internal_revenue_service department of the treasury number release date index number washington dc person to contact telephone number refer reply to cc psi b07-plr-121622-00 date date legend p q w x y z agreement date date date date date date dollar_figurea dollar_figureb dollar_figurec dollar_figured dollar_figuree plr-121622-00 dollar_figuref site x site y dear this letter responds to a letter dated date and subsequent correspondence submitted on behalf of p by its authorized representative requesting rulings under sec_29 and sec_702 of the internal_revenue_code facts the facts as represented by p and p’s authorized representative are as follows p is a limited_liability_company taxable as a partnership x a limited_liability_company owns a member interest in p y a limited_liability_company owns a member interest in p w is the sole member of x and z is the sole member of y because x and y are treated as disregarded entities for federal_income_tax purposes w is treated as owning x s member interest in p and z is treated as owning y s member interest in p the members of p have made and are expected to continue to make periodic cash capital contributions to p to pay its operating costs in accordance with their respective membership interests effective on date pursuant to the terms of the agreement y acquired its membership interest directly from p effective on date pursuant to the terms of the agreement x acquired its membership interest from the prior owners of p for a dollar_figurea cash payment and a contingent payment note on date p had certain fixed liabilities and dollar_figuree of these liabilities were allocated to x to be paid_by p through capital contributions by x on date x made a cash capital_contribution of dollar_figuref to p which p used primarily to pay certain of its fixed liabilities in addition x agreed to make periodic cash capital contributions to fund p s payment of the balance of p s fixed liabilities that were allocated to x and y agreed to make periodic cash capital contributions to fund p s payment of the remainder of p s fixed liabilities effective as of date the agreement was modified by a second amendment and a third amendment to provide that the consideration payable by x for its membership interest would include a fixed payment note of dollar_figureb principal_amount in addition to dollar_figurea in cash and a revised contingent payment note p represents that based on the expected production level of the facilities on date the net present_value of the cash the fixed payment note and the fixed liabilities of p that were allocated to x to be repaid by p with capital contributions from x will exceed percent of the net present_value of the total consideration payable and allocated to x in connection with the acquisition of its p membership interest from the prior owners on date p received plr which rules on issues similar to those plr-121622-00 addressed by this letter p seeks confirmation of the prior rulings received in light of changes in the ownership of p and a relocation of its facilities the facilities were constructed pursuant to a construction_contract dated date that was partially assigned to p by q effective date the construction_contract provides for liquidated_damages of at least five percent of the cost of the facilities it also includes a description of the facilities to be constructed a completion date and a price the construction_contract is valid under state law p is the original owner of the facilities which were constructed at site x p represents that the facilities were placed_in_service within the meaning of sec_29 before date the facilities consist of two lines for the production of a solid synthetic_fuel from coal using the process described below the facilities can be moved from one site to another depending on the availability price and location of coal feedstock due to an inability to obtain sufficient coal feedstock at site x subsequent to date p relocated the facilities from that location to a new location at site y following this relocation the fair_market_value of the original property comprising a part of the facilities was more than percent of the facilities total value the cost of the new property plus the value of the original property p entered into a facilities operating_agreement with y for the operation and maintenance of the facilities under this agreement y provides workers and certain services and equipment to p for a fixed fee of dollar_figurec per ton of synthetic_fuel produced subject_to an annual inflation adjustment y is subject_to the direction and control of p which has the sole authority to set production levels and make other strategic decisions p pays for all operating costs other than the cost of workers and equipment provided by y and certain liability insurance in addition y provides a working_capital loan to p pursuant to an exclusive coal fines supply agreement p appoints y as its exclusive supplier of coal feedstock meeting certain minimum quality specifications y provides this coal feedstock to p for its delivered cost plus dollar_figured per ton if y is unable to provide sufficient coal feedstock to satisfy p s requirements p can purchase its feedstock from other suppliers p also entered into an exclusive agreement for marketing of product with y under this agreement y undertakes to market all of the synthetic_fuel produced by the facilities for a brokerage fee of dollar_figured per ton with an additional dollar_figured per ton payable for synthetic_fuel that needs to be transloaded onto barges if y determines that it is unable to market all of the synthetic_fuel produced by p then p can market the synthetic_fuel y only receives payment for synthetic_fuel it markets and sells p has represented that all sales of synthetic_fuel will be to unrelated persons as noted above the facilities consist of two lines for the production of a solid synthetic_fuel from coal for each production line the feedstock coal is thoroughly mixed plr-121622-00 with a heated chemical reagent in a pugmill after leaving the pugmill the mixture is carried by conveyor belt to a briquetter each briquetter is equipped with a short conveyor belt running under it that receives the resulting solid synthetic_fuel product and carries it to a common collection belt and then out of the facilities to a storage area in p s production process the combination of the chemically reactive agent the mixing process and the compression pressure in the roll briquetter process results in the formation of a solid synthetic_fuel product the synthetic_fuel produced is currently sold to steel producers power generators and other third party users the facilities utilize coal feedstock and chemical reagents that meet the requirements of revproc_2001_34 2001_22_irb_1293 in the past the facilities have used various feedstock sources chemical reagents and chemical reagent concentrations as described in p s letter_ruling request p has had recognized experts in coal and chemical analysis conduct tests on synthetic_fuel samples produced by p using each reagent identified in the request for rulings these tests are described in p’s letter_ruling request and subsequent correspondence from p s authorized representative based on this testing of the reagents the experts have concluded that there was a measurable significant change in the chemical composition of the resulting synthetic_fuel compared to the unreacted coal feedstocks and chemical reagent the amended and restated operating_agreement of p allocates receipts from the sale of synthetic_fuel among its members in accordance with their membership interests the rulings requested by p are as follows p by using the process and the facilities produces a solid synthetic_fuel from coal that constitutes a qualified_fuel within the meaning of sec_29 the contract for construction of the facilities constitutes a binding written contract in effect before date within the meaning of sec_29 the facilities are placed_in_service for purposes of sec_29 on the date that the facilities are first placed in a condition or state of readiness and availability to produce a solid synthetic_fuel from coal as provided in d ii and a -11 e i production of qualified_fuel from the facilities will be attributable solely to p within the meaning of sec_29 and p will be entitled to the sec_29 credit for the production of qualified_fuel from the facilities that is sold to unrelated persons provided the facilities were placed_in_service prior to date within the meaning of sec_29 relocation of the facilities to a different location after date or replacement of parts of the facilities after that date will not result in a new placed_in_service_date for the facilities for purposes of sec_29 if the fair_market_value of the original property is more than percent of the facilities total fair_market_value immediately following the relocation or replacement plr-121622-00 the credit allowed under sec_29 may be passed through to and allocated among all the members of p under the principles of a in accordance with each member s interest in p as of the time the credit arises for purposes of the sec_29 credit a member s interest in p is determined based on a valid allocation of the receipts from the sale of the sec_29 credit qualified_fuel provided the facilities were placed_in_service prior to date within the meaning of sec_29 the facilities will continue to be treated as placed_in_service before date if sold to a new owner after such date a termination of p under b b will not preclude the reconstituted partnership from claiming the sec_29 credit for the production and sale of synthetic_fuel to unrelated persons ruling_request sec_29 allows a credit for qualified_fuels sold by the taxpayer to an unrelated_person during the taxable_year the production of which is attributable to the taxpayer the credit for the taxable_year is an amount equal to dollar_figure adjusted for inflation multiplied by the barrel-of-oil_equivalent of qualified_fuels sold sec_29 defines qualified_fuels to include liquid gaseous or solid synthetic fuels produced from coal including lignite including such fuels when used as feedstocks in revrul_86_100 1986_2_cb_3 the internal_revenue_service ruled that the definition of the term synthetic_fuel under l and its regulations is relevant to the interpretation of the term under sec_29 former l a iii provided a credit for the cost of equipment used for converting an alternate_substance into a synthetic liquid gaseous or solid fuel revrul_86_100 notes that both sec_29 and former l contain almost identical language and have the same overall congressional intent namely to encourage energy conservation and aid development of domestic energy production under c ii of the income_tax regulations a synthetic_fuel differs significantly in chemical composition as opposed to physical composition from the alternate_substance used to produce it coal is an alternate_substance under c i of the income_tax regulations in revproc_2001_30 2001_19_irb_1163 the service announced that it will resume issuance of rulings under sec_29 for processes that do not go beyond the processes approved in the rulings issued prior to sec_3 of revproc_2001_34 provides that the service will issue rulings that a solid fuel other than coke produced from coal is a qualified_fuel under sec_29 if the conditions set forth below are satisfied and evidence is presented that all or substantially_all of the coal used as feedstock undergoes a significant chemical change the conditions are that plr-121622-00 the feedstock coal consists of coal fines or crushed coal comprised of particles the majority of which by weight are no larger than inch the feedstock coal is thoroughly mixed in a mixer a with styrene or other monomers b with quinoline c9h7n or other organic resin and left to cure for several days c with ultra heavy hydrocarbons or d with an aluminum and or magnesium silicate binder following heating to a minimum temperature of degrees fahrenheit and the treated feedstock is subjected to elevated temperature and pressure that results in briquettes pellets or an extruded fuel product or the taxpayer represents that the omission of this procedure will not significantly increase the production of the facility over the remainder of the period during which the sec_29 credit is allowable based on the representations of p and p’s authorized representative including the test results submitted by p we conclude that the conditions of revproc_2001_34 are met and that the process and reagents used in the facilities as described in p’s ruling_request and subsequent correspondence produce a significant chemical change to the coal transforming the coal feedstock into a solid synthetic_fuel from coal therefore we further conclude that p by using the process and reagents described in the request for rulings and the facilities produces a solid synthetic_fuel from coal that constitutes a qualified_fuel within the meaning of sec_29 ruling_request sec_29 and f provide that sec_29 applies with respect to qualified_fuels which are produced in a facility placed_in_service after date and before date and which are sold before date sec_29 modifies sec_29 in the case of a facility producing qualified_fuels described in sec_29 which qualified_fuels include solid synthetic fuels produced from coal or lignite sec_29 provides that for purposes of sec_29 a facility shall be treated as placed_in_service before date if the facility is placed_in_service before date pursuant to a binding written contract in effect before date sec_29 provides that if the facility is originally placed_in_service after date sec_29 shall be applied by substituting date for date a contract is binding only if it is enforceable under local law against a taxpayer and does not limit damages to a specified amount eg by use of a liquidated_damages provision a contract provision limiting damages to an amount equal to at least five percent of the total_contract_price for example should be treated as not limiting damages the construction_contract executed prior to date provides for liquidated_damages of at least five percent of the total_contract_price and includes such essential features as a description of the facility to be constructed a completion date and a price therefore we conclude that the construction_contract is a binding written contract in effect before date within the meaning of sec_29 plr-121622-00 ruling requests and sec_29 and f of the code provide that sec_29 applies with respect to qualified_fuels which are produced in a facility placed_in_service after date and before date and which are sold before date sec_29 of the code modifies sec_29 in the case of a facility producing qualified_fuels described in sec_29 which qualified_fuels include solid synthetic fuels produced from coal or lignite sec_29 provides that for purposes of sec_29 such a facility is to be treated as placed_in_service before date if the facility is placed_in_service before date pursuant to a binding written contract in effect before date sec_29 provides that if the facility is originally placed_in_service after date sec_29 is to be applied by substituting for the date therein date to qualify for the sec_29 credit the facility must be placed_in_service before date pursuant to a binding written contract in effect before date while sec_29 does not define placed_in_service the term has been defined for purposes of the deduction for depreciation and the investment_tax_credit property is placed_in_service in the taxable_year the property is placed in a condition or state of readiness and availability for a specifically assigned function sec_1_167_a_-11 and sec_1_46-3 of the income_tax regulations placed_in_service has consistently been construed as having the same meaning for purposes of the deduction for depreciation and the investment_tax_credit see revrul_76_256 1976_2_cb_46 when property is placed_in_service is a factual determination and we express no opinion on when the facilities were placed_in_service revrul_94_31 1994_1_cb_16 concern sec_45 which provides a credit for electricity produced from certain renewable resources including wind the credit is based on the amount of electricity produced_by_the_taxpayer at a qualified_facility during the 10-year period beginning on the date the facility was originally placed_in_service and sold by the taxpayer to an unrelated_person during the taxable_year revrul_94_31 holds that for purposes of a facility qualifies as originally placed_in_service even though it contains some used_property provided the fair_market_value of the used_property is not more than percent of the facility’s total value the cost of the new property plus the value of the used_property revrul_94_31 concerns a factual context similar to the present situation consistent with the holding in revrul_94_31 provided the facilities were placed_in_service prior to date within the meaning of sec_29 relocation of the facilities after date or replacement of parts of the facilities after that date will not result in a new placed_in_service_date for the facilities or otherwise prevent the facilities from continuing to be treated as originally placed_in_service prior to date if the fair_market_value of the original property is more than percent of the facilities’ total fair_market_value immediately following the relocation or replacement plr-121622-00 ruling_request sec_29 allows a credit for qualified_fuels sold by the taxpayer to an unrelated_person during the taxable_year the production of which is attributable to the taxpayer under sec_7701 taxpayer means any person subject_to any internal revenue tax furthermore a provides that when used in title_26 where not otherwise distinctly expressed or manifestly incompatible with the intent thereof person will be construed to mean and include an individual trust estate partnership_association company or corporation p is the taxpayer for purposes of sec_29 of the code because a limited_liability_company such as p may be treated for tax purposes as either a partnership or a corporation either of which is a taxpayer under a p will own the facilities and through an agent p will operate and maintain the facilities and sell the resulting qualified_fuel therefore all production of qualified_fuel from the facilities will be attributable solely to p within the meaning of sec_29 and p will be entitled to the sec_29 credit for the production of qualified_fuel from the facilities that is sold to unrelated persons ruling_request sec_29 allows a credit for qualified_fuels solid by the taxpayer to an unrelated_person during the taxable_year the production of which is attributable to the taxpayer sec_7701 provides that taxpayer means any person subject_to any internal revenue tax generally under a the term person includes an individual a_trust estate partnership_association company or corporation sec_702 provides that each partner determines the partner’s income_tax by taking into account separately the partner’s distributive_share of the partnership’s other items of income gain loss deduction or credit to the extent provided by regulations prescribed by the secretary sec_1_702-1 provides that the distributive_share is determined as provided in and sec_704 provides that a partner’s distributive_share of income gain loss deduction or credit is except as otherwise provided in chapter of subtitle a of title_26 determined by the partnership_agreement sec_704 provides that a partner’s distributive_share of income gain loss deduction or credit or item thereof is determined in accordance with the partner’s interest in the partnership determined by taking into account all facts and circumstances if the partnership_agreement does not provide as to the partner’s distributive_share of income gain loss deduction or credit or item thereof or the allocation to a partner under the agreement of income gain loss deduction or credit or item thereof does not have substantial economic_effect sec_1_704-1 b ii provides that allocations of tax_credits and tax_credit recapture except for property are not reflected by adjustments to the partners’ capital plr-121622-00 accounts thus these allocations cannot have economic_effect under b ii b and the tax_credits and tax_credit recapture must be allocated in accordance with the partners’ interests in the partnership as of the time the tax_credit or credit recapture arises if a partnership expenditure whether or not deductible that gives rise to a tax_credit in a partnership_tax_year also gives rise to valid allocations of partnership loss or deduction or other downward capital_account adjustments for the year then the partners’ interests in the partnership with respect to such credit or the cost giving rise to it are in the same proportion as the partners’ respective distributive shares of the loss or deduction and adjustments see b example identical principles apply in determining the partners’ interests in the partnership with respect to tax_credits that arise from receipts of the partnership whether or not taxable based on the information submitted and the representations made we conclude that assuming the solid synthetic_fuel produced and sold qualifies for the sec_29 credit the credit will be allowed to p and the credit may be passed through to and allocated among the members of p under the principles of a in accordance with each member’s interest in p as of the time the credit arises for purposes of the sec_29 credit a member’s interest in p is determined based on a valid allocation of the receipts from the sale of the sec_29 credit qualified_fuel ruling_request the sec_29 credit has always been a time sensitive credit in that eligibility for the credit is determined when facilities or wells producing qualified_fuels are placed_in_service and when the qualifying fuels are produced and sold to unrelated persons for example the sec_44d credit as originally enacted in the crude_oil windfall profit tax act of was generally available for the production and sale of alternative fuels after date and before date on property that first began production after date congress has extended the sec_29 credit four times the placed-in-service deadline and the period for claiming the sec_29 credit were extended in the technical_and_miscellaneous_revenue_act_of_1988 for placed_in_service omnibus budget reconciliation act of for placed_in_service and for the end of the credit_period energy policy act of for placed_in_service and for the end of the credit_period and small_business job protection act of date for placed_in_service if sec_29 were read as requiring facilities producing qualified_fuels to be placed_in_service by the taxpayer facilities placed_in_service before that are sold or transferred to a new taxpayer after would entitle the purchaser transferee to claim the sec_29 credit it is clear from the legislative_history of sec_44d that congress intended the credit to apply to facilities placed_in_service after and that the placed-in- service deadline in sec_29 must be read as applying to when the facility is first placed_in_service within the applicable dates the placed-in-service deadlines contained in sec_29 and sec_29 focus on the facility and not the owner of the facility the plr-121622-00 legislative_history of sec_44d clearly shows that congress wanted to encourage the production of new alternative fuels from facilities first placed_in_service after and not provide a tax incentive for production capacity in service before sec_29 demonstrates that congress knows how to preclude transferees of facilities from claiming the sec_29 credit that provision provides that the extension of the period for placing facilities in service after does not apply to any facility that produces coke or coke gas unless the original_use of the facility commences with the taxpayer accordingly the determination of whether a facility has satisfied the placed-in- service deadline under either sec_29 or sec_29 is made by reference to when the facility is first placed_in_service not when the facility is transferred or sold to a different taxpayer therefore provided the facilities were placed_in_service prior to date within the meaning of sec_29 the sale of the facilities after date will not result in a new placed_in_service_date for the facilities for purposes of sec_29 for the new owner ruling_request sec_708 provides that a partnership shall be considered as terminated if within a twelve-month period there is a sale_or_exchange of percent or more of the total interest in partnership capital and profits sec_1_708-1 provides that if a partnership is terminated by a sale_or_exchange of an interest the following is deemed to occur the partnership contributes all of its assets and liabilities to a new partnership in exchange for an interest in the new partnership and immediately thereafter the terminated partnership distributes interests in the new partnership to the purchasing partner and the other remaining partners in proportion to their respective interests in the terminated partnership in liquidation of the terminated partnership either for the continuation of the business by the new partnership or for its dissolution and winding up sec_1_708-1 applies to terminations of partnerships under b b occurring on or after date as discussed above the placed-in-service deadline in sec_29 and sec_29 must be read as applying to when the facility is first placed_in_service within the applicable dates the placed-in-service deadlines contained in sec_29 and sec_29 focus on the facility and not the taxpayer owning the facility accordingly the determination of whether a facility has satisfied the placed-in- service deadline under sec_29 and sec_29 is made by reference to when the facility is first placed_in_service not when the facility is placed_in_service by a transferee taxpayer therefore we conclude that a termination of p under b b will not preclude the reconstituted partnership from claiming the sec_29 credit for the production and sale of synthetic_fuel to unrelated persons plr-121622-00 conclusions accordingly based on the representations of p and ps authorized representative we conclude as follows p by using the process and reagents described in the request for rulings and the facilities produces a solid synthetic_fuel from coal that constitutes a qualified_fuel within the meaning of sec_29 the contract for construction of the facilities constitutes a binding written contract in effect before date within the meaning of sec_29 the facilities are placed_in_service for purposes of sec_29 on the date that the facilities are first placed in a condition or state of readiness and availability to produce a solid synthetic_fuel from coal as provided in d ii and a - e i we express no opinion on when the facilities were placed_in_service production of qualified_fuel from the facilities will be attributable solely to p within the meaning of sec_29 and p will be entitled to the sec_29 credit for the production of qualified_fuel from the facilities that is sold to unrelated persons provided the facilities were placed_in_service prior to date within the meaning of sec_29 relocation of the facilities to a different location after date or replacement of parts of the facilities after that date will not result in a new placed_in_service_date for the facilities for purposes of sec_29 if the fair_market_value of the original property is more than percent of the facilities total fair_market_value immediately following the relocation or replacement the credit allowed under sec_29 may be passed through to and allocated among all the members of p under the principles of a in accordance with each member s interest in p as of the time the credit arises for purposes of the sec_29 credit a member s interest in p is determined based on a valid allocation of the receipts from the sale of the sec_29 credit qualified_fuel provided the facilities were placed_in_service prior to date within the meaning of sec_29 the facilities will continue to be treated as placed_in_service before date if sold to a new owner after such date a termination of p under b b will not preclude the reconstituted partnership from claiming the sec_29 credit for the production and sale of synthetic_fuel to unrelated persons except as specifically ruled upon above we express no opinion concerning the federal_income_tax consequences of the transaction described above specifically we express no opinion on when the facilities were placed_in_service for purposes of sec_29 this ruling is directed only to the taxpayer who requested it sec_6110 provides that it may not be used or cited as precedent temporary or final regulations plr-121622-00 pertaining to one or more of the issues addressed in this ruling have not yet been adopted therefore this ruling may be modified or revoked by the adoption of temporary or final regulations to the extent the regulations are inconsistent with any conclusion in this ruling see dollar_figure of revproc_2001_1 2001_1_irb_1 however when the criteria in dollar_figure of revproc_2001_1 are satisfied a ruling is not revoked or modified retroactively except in rare or unusual circumstances in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to p’s authorized representative 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 signed joseph h makurath senior technician reviewer branch office of associate chief_counsel passthroughs and special industries


internal_revenue_service number release date index number ---------------------------- ----------------------------------- ---------------------------------- -------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ------------------- id no ------------------ telephone number ---------------------- refer reply to cc psi b01 plr-121028-18 date date legend x ------------------------------------------- --------------------------------- date ------------------- date ---------------------- date -------------------------- state -------------- dear -------------- this responds to a letter signed date submitted on behalf of x by x’s authorized representative requesting relief under sec_1362 of the internal_revenue_code the code facts according to the information submitted and representations within x was formed on date under the laws of state effective date x elected to be taxed as an s_corporation on date x amended its operating_agreement the amendment provided for allocations that are not pro_rata creating a second class of stock and thus terminated its s_corporation_election effective date x represents that it has taken corrective plr-121028-18 action and amended the operating_agreement to allow for pro_rata allocations thus correcting the second class of stock issue x represents that neither x nor its shareholders intended to terminate x’s subchapter_s_election and that x and its shareholders have filed consistently with being an s_corporation in addition x represents that other than the termination due to a second class of stock x has qualified as a small_business_corporation at all times since its election on date lastly x and its shareholders agree to make any adjustments required as a condition of obtaining relief under the inadvertent_termination_rule as provided under sec_1362 of the code as may be required by the secretary law and analysis sec_1361 provides that the term s_corporation means with respect to any taxable_year a small_business_corporation for which an election under sec_1362 is in effect for the year sec_1361 defines a small_business_corporation as a domestic_corporation which is not an ineligible_corporation which does not a have more than shareholders b have as a shareholder a person other than an estate and a_trust described in subsection c or an organization described in subsection c who is not an individual c have a nonresident_alien as a shareholder and d have more than class of stock sec_1362 provides that an election under sec_1362 shall be terminated whenever at any time on or after the 1st day of the taxable_year for which the corporation is an s_corporation such corporation ceases to be a small_business_corporation sec_1362 further provides that the termination shall be effective on and after the date of cessation sec_1_1361-1 provides that a corporation is generally treated as having only one class of stock if all outstanding shares of stock of the corporation confer identical rights to distribution and liquidation proceeds section sec_1_1361-1 provides in part that the determination of whether all outstanding shares of stock confer identical rights to distribution and liquidation proceeds is made based on the corporate charter articles of incorporation bylaws applicable state laws and binding agreements relating to distribution and liquidation proceeds collectively governing provisions although a corporation is not treated as having more than one class of stock so long as the governing provisions provide for identical distribution and liquidation rights any distributions including actual constructive or deemed distributions that differ in timing and amount are to be given appropriate tax effect in accordance with the facts and circumstances sec_1362 provides in part that if an election under sec_1362 by any corporation was terminated under sec_1362 the secretary determines that the plr-121028-18 circumstances resulting in the termination were inadvertent no later than a reasonable period of time after the discovery of the circumstances resulting in the termination steps were taken so that the corporation for which the termination occurred is a small_business_corporation and the corporation for which the termination occurred and each person who was a shareholder in such corporation at any time during the period of inadvertent termination of the s election agrees to makes such adjustments consistent with the treatment of the corporation as an s_corporation as may be required by the secretary with respect to such period then notwithstanding the circumstances resulting in the termination the corporation is treated as an s_corporation during the period specified by the secretary conclusion based on the facts submitted and the representations made we conclude that x’s s_corporation_election terminated date and that the termination was inadvertent within the meaning of sec_1362 therefore x will be treated as an s_corporation effective date and thereafter provided x’s s_corporation_election is not otherwise terminated under sec_1362 except as specifically ruled upon above we express or imply no opinion concerning the federal tax consequences of the facts of this case under any other provision of the code specifically we express or imply no opinion regarding x’s eligibility to be an s_corporation this ruling is directed only to the taxpayer who requested it according to sec_6110 this ruling may not be used or cited as precedent pursuant to the power_of_attorney on file with this office we are sending a copy of this letter to your authorized representative sincerely laura c fields laura c fields senior technician reviewer branch office of the associate chief_counsel passthroughs special industries enclosures copy of this letter copy of this letter for sec_6110 purposes


department of the treasury internal_revenue_service washington d c tax_exempt_and_government_entities_division may uniform issue list xxxxxxxxxx xxxxxxxxxx xxxxxxxxxx legend taxpayer a ira x iray amount amountc amount d xxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxx financial_institution e xxxxxxxxxxxxxxxx bank f entity m date date date xxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxx xxxxxxxxxxxxxxx page dear xxxxxxxxxxxx this is in response to your request dated date in which you request a waiver of the 60-day rollover requirement contained in sec_408 of the internal_revenue_code the code the following facts and representations have been submitted under penalty of perjury in support of the ruling requested taxpayer a represents that he received a distribution from ira x totaling amount b taxpayer a asserts that his failure to accomplish a rollover within the 60-day period prescribed by sec_408 was due to an error made by a representative of financial_institution e taxpayer a further represents that amount b has not been used for any other purpose on date taxpayer a received a distribution of amount b from ira x taxpayer a intended to rollover amount b into an ira y a self-directed individual_retirement_account held by financial_institution e prior to receiving amount b from ira x taxpayer a had established entity m a limited_liability_company and also established a checking account for entity m with bank f financial_institution e is the sole member of entity m a representative of financial_institution e instructed taxpayer a to make rollover deposits into the checking account established for entity m in accordance with such instructions on date taxpayer a deposited amount c into the checking account established for entity m on date taxpayer a additionally deposited amount d into that checking account the total of amounts c and d equal amount b in date taxpayer a contacted the representative at financial_institution e who had instructed him to make the intended rollover_contributions into the entity m checking account and was then told by such representative that the rollover_contributions should have been made to ira y before being deposited into the entity m checking account that was the first time taxpayer a had been given such information it was not until taxpayer a received a form 1099-r showing the distribution of amount b as being taxable that he realized the intended rollover from ira x to ira y was done incorrectly based on the facts and representations you request a ruling that the internal_revenue_service waive the 60-day rollover requirement contained in sec_408 of the code with respect to the distribution of amount b xxxxxxxxxxxxxxx page sec_408 of the code provides that except as otherwise provided in sec_408 any amount_paid or distributed out of an ira shall be included in gross_income by the payee or distributee as the case may be in the manner provided under sec_72 of the code sec_408 of the code defines and provides the rules applicable to ira_rollovers sec_408 of the code provides that sec_408 of the code does not apply to any amount_paid or distributed out of an ira to the individual for whose benefit the ira is maintained if i the entire amount received including money and any other_property is paid into an ira for the benefit of such individual not later than the 60th day after the day on which the individual receives the payment or distribution or ii the entire amount received including money and any other_property is paid into an eligible_retirement_plan other than an ira for the benefit of such individual not later than the 60th day after the date on which the payment or distribution is received except that the maximum amount which may be paid into such plan may not exceed the portion of the amount received which is includible in gross_income determined without regard to sec_408 sec_408 of the code provides that sec_408 does not apply to any amount described in sec_408 received by an individual from an ira if at any time during the 1-year period ending on the day of such receipt such individual received any other amount described in sec_408 from an ira which was not includible in gross_income because of the application of sec_408 sec_408 of the code provides a similar 60-day rollover period for partial rollovers sec_408 of the code provides that the rollover provisions of sec_408 do not apply to any amount required to be distributed under sec_408 sec_408 of the code provides that the secretary may waive the 60-day requirement under sec_408 and sec_408 of the code where the failure to waive such requirement would be against equity or good conscience including casualty disaster or other events beyond the reasonable control of the individual subject_to such requirement only distributions that occurred after date are eligible for the waiver under sec_408 of the code xxxxxxxxxxxxxxx page4 revproc_2003_16 i r date provides that in determining whether to grant a waiver of the 60-day rollover requirement pursuant to sec_408 the service will consider all relevant facts and circumstances including errors committed by a financial_institution inability to complete a rollover due to death disability hospitalization incarceration restrictions imposed by a foreign_country or postal error the use of the amount distributed for example in the case of payment by check whether the check was cashed and the time elapsed since the distribution occurred the information presented and documentation submitted by taxpayer a is consistent with his assertion that his failure to accomplish a timely rollover was caused by an error committed by a representative of financial_institution e therefore pursuant to sec_408 of the code the service hereby waives the 60-day rollover requirement with respect to the distribution of amount from ira x taxpayer a is granted a period of days from the issuance of this ruling letter to contribute amount into a rollover ira provided all other requirements of sec_408 of the code except the 60-day requirement are met with respect to such contribution amount will be considered a rollover_contribution within the meaning of sec_408 of the code no opinion is expressed as to the tax treatment of the transaction described herein under the provisions of any other section of either the code or regulations which may be applicable thereto this ruling does not authorize the rollover of amounts that are required to be distributed by sec_408 of the code this letter is directed only to the taxpayer who requested it sec_611 o k of the code provides that it may not be used or cited as precedent in accordance with a power_of_attorney on file in this office a copy of this letter has been sent to your authorized representative xxxxxxxxxxxxxxx page if you wish to inquire about this ruling please contact xxxxxxxxxx id xxxxxxxx at xxx xxx-xxxx please address all correspondence to se t ep ra t sincerely yours __ -- ' l- vta d lt_b _ - __ laura b warshawsky manager employee_plans technical group enclosures deleted copy of ruling letter notice of intention to disclose cc xxxxxxxxxxxxxx xxxxxxxxxxxxxx xxxxxxxxxxxxxx