------------------------------- ----------------------------------------------------------------------------------- ----------------------------------------------------------------------------------- ----------------------------------------------------------------------------------- ----------------------------------------------------------------------------------- ----------------------------------------------------------------------------------- --------------------------------------------- -------------------------- ----------------------- company official ----------------------------------------------------------------------------------- ----------------------------------------------------------- tax professional ----------------------------------------------------------------------------------- ------------------------------------------------------------------------- dear -------------- this letter_ruling responds to a letter from your authorized representative dated date requesting an extension of time under sec_301_9100-1 and sec_301_9100-3 of the procedure and administration regulations to file an election the plr-143643-14 extension is being requested for parent and subsidiaries to make an election to file a consolidated federal_income_tax return with parent as the common parent under sec_1_1502-75 of the income_tax regulations hereinafter referred to as the election effective for the taxable_year ending on date the material information provided is summarized below for the taxable_year ending date parent was the common parent of an affiliated_group_of_corporations comprised of parent and subsidiaries the parent group an election for the parent group to file a consolidated_income_tax_return with parent as the common parent for the taxable_year ending on date was due on the last day prescribed by law including extensions of time for the filing of parent's return but for various reasons the election was not filed until date after the due_date for the election subsequently this request was submitted under sec_301_9100-3 for an extension of time to file the election the period of limitations on assessment under sec_6501 has not expired for the parent group's taxable_year for which they want to make the election the taxable_year in which the election should have been filed or any subsequent taxable_year parent has represented that it does not seek to alter a return position for which an accuracy-related_penalty has been or could be imposed under sec_6662 sec_1_1502-75 of the income_tax regulations provides in part that an affiliated_group_of_corporations which did not file a consolidated_return for the immediately preceding_taxable_year may file a consolidated_return in lieu of separate returns for the taxable_year provided that each corporation which has been a member of the group during any part of the taxable_year for which the consolidated_return is to be filed consents in accordance with sec_1_1502-75 to the regulations under sec_1502 if a group wishes to exercise its privilege of filing a consolidated_return such consolidated_return must be filed not later than the last day prescribed by law including extensions of time for the filing of the common parent's return 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 to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government sec_301_9100-3 plr-143643-14 in this case the time for filing the election is fixed by the regulations ie sec_1 a therefore the commissioner has discretionary authority under sec_301_9100-3 to grant an extension of time for parent to file the election provided parent shows 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 information affidavits and representations submitted by parent company official and tax professional explain the circumstances that resulted in the failure to timely file the election the information establishes that parent reasonably relied on a qualified_tax professional who failed to make or advise parent to make the election 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 provided that the parent group qualifies substantively to file a consolidated_return for the applicable tax_year an extension of time is granted under sec_301_9100-3 until days from the date on this letter for parent to file the election by filing a consolidated_return with parent as the common parent and attaching a form_1122 for each of subsidiaries for the taxable_year ending on date parent group having already filed such consolidated_return on date must amend such return to attach a copy of this ruling letter to such return or if the parent group files the return electronically to attach a statement to the return that provides the date and the control number of this ruling letter the above extension of time is conditioned on the parent group'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 parent group's 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 we express no opinion with respect to whether in fact the parent group qualifies substantively to file a consolidated_return in addition we express no opinion as to the tax effects or consequences of filing the return or the election late under the provisions of any other section of the code or regulations or as to the tax treatment of any conditions existing at the time of or effects resulting from filing the return or the election late that are not specifically set forth in the above ruling for purposes of granting relief under sec_301_9100-3 we relied on certain statements and representations made by parent company official and tax professional however the director should verify all essential facts in addition notwithstanding that an extension is granted under sec_301_9100-3 to file the election penalties and interest that would otherwise be applicable if any continue to apply plr-143643-14 this ruling is directed only to the taxpayer requesting it sec_6110 of the code provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative sincerely __________________________________ ken cohen senior technician reviewer branch office of associate chief_counsel corporate


internal_revenue_service number release date index number --------------------------- ---------------------------------------- ------------------------------------------------------------ ----------------- ------------------------------------------------ ------------------------ -------------------- -------------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ----------------------- id no ------------- telephone number --------------------- refer reply to cc psi b02 plr-109035-10 date date legend trust trust ----------------------------------------- ---------------------------------------------------------------------- ---------------------------------------------------------------------- a ---------------------- ------------------------------------------ b ----------------------- ------------------------------------------ x ------------------------------------------------- court --------------------------------------------------------------- date ---------------------------- date ------------------------- dear ------ ---------------------------- this responds to a letter dated date and subsequent correspondence submitted on behalf of trust requesting rulings under sec_664 and sec_4941 of the internal_revenue_code concerning the qualification of trust as a charitable_remainder_unitrust crut the information submitted states that on date a created trust with the intention that trust qualify as a fixed percentage crut under sec_664 x is the trustee of trust a established trust with the assistance of an accountant and an plr-109035-10 attorney however due to a drafting error trust was drafted as a single-life crut rather than as a two-life crut in order to correct the scrivener's error and because trust is irrevocable trustee sought an order from court authorizing an amendment ab initio of trust no parties objected to the proposed reformation on date court issued an order reforming trust to a two-life crut subject_to the service issuing a private_letter_ruling that the reformation of trust will not disqualify trust as a charitable_remainder_trust sec_664 provides that for purposes of sec_664 a crut is a trust- a from which a fixed percentage which is not less than percent nor more than percent of the net fair_market_value of its assets valued annually is to be paid not less often than annually to one or more persons at least one of which is not an organization described in sec_170 and in the case of individuals only to an individual who is living at the time of the creation of the trust for a term of years not in excess of years or for the life or lives of such individual or individuals b from which no amount other than the payments described in sec_664 and other than qualified gratuitous transfers described in sec_664 may be paid to or for_the_use_of any person other than an organization described in sec_170 c following the termination of the payments described in sec_664 the remainder_interest in the trust is to be transferred to or for_the_use_of an organization described in sec_170 or is to be retained by the trust for such a use or to the extent the remainder_interest is in qualified_employer_securities as defined in sec_664 all or part of such securities are to be transferred to an employee_stock_ownership_plan as defined in sec_4975 in a qualified_gratuitous_transfer as defined sec_664 and d with respect to each contribution of property to the trust the value determined under sec_7520 of such remainder_interest in such property is at least percent of the net fair_market_value of such property as of the date such property is contributed to the trust sec_1_664-3 of the income_tax regulations provides that the trust may not be subject_to a power to invade alter amend or revoke for the beneficial use of a person other than an organization described in sec_170 sec_4941 imposes an excise_tax on each act of self-dealing between a disqualified_person and a private_foundation sec_4941 defines the term self-dealing as any direct or indirect transfer to or the use by or for the benefit of a disqualified_person of the income or assets of a private_foundation sec_4946 defines the term disqualified_person with respect to a private_foundation as including a substantial_contributor to the foundation including the creator of a_trust sec_4947 provides generally that split-interest_trusts are subject_to the provisions of sec_4941 in the same manner as if such trusts were private_foundations but under sec_4947 not with respect to any amounts payable under the terms of such plr-109035-10 trust to income beneficiaries unless a deduction were allowed under sec_170 sec_2055 or sec_2522 based solely on the information submitted and representations made we conclude that the judicial reformation of trust ab initio does not violate sec_664 furthermore assuming that the terms of the reformed trust are otherwise valid under sec_664 the reformed trust will be treated as a valid crut under sec_664 we also conclude that the judicial reformation of trust will not be an act of self-dealing under sec_4941 within days of the date of this letter trust a and b must file any necessary income or gift_tax returns consistent with the treatment of trust as a two-life crut effective date a copy of this letter should be attached to any such returns if trust a or b fails to file any necessary amended returns this ruling is null and void except as specifically set forth above no opinion is expressed as to the federal tax consequences of the above described facts under any other provision of the code specifically no opinion is expressed concerning whether trust is or was a charitable_remainder_trust within the meaning of sec_664 or as to any other income gift or estate_tax consequences of the creation of trust this ruling is directed only to the taxpayer on whose behalf it was requested sec_6110 provides that it may not be used or cited as precedent pursuant to a power_of_attorney on file with this office a copy of this letter is being sent to trust's authorized representative sincerely bradford r poston acting chief branch office of the associate chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes cc


internal_revenue_service number release date index number --------------------------------- --------------------------------------------------- ---------------------------------------------------- ------------------------------- ---------------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ---------------------- id no ------------- telephone number -------------------- refer reply to cc psi b03 plr-107969-10 date date legend x a ------------------------------------------------------------------------------------------------------ ----------------------- ------------------------------------------------------------------------------------------------------ ------------------------- state ---------- d1 d2 -------------------------- ---------------------- dear --------------- this letter responds to a letter dated date and subsequent correspondence submitted on behalf of x by x’s authorized representative requesting a ruling under sec_1362 of the internal_revenue_code facts x was incorporated on d1 under state law and began operations on d2 a x’s sole shareholder intended for x to be an s_corporation effective d2 however x’s form_2553 election by a small_business_corporation was not timely filed x requests a ruling that it be permitted to file a late s_corporation_election effective d2 plr-107969-10 law and analysis sec_1362 provides that except as provided in sec_1362 a small_business_corporation may elect in accordance with the provisions of sec_1362 to be an s_corporation sec_1362 provides that an election under sec_1362 may be made by a small_business_corporation for any taxable_year a at any time during the preceding_taxable_year or b at any time during the taxable_year and on or before the 15th day of the third month of the taxable_year sec_1362 provides that if a a small_business_corporation makes an election under sec_1362 for any taxable_year and b the election is made after the 15th day of the third month of the taxable_year and on or before the 15th day of the third month of the following taxable_year then the election is treated as made for the following taxable_year sec_1362 provides that if a an election under sec_1362 is made for any taxable_year determined without regard to sec_1362 after the date prescribed by sec_1362 for making the election for the taxable_year or no sec_1362 election is made for any taxable_year and b the secretary determines that there was reasonable_cause for the failure to timely make the election the secretary may treat the election as timely made for the taxable_year and sec_1362 shall not apply conclusion based on the facts submitted and representations made we conclude that x has established reasonable_cause for failing to make an s_corporation_election thus we conclude that x is eligible for relief under sec_1362 accordingly if x makes an election to be an s_corporation by filing with the appropriate service_center a completed form_2553 effective d2 within days following the date of this letter the election shall be treated as timely made a copy of this letter should be attached to the form_2553 filed with the service_center a copy is enclosed for that purpose except as expressly provided herein we express or imply no opinion concerning the federal tax consequences of any aspect of any transaction or item discussed or referenced in this letter specifically we express or imply no opinion concerning whether x is otherwise eligible to be an s_corporation for federal tax purposes this ruling is directed only to the taxpayer requesting it sec_6110 provides that it may not be used or cited as precedent in accordance with a power_of_attorney on file with this office we are sending a copy of this letter to your authorized representative plr-107969-10 the ruling contained in this letter is 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 ruling_request it is subject_to verification on examination sincerely s james a quinn senior counsel branch office of the associate chief_counsel passthroughs special industries enclosures a copy of this letter a copy for sec_6110 purposes


internal_revenue_service number release date index number -------------------------- --------------------------------------------- ------------------------------------------------------------ ----------------- ------------------------------------------- ------------------------------- ------------------------------------------------------------ ---------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact -------------------------- id no ---------------- ----------------- telephone number ---------------------- refer reply to cc intl b06 plr-102024-19 date date ------------- --------------------------------------------------------------------------------- ----------------------------------- --------------------------------------- ----------------------- ----------------------- ------------------------ ------------------------ --------------------------- ------- ------------------------------------------------- ---------------------------------------------------- ------------------------ -------------------------- --------------------------- legend taxpayer accounting firm company date date date date date year trust a_trust b individual a individual b individual c dear -------------------- this responds to a letter dated date supplemented by additional correspondence dated june submitted by your representatives requesting that the internal_revenue_service service grant taxpayer an extension of time under sec_301_9100-1 and sec_301_9100-3 to file form 4876-a election to be treated as an interest_charge_disc for year taxpayer’s first taxable_year plr-102024-19 the ruling contained in this letter is based upon information and representations submitted by taxpayer and accounting firm and accompanied by affidavits and penalty of perjury statements executed by appropriate parties this office has not verified any of the materials submitted in support of the request for a ruling it is subject_to verification on examination facts on date taxpayer was formed to serve as an interest charge domestic_international_sales_corporation ic-disc taxpayer is a domestic_corporation that is wholly owned by company company is an s_corporation owned by trust a and trust b until date when trust a transferred its company shares to individual a taxpayer was formed in order to sell company’s products to international buyers on a commission basis in year taxpayer engaged accounting firm for assistance with arranging for taxpayer to qualify as an ic-disc accounting firm prepared a form 4876-a and sent it via electronic mail to individual c an officer of company with the belief that taxpayer would ensure timely filing with the service individual b in her official capacities as taxpayer’s president and as company’s president signed the prepared form 4876-a on date individual c sent an electronic copy to accounting firm on date with the belief that accounting firm would ensure timely filing with the service due to these differing beliefs as to who was responsible and a lack of communication the completed form 4876-a was not submitted to the service in a timely fashion by either taxpayer or accounting firm as a result the form 4876-a was not filed within days after date accounting firm was instructed to file taxpayer’s year tax_return for the short taxable_year starting date and ending date accounting firm assuming that form 4876-a had been timely filed filed form_1120 ic-disc for year with the service taxpayer subsequently learned that the service had no record of the filing of a form 4876-a through receipt of a form 6800sc upon learning of the miscommunications that left the form 4876-a unfiled taxpayer instructed accounting firm to file a request for a ruling granting an extension of time to file form 4876-a for year its first taxable_year law and analysis sec_992 provides that an election by a corporation to be treated as a disc2 shall be made by such corporation for a taxable_year at any time during the 90-day period immediately preceding the beginning of the taxable_year except that the secretary may give his consent to the making of an election at such other times as he may designate the beneficiary of trust a is individual a and the beneficiary of trust b is individual b as used in this letter the terms ic-disc and disc have the same meaning plr-102024-19 sec_992 provides that such election shall be made in such manner as the secretary shall prescribe and shall be valid only if all persons who are shareholders in such corporation on such first day of the first taxable_year for which such election is effective consent to such election temp sec_1_921-1t provides in part that a corporation electing ic- disc status must file form 4876-a and that a corporation electing to be treated as an ic-disc for its first taxable_year shall make its election within days after the beginning of that year sec_301_9100-1 provides in part that the commissioner in exercising the commissioner’s discretion may grant a reasonable extension of time under the rules set forth in sec_301_9100-2 and sec_301_9100-3 to make a regulatory election under all subtitles of the code except subtitles e g h and i sec_301_9100-1 provides that a regulatory election is an election whose due_date is prescribed by a regulation published in the federal_register or a revenue_ruling revenue_procedure notice or announcement published in the internal_revenue_bulletin for this purpose an election includes an application_for relief in respect of tax sec_301_9100-3 provides that requests for extensions of time for regulatory elections that do not meet the requirements of sec_301_9100-2 automatic extensions must be made under the rules of sec_301_9100-3 requests for relief subject_to sec_301_9100-3 will be granted when the taxpayer provides the evidence including affidavits described in sec_301_9100-3 to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and that the grant of relief will not prejudice the interests of the government in the present situation the election described in temp sec_1_921-1t is a regulatory election as defined in sec_301_9100-1 therefore the commissioner has discretionary authority under sec_301_9100-1 to grant taxpayer an extension of time provided that taxpayer satisfies the standards for relief set forth in sec_301_9100-3 based on the facts and representations submitted with taxpayer’s ruling_request we conclude that taxpayer satisfies sec_301_9100-3 accordingly taxpayer is granted an extension of time of days from the date of this ruling letter to file form 4876-a such filing will be treated as a timely election to be treated as an ic-disc for taxpayer’s first taxable_year the granting of an extension in this ruling letter is not a determination that taxpayer is otherwise eligible to make the election or to claim ic-disc status or benefits see sec_301_9100-1 taxpayer should attach a copy of this ruling letter to its plr-102024-19 form 4876-a and federal_income_tax return for the taxable years to which this letter applies 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 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 accordance with the power_of_attorney on file with this office a copy of this ruling letter is being sent to your authorized representative sincerely _____________________________________ angela e holland senior counsel branch office of associate chief_counsel international enclosures copy of this letter copy for sec_6110 purposes cc


internal_revenue_service department of the treasury number release date index numbers washington dc person to contact telephone number refer reply to cc intl plr-112275-02 date date legend taxpayer tax years at issue individual a dear this replies to your letter dated date requesting that taxpayer be granted an extension of time under sec_301_9100-3 to elect the foreign_earned_income_exclusion for the tax years at issue additional information was submitted in letters dated date date and date the information submitted for consideration is substantially as set forth below the ruling contained in this letter is predicated upon facts and representations submitted by taxpayer and accompanied by a penalty of perjury statement executed by taxpayer this office has not verified any of the material submitted in support of the request for a ruling verification of the factual information representations and other data may be required as a part of the audit process the affidavit of the taxpayer and the documentation submitted indicate that taxpayer engaged individual a a cpa to file form sec_1040 for the tax years at issue and claim the foreign_earned_income_exclusion for each year however for various reasons this was not done plr-112275-02 sec_301 -1 b provides that an election includes an application_for relief in respect of tax and defines a regulatory election as an election whose due_date is prescribed by a regulation a revenue_ruling revenue_procedure notice or announcement sec_301_9100-1 provides that the commissioner has discretion to grant a taxpayer a reasonable extension of time under the rules set forth in sec_301_9100-3 to make a regulatory election under all subtitles of the internal_revenue_code except subtitles e g h and i sec_301_9100-3 provides that requests for relief subject_to this section will be granted when the taxpayer provides the evidence including affidavits described in sec_301_9100-3 to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and the grant of relief will not prejudice the interests of the government sec_1_911-7 provides the rules to make a valid election of the foreign_earned_income_exclusion therefore the commissioner has discretionary authority under sec_301_9100-1 to grant taxpayer an extension of time provided that taxpayer satisfies the standards set forth in sec_301_9100-3 based on the facts and circumstances of this case we conclude that taxpayer satisfies sec_301_9100-3 accordingly taxpayer is granted an extension of time until days from the date of this ruling letter to elect the foreign_earned_income_exclusion for the tax years at issue the granting of an extension of time is not a determination that taxpayer is otherwise eligible to make the elections sec_301 -1 a a copy of this ruling letter should be associated with the income_tax returns for the tax years at issue no ruling has been requested and none is expressed as to the application of any other section of the code or regulations to the facts presented including the effect on interest and penalties attributable to the late filing of form sec_1040 for the tax years at issue plr-112275-02 this ruling is directed only to the taxpayer who requested it sec_6110 provides that it may not be used or cited as precedent sincerely s allen goldstein allen goldstein reviewer office of the associate chief_counsel international


internal_revenue_service number release date index number ----------------------- ------------------------- -------------------------------- -------------------------------------------------- ----------------------------------------- legend legend department of the treasury washington dc person to contact ------------------------- id no ------------- telephone number --------------------- refer reply to cc fip b02 plr-105390-10 date date taxpayer ------------------------------------------------------------------------------- --------------------------------------- properties llc llc llc llc4 tr sec_1 tr sec_2 manager llc5 a ------------------------------ --------------------- ------------------------ --------------------------- ----------------------- ------------------------------- ---------------------------- ------------------- --------------------------- ---- equipment -------------------------------------------------------------------------- --------------------------------------------------------------- dear ------------ this responds to a request for rulings dated date submitted by your authorized representative you have requested rulings that the properties including plr-105390-10 their structural_components constitute real_estate_assets for purposes of sec_856 of the internal_revenue_code and that the services furnished to tenants of the properties by taxpayer through llc and llc will not cause any amounts received from tenants of the properties to be treated as other than rents_from_real_property under sec_856 facts taxpayer has elected to be taxed as a real_estate_investment_trust reit under sec_856 of the code the taxpayer wholly-owns two limited_liability companies llc and llc the llcs that each own an a percent interest in the capital and profits of a lower-tier limited_liability_company that is taxed as a partnership for federal_income_tax purposes llc owns an interest in llc and llc owns an interest in llc the llcs’ principal business is to acquire sell finance improve lease operate and manage real_estate taxpayer also directly or indirectly owns a percent of the common_stock of each tr sec_1 and tr sec_2 the trss taxpayer jointly elected with each of the trss under sec_856 for it to be treated as a taxable_reit_subsidiary trs of taxpayer taxpayer conducts the management activities for the properties provides certain services to tenants and provides the tenants access to outside service providers through the trss the trss contract with the llc which is represented to be an independent_contractor to provide certain other services to tenants of the properties tenants of the properties generally use the properties to house their equipment and associated personnel the properties contain certain structural_components regarding heating ventilation and air conditioning hvac specifically suitable for the tenants’ technological requirements the properties’ components include electrical components designed with redundancy systems to provide uninterruptible power supply beyond that ordinarily found in office buildings the properties also possess a structural design with respect to humidification fire protection and security systems at a level higher than the ordinary average for office buildings the telecommunication system and infrastructure includes access to third-party providers tenant space is generally constructed on raised flooring designed to accommodate the systems necessary for the operation of tenants’ equipment taxpayer represents that the properties are inherently permanent structures and that the structural_components of the properties are designed and constructed specifically for the particular building for which they are a part and are intended to remain permanently in place certain tenant services are currently provided to the tenants through the llcs manager independent contractors supervised by manager or llc supervised by the trss customary services performed by the taxpayer on behalf of the tenants include the provision of utilities such as hvac water electricity etc humidification services fire protection security by means of on-site staff and technology receiving tenant plr-105390-10 deliveries during normal business hours in the absence of tenant personnel unattended and unreserved parking and maintenance of common areas telecommunication infrastructure and major structural_components and buildings systems certain of these customary services may be provided through an independent_contractor from whom the taxpayer neither derives nor receives any income taxpayer represents that any noncustomary services rendered to any tenant are provided by a trs or through an independent_contractor from whom taxpayer does not derive or receive any income the trss may provide tenants technological services and support specific to the tenants’ information_technology and telecommunications equipment located at the properties the taxpayer represents that it has undertaken research regarding services furnished by other similarly situated owners in connection with similar buildings located in the same geographic markets and it has determined that the services rendered by it to its tenants are customarily rendered in connection with the rental of comparable buildings in the geographic market in which the properties are located law and analysis sec_856 and c provide that for a corporation to be qualified to be taxable as a reit for any taxable_year at least percent of its gross_income must be derived from certain specified sources including rents_from_real_property and at least percent of its gross_income must be derived from real_property interests sec_856 provides that at the close of each quarter of its tax_year at least percent of the value of a reit's total assets must be represented by real_estate_assets cash and cash items including receivables and government securities sec_856 provides that not more than percent of the value of a reit’s total assets is represented by securities of one or more taxable reit subsidiaries real_property issue sec_856 defines the term real_estate_assets in part to mean real_property including interests_in_real_property and interests in mortgages on real_property and shares or transferable certificates of beneficial_interest in other reits sec_856 provides that the term interests_in_real_property includes fee ownership and co-ownership of land or improvements thereon leaseholds of land or improvements thereon options to acquire land or improvements thereon and options to acquire leaseholds of land or improvements thereon but does not include mineral oil or gas royalty interests sec_1_856-3 of the income_tax regulations provides that the term real_estate_assets means real_property interests in mortgages on real_property including plr-105390-10 interests in mortgages on leaseholds of land or other improvements thereon and shares in other qualified reits sec_1_856-3 provides that the term interests_in_real_property includes fee ownership and co-ownership of land or improvements thereon leaseholds of land or improvements thereon options to acquire land or improvements thereon and options to acquire leaseholds of land or improvements thereon sec_1_856-3 provides that the term real_property means land or improvements thereon such as buildings or other inherently permanent structures thereon including items that are structural_components of those buildings or structures in addition real_property includes interests_in_real_property local law definitions do not control for purposes of determining the meaning of the term real_property as used in sec_856 and the regulations thereunder the term includes for example the wiring of a building plumbing systems central heating or central air-conditioning machinery pipes or ducts elevators or escalators installed in the building or other items that are structural_components of a building or other permanent structure the term does not include assets accessory to the operation of a business such as machinery printing press transportation equipment that is not a structural_component of the building office equipment refrigerators individual air-conditioning units grocery counters furnishings of a motel hotel or office building etc even though those items may be termed fixtures under local law revrul_75_424 1975_2_cb_270 concerns whether various components of a microwave transmission system are real_estate_assets for purposes of sec_856 the system consists of transmitting and receiving towers built upon pilings or foundations transmitting and receiving antennae affixed to the towers a building equipment within the building and waveguides the waveguides are transmission lines from the receivers or transmitters to the antennae and are metal pipes permanently bolted or welded to the tower and never removed or replaced unless blown off by weather the transmitting multiplex and receiving equipment is housed in the building prewired modular racks are installed in the building to support the equipment that is installed upon them the racks are completely wired in the factory and then bolted to the floor and ceiling they are self-supporting and do not depend upon the exterior walls for support the equipment provides for transmission of audio or video signals through the waveguides to the antennae also installed in the building is a permanent heating and air conditioning system the transmission site is surrounded by chain link fencing the revenue_ruling holds that the building the heating and air conditioning system the transmitting and receiving towers and the fence are real_estate_assets the ruling holds further that the antennae waveguides transmitting receiving and multiplex equipment and the prewired modular racks are assets accessory to the operation of a business and therefore not real_estate_assets revrul_73_425 1973_2_cb_222 considers whether a mortgage secured_by a plr-105390-10 shopping center and its total energy system is an obligation secured_by real_property a total energy system is a self-contained facility for the production of all the electricity steam or hot water and refrigeration needs of associated commercial or industrial buildings building complexes shopping centers apartment complexes and community developments the system may be permanently installed in the building attached to the building or it may be a separate structure nearby the principal components consist of electric generators powered by turbines or reciprocating engines waste heat boilers heat exchangers gas-fired boilers and cooling units in addition each facility includes fuel storage tanks control and sensor equipment electrical substations and air handling equipment for heat hot water and ventilation it also includes ducts pipes conduits wiring and other associated parts machinery and equipment the revenue_ruling holds in part that a mortgage secured_by the building and the system is a real_estate asset regardless of whether the system is housed in the building it serves or is housed in a separate structure apart from the building it serves this is because the interest in a structural_component is included with an interest held in a building or inherently_permanent_structure to which the structural_component is functionally related similar to the properties or structural_components described in revrul_75_424 and revrul_73_425 that qualify as real_property for purposes of sec_856 the properties and the structural_components described above are inherently permanent structures although the properties and structures help to facilitate the technology businesses of tenants that occupy such buildings the buildings and structural_components themselves are not assets accessory to the operation of a business like the examples set forth in sec_1_856-3 accordingly based on the information submitted and representations made we conclude that the properties including their structural_components as described above constitute real_property for purposes of sec_856 and sec_856 in addition because the properties and their structural_components are real_property they constitute real_estate_assets for purposes of sec_856 and sec_856 tenant services issue sec_856 provides that subject_to sec_856 the term rents_from_real_property includes inter alia rents from interests_in_real_property and charges for services customarily furnished or rendered in connection with the rental of real_property whether or not such charges are separately_stated sec_1 a provides that the term rents_from_real_property means generally the gross amounts received for_the_use_of or the right to use real_property of the reit sec_1_856-4 explains that services furnished to the tenants of a particular building will be considered to be customary if in the geographic market in which the building is located tenants in similar buildings are customarily provided with plr-105390-10 the service the regulation goes on to provide that furnishing of water heat light air conditioning the cleaning of windows public entrances exits and lobbies the performance of general maintenance janitorial and cleaning services the collection of trash and the furnishing of elevator services telephone answering services incidental storage space laundry equipment watchman or guard services parking facilities and swimming pool facilities are examples of services that are customarily furnished to tenants in many geographic marketing areas sec_856 excludes from the term rents_from_real_property any impermissible_tenant_service_income sec_857 provides that impermissible_tenant_service_income includes with respect to any real or personal_property any amount received or accrued directly or indirectly by the reit for i services furnished or rendered by the reit to the tenants of such property or ii managing or operating such property sec_856 provides that services management or operations provided through an independent_contractor from whom the reit itself does not derive or receive any income or through a taxable_reit_subsidiary of the reit will not be treated as provided by the reit sec_856 provides that any amount which would be excluded from unrelated_business_taxable_income under sec_512 if received by an organization described in sec_511 will not constitute impermissible tenant services income sec_856 provides that if the amount of impermissible_tenant_service_income received or accrued directly or indirectly by a reit with respect to a property for any taxable_year exceeds one percent of all amounts received or accrued directly or indirectly by the reit with respect to such property the impermissible_tenant_service_income of the reit with respect to the property shall include all such amounts sec_856 provides that an independent_contractor is any person a who does not own directly or indirectly more than percent of the shares or certificates of beneficial_interest in the reit and b if the person is a corporation not more than percent of the voting power or total number of shares of whose stock or if the person is not a corporation not more than percent of the interest in whose assets or net profits is owned directly or indirectly by one or more persons owning percent or more of the shares or certificates of beneficial_interest in the reit sec_1_856-4 provides that no amount received or accrued directly or indirectly with respect to any real_property qualifies as rents_from_real_property if the reit furnishes or renders services to the tenants of the property or manages or operates the property other than through an independent_contractor from whom the trust itself does not derive or receive any income this section provides further that the requirement that the trust not receive any income from an independent_contractor requires that the relationship between the two be an arm’s-length relationship to the plr-105390-10 extent that services other than those customarily furnished or rendered in connection with the rental of real_property are rendered to the tenants of a property by an independent_contractor the cost of the services must be borne by the independent_contractor a separate charge must be made for the services the amount of the separate charge must be received and retained by the independent_contractor and the independent_contractor must be adequately compensated for the services sec_512 provides inter alia that there shall be excluded from the computation of unrelated_business_taxable_income all rents_from_real_property and all rents from personal_property leased with such real_property if the rents attributable to such personal_property are an incidental amount of the total rents received or accrued under the lease determined at the time the personal_property is placed_in_service sec_1_512_b_-1 explains however that payments for the occupancy of rooms and other space where services are also rendered to the occupant such as payments for_the_use_of a hotel room are not rents_from_real_property generally services are considered rendered to the occupant if they are primarily for his convenience and are other than those usually or customarily rendered in connection with the rental of rooms or other space for occupancy only the supplying of maid services for example constitutes such service whereas the furnishing of heat and light the cleaning of public entrances exits stairways and lobbies and the collection of trash are not considered as services rendered to the occupant payments for the use or occupancy of entire private residences or living quarters in duplex or multiple housing units or offices in any office building are generally treated as rents_from_real_property many of the services described above are usual or customary services that are rendered in connection with the operation or maintenance of the properties and are not rendered primarily for the convenience of tenants other services that may constitute personal services to a tenant will be provided through independent contractors from whom taxpayer will not receive or derive any income or through a trs accordingly the services furnished by taxpayer in connection with the leasing of the properties will not cause any amounts received from tenants of the properties to be treated as other than rents_from_real_property under sec_856 conclusion based on the information submitted and representations made we conclude that the properties including their structural_components as represented constitute real_estate_assets for purposes of sec_856 and sec_856 accordingly we conclude that income derived from leasing the properties qualifies as rents_from_real_property under sec_856 also the customary activities that the taxpayer undertakes directly with respect to the taxpayer’s properties will not cause the gross_income received or accrued by the plr-105390-10 taxpayer with respect to those properties to be treated as something other than rents_from_real_property for purposes of sec_856 and the activities undertaken by an independent_contractor and or the trss described above will not cause any amounts received by the taxpayer to be treated as other than rents_from_real_property under sec_856 further the customary activities undertaken by the taxpayer through the llcs will not cause any amounts received by the taxpayer to be treated as other than rents_from_real_property under sec_856 no opinion is expressed or implied as to the federal tax consequences of this transaction under any provision not specifically addressed herein furthermore no opinion is expressed concerning whether taxpayer otherwise qualifies as a reit under subchapter_m part ii of chapter of the code this ruling is directed only to the taxpayer requesting it sec_6110 of the code provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office copies of this letter are being sent to your authorized representatives sincerely by _david b silber__________ david b silber chief branch office of associate chief_counsel financial institutions products