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 b02 plr-137279-13 date date legend distributing controlled sub sub country a ------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------ -------------------- ------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------ ----------------------------------------------- ------------------------------------------------------------------------------------------ ----------------------------------------- ------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------ ------- ------------- country b --------- professional services agreement --------------------------------------------- business a -------------------------------------- business b --------------------------------------------------------------------------- segment ---------------------------------------------------- plr-137279-13 segment ----------------------------------------------------------- -------------------------- ---------------------- ------------------- ---------------------------- ---------------------- ------------------------ --------------------------- ------------------ ------------ ----- ----- ------ ------ -------- ---------------- -------- --------------- ---- ---- date date date date date date date a b c d e f g h i j k l dear ----------- plr-137279-13 this letter responds to your representative’s date letter requesting rulings on certain federal_income_tax consequences of the proposed transaction the material information submitted in that letter and subsequent correspondence is summarized below the rulings contained in this letter are based on facts and representations submitted by the taxpayer and accompanied by a penalties of perjury statement executed by an appropriate party this office has not verified any of the materials submitted in support of the request for rulings verification of the facts representations and other information may be required as part of the audit process in particular this office has not reviewed any information pertaining to and has made no determination regarding i whether the distribution described below satisfies the business_purpose requirement of sec_1_355-2 of the income_tax regulations ii whether the distribution is used principally as a device for the distribution of the earnings_and_profits of the distributing_corporation distributing or the controlled_corporation controlled or both see sec_355 of the internal_revenue_code code and sec_1_355-2 and iii whether the distribution is part of a plan or a series of related transactions pursuant to which one or more persons will acquire directly or indirectly stock representing a 50-percent_or_greater_interest in distributing or controlled see sec_355 and sec_1_355-7 facts distributing is a publicly traded corporation and the common parent of an affiliated_group_of_corporations that file a consolidated federal_income_tax return distributing also has foreign subsidiaries distributing has one class of common_stock outstanding as of date distributing has a shares of common_stock issued and outstanding distributing has no preferred_stock outstanding distributing and the members of its separate_affiliated_group sag as defined in sec_355 the distributing sag are engaged in business a business a is composed of segment and segment and distributing believes each segment independently qualifies as an active trade_or_business the distributing sag has also been engaged in business b financial information has been submitted indicating that each of business a including each of segment and segment and business b has had gross_receipts and operating_expenses representing the active_conduct_of_a_trade_or_business for each of the past five years under distributing’s stock benefit plan distributing has issued compensatory stock_options restricted_stock units rsus and performance-based stock awards to employees and directors of distributing and its subsidiaries plr-137279-13 controlled is a domestic_corporation and was a wholly owned subsidiary of distributing prior to controlled’s ipo as described below controlled wholly owns sub a corporation organized under the laws of country a and sub a corporation organized under the laws of country b both sub and sub are members of controlled’s sag the controlled sag following the contribution as described below the controlled sag has been engaged in business b effective date distributing contributed its business b assets to controlled the contribution in connection with the contribution certain distributing subsidiaries sold assets relating to the conduct of business b to controlled_subsidiaries the controlled_subsidiaries paid dollar_figureb in total to distributing subsidiaries in the form of promissory notes under controlled’s stock benefit plan controlled’s board_of directors granted stock_options the controlled stock_options to employees and directors of controlled and distributing the exercisability of controlled stock_options is subject_to the terms of applicable lock-up agreements pursuant to these agreements certain holders of controlled stock_options cannot exercise their options for a period ending the earlier of c days after the ipo or the distribution as described below and certain holders who acquire controlled common_stock through the exercise of an option cannot except to a limited extent in the case of a broker-assisted cashless exercise dispose_of their shares for a period ending d days after the ipo as described below on date controlled undertook a stock split and intends to report the transaction under sec_368 on date controlled issued shares of its common_stock in an initial_public_offering the ipo representing less than percent of the outstanding shares of controlled following the ipo controlled was owned e percent by distributing and f percent by the public prior to date certain controlled employees exercised a limited number of employee stock_options after the exercise of these options distributing owned approximately g percent of controlled common_stock as of date controlled has h shares of common_stock outstanding at the time of the contribution distributing and controlled entered into a separation agreement the separation agreement pursuant to the separation agreement distributing has an obligation to purchase from controlled and controlled has an obligation to sell to distributing such number of shares of controlled stock as necessary to prevent distributing’s ownership percentage of controlled stock from falling below i percent after the ipo and before the distribution as described below distributing will pay a price that is representative of fair_market_value plr-137279-13 presently a majority of controlled’s board_of directors are persons that are not directors officers employees or principal shareholders of distributing however to accommodate controlled’s business needs two of distributing’s directors also serve on controlled’s board controlled has a balance due to distributing under an intercompany payable attributable to cash advances made by distributing to controlled and obligations between the parties arising in connection with the continuing arrangements as described below the intercompany debt as of date the balance of the intercompany debt was approximately dollar_figurej proposed transaction for what are proposed as valid business reasons distributing proposes the following transaction the proposed transaction within k months following the ipo of controlled distributing will distribute all the controlled stock it owns pro_rata to the distributing shareholders the distribution except for controlled shares that may be retained by distributing as described below no fractional shares of controlled stock will be distributed in the distribution instead the distribution agent will aggregate all fractional shares into whole shares and sell the whole shares in the open market at prevailing market prices the distribution agent will then distribute the aggregate cash proceeds of the sales net of brokerage fees and other costs pro_rata to each distributing shareholder who would otherwise have been entitled to receive a fractional share of controlled in the distribution in connection with the distribution distributing will make a cash distribution to holders of distributing rsus payable either at the time of the distribution or at the time of settlement of the holders’ rsus the amount of cash per rsu is expected to approximate the trading price on a specified date or during a specified period on or around the time of the distribution of the amount of shares of controlled stock that would have been distributed to the distributing rsu holders if they had been shareholders of record with respect to that rsu on the date of the distribution distributing expects that there would only be a small number if any of shares of controlled stock to be retained following the distribution the retained shares the retained shares will have been acquired by distributing pursuant to the separation agreement stock so acquired will be subject_to the restrictions of sec rule however because the controlled stock_options are subject_to lock-up agreements it is not expected that distributing will be required to purchase controlled stock under the separation agreement nevertheless if distributing owns restricted controlled stock distributing will retain the stock following the distribution immediately upon expiration plr-137279-13 of the transfer restrictions distributing will then distribute the retained shares to its shareholders of record as of the date of the distribution the purpose of the retention is to avoid the inconvenience to distributing shareholders of owning restricted shares in connection with the contribution and the proposed transaction distributing and controlled have entered into certain agreements and arrangements including a shared services agreement the shared services agreement a professional services agreement the professional services agreement a tax_sharing_agreement the tax_sharing_agreement an employee_benefits agreement and an intellectual_property agreement collectively and with the separation agreement the continuing arrangements the parties intend for the shared services agreement to last up to l months following the proposed transaction but it may be extended if necessitated by unforeseen circumstances distributing is considering potential further corporate restructuring following the proposed transaction but has not developed any specific plans or entered into any agreements distributing makes the following representations for the proposed transaction representations the contribution a b c d e no stock was deemed issued for services rendered to or for the benefit of controlled in connection with the contribution and no stock was deemed issued for indebtedness of controlled in the contribution that was not evidenced by a security or for interest on indebtedness of controlled which accrued on or after the beginning of the holding_period of distributing for the debt distributing was deemed to receive stock approximately equal to the fair_market_value of the property transferred to controlled in the contribution the value of the stock deemed to be received in exchange for accounts_receivable was equal to the net value of the accounts transferred ie the face_amount of the accounts_receivable previously included in income less the amount of the reserve for bad_debts none of the stock transferred in the contribution was sec_306 stock within the meaning of sec_306 distributing did not retain any rights in the property transferred to controlled in the contribution plr-137279-13 f g h i j k l m the patents and any patent applications transferred to controlled qualified as property within the meaning of sec_351 distributing transferred all substantial rights in such patents or patent applications within the meaning of sec_1235 all rights title and interests for each copyright in each medium of exploitation were transferred to controlled distributing did not retain any significant_power_right_or_continuing_interest within the meaning of sec_1253 in the franchises trademarks or trade names being transferred any technical know-how that distributing was deemed to transfer to controlled in exchange for stock is property within the meaning of revrul_64_56 1964_1_cb_133 and as such is afforded substantial legal protection against unauthorized disclosure and use under u s law any services to be performed in connection with the transfer of the technical know-how are merely ancillary and subsidiary to the property transfer within the meaning of revrul_64_56 or distributing will be compensated by a fee negotiated at arm's length in consideration other than stock_or_securities of controlled unless such stock_or_securities are identified for any other services to be performed on behalf of controlled such technical know- how is secret in that it is known only by distributing and its affiliates and those employees who require such technical know-how for use in the conduct of the activities to which it is related and adequate safeguards have been taken to guard the secret against unauthorized disclosure such technical know-how is original unique and novel except for indebtedness arising in the ordinary course of business there was no indebtedness between controlled and distributing at the time of the contribution and no indebtedness was created in favor of distributing as a result of the contribution taking into account i any issuance of additional shares of controlled stock ii any issuance of stock for services iii the exercise of any controlled stock_rights warrants or subscriptions iv the public offering of controlled stock and v the sale exchange transfer by gift or other_disposition of any stock of controlled deemed received in the exchange distributing was in control of controlled within the meaning of sec_368 after the contribution there was and is no plan or intention on the part of controlled to redeem or otherwise reacquire any stock deemed issued in the contribution controlled will remain in existence and retain and use the property transferred to it in a trade_or_business plr-137279-13 n o p q r s t u v w there was and is no plan or intention by controlled to dispose_of the property transferred other than in the normal course of business operations the liabilities of distributing assumed by controlled within the meaning of sec_357 were incurred in the ordinary course of business and are associated with the assets transferred the total fair_market_value of the assets transferred to controlled in the contribution exceeded the sum of i the amount of any liabilities assumed within the meaning of sec_357 by controlled in connection with the exchange ii the amount of any liabilities owed to controlled by distributing that were discharged or extinguished in connection with the exchange and iii the amount of any cash and the fair_market_value of any other_property other than stock permitted to be received under sec_351 without the recognition of gain received by distributing in connection with the exchange the fair_market_value of the assets of controlled exceeded the amount of its liabilities immediately_after_the_exchange the total adjusted_basis of the property transferred to controlled by distributing in the contribution equaled or exceeded the sum of the total liabilities assumed within the meaning of sec_357 by controlled the aggregate fair_market_value of the property transferred by distributing to controlled in the contribution equaled or exceeded distributing’s basis in such property any debt relating to any stock being transferred that is being assumed or to which such stock is subject was incurred to acquire such stock and was incurred when such stock was acquired and distributing transferred all of any such stock for which the acquisition_indebtedness being assumed or to which such stock is subject was incurred the contribution occurred under a plan agreed upon before the transaction in which the rights of the parties were defined all deemed exchanges occurred on approximately the same date no stock was issued pursuant to the meaningless gesture doctrine each of the parties to the contribution has paid or will pay its own expenses if any incurred in connection with the contribution the contribution was not the result of the solicitation by a promoter broker or investment house controlled is not an investment_company within the meaning of sec_351 and sec_1_351-1 plr-137279-13 x y z aa bb cc dd ee controlled is not a personal_service_corporation within the meaning of sec_269a distributing was not and will not be under the jurisdiction of a court in a title_11_or_similar_case within the meaning of sec_368 and the stock_or_securities received in the exchange was not used to satisfy the indebtedness of such debtor the distribution no part of the consideration to be distributed by distributing in the distribution will be received by a shareholder of distributing as a creditor employee or in any capacity other than that of a shareholder of distributing distributing will treat all members of the distributing sag as one corporation in determining whether it meets the requirements of sec_355 regarding the active_conduct_of_a_trade_or_business controlled will treat all members of the controlled sag as one corporation in determining whether it meets the requirements of sec_355 regarding the active_conduct_of_a_trade_or_business no intercorporate debt will exist between distributing or any member of the distributing sag and controlled or any member of the controlled sag at the time of or subsequent to the distribution other than debt arising in connection with the continuing arrangements and intercompany loans or other obligations that may arise in the ordinary course of business any indebtedness owed by controlled or any member of the controlled sag to distributing or any member of the distributing sag after the distribution will not constitute stock_or_securities the five years of financial information submitted by distributing with respect to business a including each of segment and segment and business b is representative of their present business operations and with regard to each of business a and business b there has been no substantial operational change since the date of the last financial statements submitted neither business a nor control of an entity conducting business a will have been acquired during the five-year period ending on the date of the distribution in a transaction in which gain_or_loss was recognized or treated as recognized in whole or in part except in connection with transfers between members of the affiliated_group as defined in sec_1504 determined without regard to sec_1504 of which distributing was the plr-137279-13 ff gg hh ii jj kk parent or in connection with the expansion of an existing five-year trade_or_business neither business b nor control of an entity conducting business b will have been acquired during the five-year period ending on the date of the distribution in a transaction in which gain_or_loss was recognized or treated as recognized in whole or in part except in connection with transfers between members of the affiliated_group as defined in sec_1504 determined without regard to sec_1504 of which distributing was the parent or in connection with the expansion of an existing five-year trade_or_business following the distribution distributing will continue the active_conduct of business a independently and with its separate employees except as provided pursuant to the continuing arrangements following the distribution controlled will continue the active_conduct of business b independently and with its separate employees except as provided pursuant to the continuing arrangements the distribution is carried out to achieve the following corporate business purposes i increase the stock value of distributing and controlled by clarifying valuation of the two businesses ii allow controlled to separately pursue business strategies that best suit its long-term interests iii create opportunities to more efficiently develop and finance ongoing operations and future acquisitions for both distributing and controlled iv give controlled independent access to the capital markets v give controlled greater flexibility to pursue strategic opportunities and increase its visibility in the marketplace and vi permit distributing and controlled to independently motivate their employees with equity compensation tied solely to the business with which each employee group is associated the distribution is motivated in whole or substantial part by one or more of these corporate business purposes the distribution is not being used principally as a device for the distribution of the earnings_and_profits of distributing or controlled or both for purposes of sec_355 immediately after the distribution no person determined after applying sec_355 will hold stock possessing percent or more of the total combined voting power of all classes of distributing stock entitled to vote or percent or more of the total value of shares of all classes of distributing stock that was acquired by purchase as defined in sec_355 and during the five-year period determined after applying sec_355 ending on the date of the distribution plr-137279-13 ll for purposes of sec_355 immediately after the distribution no person determined after applying sec_355 will hold stock possessing percent or more of the total combined voting power of all classes of controlled stock entitled to vote or percent or more of the total value of shares of all classes of controlled stock that was either i acquired by purchase as defined in sec_355 and during the five-year period determined after applying sec_355 ending on the date of the distribution or ii attributable to distributions on distributing stock_or_securities that was acquired by purchase as defined in sec_355 and during the five-year period determined after applying sec_355 ending on the date of the distribution mm no investment_tax_credit determined under sec_46 has been or will be claimed with respect to any of the property being transferred between distributing and controlled nn oo pp distributing will neither accumulate its receivables nor make extraordinary payment of its payables in anticipation of the distribution no indebtedness has been or will be cancelled in connection with the proposed transaction immediately before the distribution items of income gain loss deduction and credit will be taken into account as required by the applicable intercompany_transaction regulations see sec_1_1502-13 and sec_1 as in effect before the publication of t d 1995_2_cb_147 and as currently in effect sec_1_1502-13 as published in t d further any excess_loss_account of a member in the stock of another member that is required to be taken into account by sec_1_1502-19 will be included in income as appropriate at the time of the distribution neither distributing nor any member of distributing’s consolidated_group will have an excess_loss_account in the stock of controlled or in the stock of any subsidiary of controlled qq apart from payments for certain services that may be rendered under the shared services agreement or the professional services agreement payments made in connection with all continuing transactions between distributing or any of its subsidiaries and controlled or any of its subsidiaries will be for fair_market_value based on terms and conditions arrived at by the parties bargaining at arm’s length rr immediately after the transaction as defined in sec_355 either i no person will hold a 50-percent_or_greater_interest within the meaning of sec_355 in distributing or controlled ii if any person holds a percent or greater interest within the meaning of sec_355 in any plr-137279-13 disqualified_investment_corporation within the meaning of sec_355 such person will have held such interest in such corporation directly or through attribution immediately before the proposed transaction or iii neither distributing nor controlled will be a disqualified_investment_corporation within the meaning of sec_355 ss the distribution is not part of a plan or series of related transactions within the meaning of sec_1_355-7 pursuant to which one or more persons will acquire directly or indirectly stock representing a 50-percent_or_greater_interest within the meaning of sec_355 in distributing or controlled including any predecessor or successor of either corporation plr-137279-13 tt uu vv ww xx yy the receipt by distributing shareholders of cash in lieu of fractional shares of controlled stock if any will be solely for the purpose of avoiding the expense and inconvenience to controlled of issuing fractional shares and does not represent separately bargained-for consideration it is intended that the total cash that will be paid in the distribution to distributing shareholders in lieu of fractional shares of controlled stock will not exceed one percent of the total consideration that will be distributed in the distribution any fractional share interests of each distributing shareholder of record will be aggregated and it is intended that no distributing shareholder of record will receive cash in an amount equal to or greater than the value of one full share of controlled stock neither controlled nor distributing is aware of any overall plan within the meaning of sec_355 to acquire an ownership_interest in controlled through the purchase of bundled controlled shares sold in connection with the issuance of cash in lieu of fractional shares the distribution of controlled stock to the distributing shareholders in the distribution will be with respect to their ownership of distributing stock any money property or stock contributed by distributing to controlled in the contribution will be deemed exchanged solely for stock of controlled the retained shares if any are retained to avoid inconvenience to distributing shareholders for holding restricted shares the retained shares will be distributed to distributing shareholders of record as of the date of the distribution immediately after the expiration of the transfer restrictions the retention of the retained shares if any by distributing following the distribution will not be pursuant to a plan having as one of its principal purposes the avoidance of federal_income_tax within the meaning of sec_355 distributing will vote the retained shares in proportion to the votes cast by controlled's other shareholders and will grant controlled a proxy with respect to such retained shares requiring such manner of voting rulings based solely on the information submitted and the representations set forth above and provided that i the distribution of controlled stock to distributing’s shareholders in the distribution is with respect to their ownership of distributing stock ii any money property or stock contributed by distributing to controlled in the contribution is exchanged or deemed exchanged solely for stock_or_securities in controlled and iii any other transfer of stock money or property between distributing plr-137279-13 controlled or any distributing shareholder and any person related to distributing controlled or any distributing shareholder is respected as a separate transaction we rule as follows the contribution no gain_or_loss will be recognized by distributing on its transfer of business b assets to controlled in the contribution sec_351 and sec_357 no gain_or_loss will be recognized by controlled on its deemed issuance of stock in exchange for the business b assets in the contribution sec_1032 controlled’s basis in each asset received in the contribution will equal the basis of that asset in the hands of distributing immediately before the contribution sec_362 controlled’s holding_period in each asset received in the contribution will include the period during which that asset was held by distributing sec_1223 distributing’s basis in its controlled stock will be the same as the property contributed decreased by the amount of any liabilities assumed by controlled within the meaning of sec_357 sec_358 and d distributing’s holding_period in its controlled stock will include the holding_period of the property it exchanged provided that distributing held such property as a capital_asset on the date of the contribution sec_1223 the distribution distributing will recognize no gain_or_loss on the distribution sec_355 distributing’s shareholders will not recognize any gain_or_loss and will not otherwise include any amount in income upon their receipt of controlled stock in the distribution sec_355 immediately after the distribution distributing shareholders’ basis in the distributing stock and the controlled stock received in the distribution including any fractional share interest in controlled stock to which the distributing shareholder may be entitled will equal their basis in the distributing stock with respect to which the distribution is made allocated in proportion to the fair_market_value of the distributing and controlled stock immediately after the distribution in accordance with sec_1_358-2 sec_358 plr-137279-13 the holding_period of the controlled stock received by each distributing shareholder including any fractional share interest in controlled stock to which the shareholder may be entitled will include the holding_period of the distributing stock on which the distribution was made provided the distributing stock is held as a capital_asset on the date of distribution sec_1223 earnings_and_profits will be allocated between distributing and controlled in accordance with sec_312 and sec_1_312-10 and sec_1_1502-33 the receipt by a distributing shareholder of cash in lieu of fractional shares of controlled stock will be treated for federal_income_tax purposes as if the fractional shares had been distributed to such distributing shareholder in the distribution and then had been disposed by such shareholder for the amount of such cash in a sale_or_exchange pursuant to which gain_or_loss is recognized under sec_1001 the gain_or_loss if any determined using the basis allocated to the fractional shares in ruling and the holding_period attributed to the fractional shares in ruling will be treated as capital_gain or loss provided the stock is a capital_asset in the hands of the selling shareholder sec_1221 and sec_1222 following the distribution controlled will not be a successor of distributing for purposes of sec_1504 therefore controlled and its direct and indirect subsidiaries that are includible corporations under sec_1504 and satisfy the ownership requirements of sec_1504 will be members of an affiliated_group_of_corporations entitled to file a consolidated federal_income_tax return with controlled as the common parent any payments made between distributing and controlled under the separation agreement and the tax_sharing_agreement that i have arisen or will arise for a taxable_period ending on or before the distribution or for a taxable_period beginning before and ending after the distribution and ii will not have become fixed and ascertainable until after the distribution will be treated as if occurring immediately before the distribution see 344_us_6 revrul_83_73 c b caveats except as specifically provided herein we express no opinion concerning the tax consequences of any aspect of any matter or item discussed or referenced in this letter moreover no opinion is expressed about the tax treatment of the transaction or of any other matter under other provisions of the code or regulations or about the tax treatment of any conditions existing at the time of or effects resulting from the proposed transaction not specifically covered by the above rulings in particular no opinion is expressed regarding plr-137279-13 i ii whether the distribution satisfies the business_purpose requirement of sec_1_355-2 whether the distribution is used principally as a device for the distribution of the earnings_and_profits of distributing or controlled or both see sec_355 and sec_1_355-2 and iii whether the distribution is part of a plan or series of related transactions pursuant to which one or more persons will acquire directly or indirectly stock representing a percent or greater interest in distributing or controlled see sec_355 and sec_1_355-7 procedural statements this letter is directed only to the taxpayers who requested it sec_6110 of the code provides that this letter may not be used or cited as precedent a copy of this letter must be attached to any income_tax return to which it is relevant alternatively taxpayers filing their returns electronically may satisfy this requirement by attaching a statement to their return that provides the date and control number of this ruling letter pursuant to the power_of_attorney on file in this matter a copy of this letter is being sent to your authorized representatives sincerely ______________________________ gerald b fleming senior technician reviewer branch office of associate chief_counsel corporate


t c summary opinion united_states tax_court larry e and barbara l andra petitioners v commissioner of internal revenue respondent docket no 20242-02s filed date larry e andra pro_se wesley f mcnamara for respondent couvillion special_trial_judge this case was heard pursuant to sec_7463 of the internal_revenue_code in effect at the time the petition was filed the decision to be entered unless otherwise indicated subsequent section references are to the internal_revenue_code in effect for the year at issue rule references are to the tax_court rules_of_practice and procedure is not reviewable by any other court and this opinion should not be cited as authority respondent determined a deficiency of dollar_figure in petitioners’ federal_income_tax for the year at the time the petition was filed petitioners' legal residence was preston idaho petitioners filed a federal_income_tax return for the year that showed a tax_liability of dollar_figure an estimated penalty of dollar_figure and a withholding credit of dollar_figure petitioners did not pay the dollar_figure balance at the time they filed their return during the year petitioners received an early distribution from an individual_retirement_account ira in the amount of dollar_figure petitioners did not include the dollar_figure as income on their tax_return after being contacted by the collection_division of the internal_revenue_service petitioners made arrangements to pay their tax_liability in a series of installments petitioners contend that in their negotiations for the installment arrangement it was their understanding that the income_tax due on the ira was included in the total amount they were to pay to the internal_revenue_service the sole issue therefore is whether petitioners paid the dollar_figure deficiency which is the tax due on the ira distribution they received during the year respondent agrees that except for the dollar_figure attributable to the ira the taxes including interest and penalties on the income reported by petitioners on their return have been paid petitioners agree that the ira distribution was includable in gross_income contrary to this court's rules_of_practice and procedure the parties did not file with the court a written stipulation of facts rule nonetheless respondent offered into evidence at trial the necessary documentary information upon which the court makes its findings_of_fact and opinion the facts as recited are not in dispute except petitioners' contention that payments they made to the internal_revenue_service included the tax on the pension distribution upon which the notice_of_deficiency is based the pension_plan distribution was evidenced by the issuance by the payor of a form 1099-r distributions from pensions annuities retirement or profit-sharing_plans iras insurance contracts etc filed with the internal_revenue_service as noted petitioners acknowledge receipt of the proceeds of the distribution sometime after petitioners filed their income_tax return they were contacted by collection agents of the internal_revenue_service relative to the unpaid tax shown on their tax_return as well as unpaid tax for their tax_year although petitioners contend that the matter of the ira distribution was discussed and they understood that their installment_agreement included payment of the income_tax due on that distribution there is no evidence in the record nor do petitioners contend that they ever agreed to an assessment of the deficiency attributable to that income item the notice_of_deficiency included a form that petitioners could have signed by which they agreed to an immediate_assessment of the deficiency in which event it would have precluded their right to contest the deficiency in this court and would have allowed respondent to proceed with assessment and collection of the tax due on the ira distribution petitioners did not sign this waiver and instead filed their petition in this court in which their sole contention is that the various payments to the internal_revenue_service included the tax_liability associated with the ira at trial respondent offered into evidence the official transcripts of petitioners' accounts for the years and all of the entries in these accounts were reviewed at trial and petitioners presented no evidence reflecting any errors in these entries nor proof of any additional payments not shown on the transcripts these transcripts show that petitioners fully paid their tax_liabilities for the years in question as reported on their income_tax returns for those years the transcript for the year however does not reflect any assessment for the tax due on the ira distribution reflected on the form 1099-r nor is there any evidence that petitioners ever consented to an assessment or that respondent ever made an assessment relative to this distribution the payments and credits on the transcripts reflect payment of the tax_liabilities reported on the returns including interest and penalties and the transcripts reflect no amounts in excess of the tax_liabilities for the years as reported on petitioners' income_tax returns respondent's position is that the tax due on the ira distribution was not assessed and since petitioners instituted this action respondent is precluded from making an assessment the court agrees with respondent that the transcripts of petitioners' accounts for and do not reflect an assessment of the deficiency attributable to the ira distribution to petitioners generally no assessment or collection of a deficiency in tax can be made against a taxpayer until there is mailed to the taxpayer a notice_of_deficiency under sec_6212 once a notice_of_deficiency is issued and the taxpayer files a timely petition with this court the restrictions on assessment and collection generally continue until such time as the decision of this court becomes final any premature assessment or collection of a deficiency may be enjoined by a proceeding in a proper court including the tax_court sec_6213 the restrictions on assessment and collection do not apply in certain situations set out in sec_6213 c d and e in such situations the deficiency may be assessed and collected against the taxpayer upon notice_and_demand sec_6213 provides d waiver of restrictions --the taxpayer shall at any time whether or not a notice_of_deficiency has been issued have the right by a signed notice in writing filed with the secretary to waive the restrictions provided in subsection a on the assessment and collection of the whole or any part of the deficiency sec_301_6213-1 proced admin regs provides that after a waiver has been acted upon by the district_director and the assessment has been made in accordance with its terms the waiver cannot be withdrawn and collection can be undertaken against the taxpayer in this case respondent never made an assessment against petitioners for the tax_deficiency attributable to the ira distribution and indeed respondent was prohibited from making an assessment in the absence of a waiver or consent by petitioners petitioners never consented to an assessment if agents of the internal_revenue_service represented to petitioners that their tax_payments included the deficiency arising from the ira distribution such representation was in error it has long been held that respondent is not estopped and cannot be bound by erroneous acts or omissions by agents of the internal_revenue_service 67_tc_612 the court is satisfied from the record that petitioners' payments to the internal_revenue_service did not include payment of the tax attributable to the ira distribution accordingly respondent is sustained reviewed and adopted as the report of the small_tax_case division decision will be entered for respondent


department of the treasury internal_revenue_service washington d c tax_exempt_and_government_entities_division uil no may t ep rat legend taxpayer a taxpayer b roth_ira c roth_ira d financial_institution e financial_institution f amount amount amount dear this is in response to a letter dated date submitted on your behalf by your authorized representative in which you request rulings under sec_301_9100-3 of the procedure and administration regulations the regulations the following facts and representations have been submitted under penalty of perjury in support of your requests taxpayer a was the owner of a roth_ira roth_ira c which was maintained by financial_institution e for tax years taxpayer a made annual contributions to roth_ira c in an amount no greater than amount taxpayer a’s total contributions made to roth_ira c for years equaled amount through through and _and taxpayer b taxpayer a’s spouse was the owner of roth_ira d which was maintained by financial_institution f for tax years contributions to roth_ira d in an amount no greater than amount taxpayer b’s total contributions to roth_ira d for years taxpayer b made annual equaled amount ‘ through through taxpayer b attended a retirement seminar in which the on september speaker mentioned the modified_adjusted_gross_income limit for contributions to roth iras after the seminar taxpayer a and taxpayer b began researching the issue and reviewing their past income they discovered that from modified_adjusted_gross_income exceeded the limits for roth_ira contributions however the deadlines had passed for recharacterizing their roth_ira contributions for these years taxpayer a and taxpayer b sought professional tax_advice which led to this request for relief through their taxpayer a and taxpayer b file jointly and represent that for tax years through they timely filed their federal_income_tax returns they also represent that this request was filed before the internal_revenue_service the service discovered the failure to make an election to recharacterize their roth_ira contributions taxpayer a and taxpayer b are not seeking to recharacterize their roth_ira contributions as deductible traditional_ira contributions the contributions made for years through and the net_earnings on these contributions have been retained in roth_ira c and roth_ira d based on the facts and representations submitted taxpayer a requests an extension of time to recharacterize the roth_ira contributions made to roth_ira c for tax years and through which total amount as having been made to a traditional_ira pursuant to sec_1_408a-5 of the federal_income_tax regulations the i t regulations and sec_301_9100-3 of the regulations based on the facts and representations submitted taxpayer b requests an extension of time to recharacterize the roth_ira contributions made to roth_ira d for tax years through which total amount as having been made to a traditional_ira pursuant to sec_1_408a-5 of the i t regulations and sec_301_9100-3 of the regulations with respect to your ruling requests sec_408a of the internal_revenue_code the code’ provides that except as provided by the secretary if on or before the due_date for any taxable_year a taxpayer transfers in a trustee-to-trustee transfer any contribution to an individual_retirement_plan made during such taxable_year from such plan to another individual_retirement_plan then for purposes of this chapter such contribution shall be treated as having been made to the transferee_plan and not the transferor plan sec_408a of the code provides that subparagraph a shall not apply to the transfer of any contribution unless such transfer is accompanied by the net_income allocable to such contribution sec_408a of the code defines the due_date for purposes of this subsection to mean the due_date prescribed by law including extensions of time for filing the taxpayer's return for such taxable_year sec_1_408a-5 q a-1 of the t regulations provides that except as otherwise provided by the secretary a taxpayer may elect to recharacterize an ira contribution made to one type of ira as having originally been made to another type of ira by making a trustee-to-trustee transfer of the ira contribution to the other type of ira a recharacterization the ira contribution is treated as having been made to the transferee ira and not the transferor ira this section further provides that this recharacterization election generally must occur on or before the date prescribed by law including extensions for filing the taxpayer's federal_income_tax return for the tax_year of the contribution in sec_1_408a-5 q a-2 of the i t regulations requires that the net_income attributable to the amount of a contribution being recharacterized must be transferred to the other type of ira along with the contribution sec_1_408a-5 q a-6 of the i t regulations describes how a taxpayer makes the election to recharacterize the ira contribution to recharacterize a roth_ira contribution the taxpayer must notify the roth_ira trustee that the taxpayer has elected to recharacterize the contribution the taxpayer must provide the trustee and the transferee trustee if different from the transferor trustee with specified information that is sufficient to effect the recharacterization and the trustee must transfer the contribution and the net_income allocable to the contribution sec_301_9100-1 sec_301_9100-2 and sec_301_9100-3 of the regulations provide guidance concerning requests for relief submitted to the service on or after date sec_301_9100-1 provides that the commissioner of internal revenue in his discretion may grant a reasonable extension of the time fixed by a regulation a revenue_ruling a revenue_procedure a notice or an announcement published in the internal_revenue_bulletin for the making of an election or application_for relief in respect of tax under among others subtitle a of the code sec_301_9100-2 of the regulations lists certain elections for which automatic extensions of time to file are granted sec_301_9100-3 generally provides guidance 201932u with respect to the granting of relief with respect to those elections not referenced in sec_301_9100-2 the relief requested in this case is not referenced in sec_301_9100-2 sec_301_9100-3 of the regulations provides that applications for relief that fall within sec_301_9100-3 will be granted when the taxpayer provides sufficient evidence including affidavits described in sec_301_9100-3 to establish that the taxpayer acted reasonably and in good_faith and the grant of relief would not prejudice the interests of the government sec_301_9100-3 of the regulations provides that a taxpayer will be deemed to have acted reasonably and in good_faith if the taxpayer i requests relief under sec_301_9100-1 before the failure to make a timely election is discovered by the service ii inadvertently failed to make the election because of intervening events beyond the taxpayer's control iii failed to make the election because after exercising reasonable diligence the taxpayer was unaware of the necessity for the election iv reasonably relied upon the written advice of the service or v reasonably relied on a qualified_tax professional including a tax professional employed by the taxpayer and the tax professional failed to make or advise the taxpayer to make the election sec_301_9100-3 of the regulations provides that the interests of the government are prejudiced if granting relief would result in a taxpayer having a lower tax_liability in the aggregate for all taxable years affected by the election than the taxpayer would have had if the election had been timely made taking into account the time_value_of_money sec_301_9100-3 of the regulations provides that ordinarily the interests of the government will be treated as prejudiced if the tax years that would have been affected by the election had it been timely made are closed by the statute_of_limitations before the taxpayer's receipt of a ruling granting relief under this section in this case taxpayer a and taxpayer b requested relief before the failures to make timely elections to recharacterize their roth_ira contributions were discovered by the service thus taxpayer a and taxpayer b are deemed to have acted reasonably and in good_faith because they satisfy the requirements of sec_301_9100-3 of the regulations in addition taxpayer a and taxpayer b are not seeking relief to file amended returns for closed years and granting relief will not result in taxpayer a and taxpayer b having a lower tax_liability in the aggregate for all taxable years affected by the election than they would have had if the election had been timely made thus we find that under sec_301_9100-3 of the regulations granting relief will not prejudice the interests of the government with respect to taxpayer a’s ruling_request we rule that pursuant to sec_301 of the regulations taxpayer a is granted a period not to exceed days from the date of this letter to recharacterize the contributions made to roth_ira c for tax years and through which total amount as contributions to a traditional_ira the recharacterization must otherwise satisfy applicable rules including that the net_income attributable to the contributions must be transferred to the traditional_ira with respect to taxpayer b’s ruling_request we rule that pursuant to sec_301 of the regulations taxpayer b is granted a period not to exceed days from the date of this letter to recharacterize the contributions made to roth_ira d for tax years through which total amount as contributions to a traditional_ira the recharacterization must otherwise satisfy applicable rules including that the net_income attributable to the contributions must be transferred to the traditional_ira this letter assumes that the above traditional iras and roth iras qualify under code sec_408 and sec_408a respectively at all relevant times this letter is directed only to the taxpayers who requested it code sec_6110 provides that it may not be used or cited as precedent a copy of this letter has been sent to your authorized representative in accordance with a power_of_attorney on file with this office if you wish to inquire about this ruling please contact at sincerely yours adam p zaebst acting manager employee_plans technical group enclosures deleted copy of letter notice cc


internal_revenue_service department of the treasury number release date index number washington dc person to contact telephone number refer reply to cc ita plr-135116-01 date legend taxpayers broadway property california property date date date date intermediary state_agency dear this letter_ruling is in response to your letter dated date and submitted pursuant to revproc_2001_1 i r b requesting a ruling under sec_1031 of the internal_revenue_code facts you sold broadway property on date you simultaneously executed a real_estate exchange_agreement with intermediary to act as your intermediary in a sec_1031 exchange in accordance with the agreement you directed the closing agent to pay over your sale proceeds to intermediary on date state_agency took possession and control of intermediary appointed a receiver of intermediary and filed a lawsuit against intermediary a judge later confirmed the appointment of the receiver and froze all assets of intermediary including your sale proceeds on date a date within days of date on which you sold broadway property you submitted a designation form to the receiver of intermediary that designated california property as your replacement_property and entered into a contract to purchase this plr-135116-01 property however you were prevented from purchasing this replacement_property within days from date because the sale proceeds continued to be frozen as part of the receivership proceeding against intermediary rulings requested you request a ruling concluding that the 180-day period is suspended for the duration of the receivership based on the fact that the situation is analogous to the events that trigger the suspension provided under sec_6503 of the code law and analysis sec_1001 of the code generally requires recognition of the entire amount of gain_or_loss on the sale_or_exchange of property an exception to this rule is sec_1031 that provides no gain_or_loss will be recognized on the exchange of property held for productive use in a trade_or_business or for investment if the property is exchanged solely for property of a kind which is to be held either for productive use in a trade_or_business or for investment sec_1031 of the code provides certain requirements for treating property received in a non-simultaneous exchange as like-kind_property sec_1031 requires deferred replacement_property to be identified within days after the date that the taxpayer transfers the property relinquished in the exchange the relinquished_property sec_1031 provides that the property received by the taxpayer the exchanged property will not qualify for nonrecognition treatment if the exchanged property is received after the earlier of days from the date the taxpayer transfers the relinquished_property or the due_date determined with regard to extensions of the taxpayer’s return for the taxable_year in which the transfer of the relinquished_property occurs see also sec_1_1031_k_-1 of the income_tax regulations christensen v commissioner u s t c cch pbig_number 9th cir involved taxpayers who did not acquire the exchanged property by the deadline set under sec_1031 the court disallowed nonrecognition treatment holding that nothing less than literal compliance with sec_1031 satisfies the congressionally- mandated deadline cf 471_us_84 holding filing deadlines like statutes of limitations necessarily operate harshly and arbitrarily with respect to individuals who fall just on the other side of them but if the concept of a filing deadline is to have any content the deadline must be enforced sec_6503 of the code provides that where the assets of the taxpayer are in the control or custody of the court in any proceeding before any court of the united_states or of any state or of the district of columbia the running of the period of limitations for collection is suspended for the duration of such control or custody and for six months thereafter plr-135116-01 sec_301_6503_b_-1 of the procedure and administration regulations provides that where all or substantially_all of the assets of a taxpayer are in the control or custody of a court the period of limitations on collection after assessment prescribed in sec_6502 is suspended with respect to the outstanding amount due on the assessment for the period such assets are in the control or custody of the court and for months thereafter nothing in either the language of sec_6503 or the case law interpreting this provision supports the notion that the suspension afforded by sec_6503 is properly relied on to suspend the 180-day period under sec_1031 where a taxpayer’s assets are within court custody or control based on the foregoing analysis and your representations we rule that sec_6503 of the code does not authorize the irs to suspend the 180-day replacement_period under sec_1031 except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter this ruling is directed only to the taxpayers 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 george baker assistant to the chief branch office of income_tax and accounting enclosure cc


internal_revenue_service number release date index number ---------------------- ---------------------------- --------------------------------------------- ------------------------------- -------------------------- --------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact -------------------------- id no ------------- telephone number --------------------- refer reply to cc corp b05 plr-125669-08 date october legend parent ------------------------------------------------------------ --------------------------------------------- sub -------------------------------------------------------------------------------- ---------------------------------------------------------------------------------- ------------------------------------------------------------ sub ------------------------------------------------------------ --------------------------------------------------------- state a --------- year -------------------------- -------------------------------------------------------------- date a date b date c date d date e date f ----------------- --------------------------- -------------------------- ----------------------- -------------------------- -------------------------- plr-125669-08 parent official ---------------------------------------------------------------------------------- --------------------------------------------------------------------------------- ---------------- tax professional ------------------------------------------------------------------------- ---------------------------------------------------------- ------------------ dear ------------------ this letter responds to a letter dated date submitted on behalf of parent requesting a determination under sec_1_1502-75 that sub and sub each had filed a properly executed form_1122 with the consolidated federal_income_tax return of the parent group for the year taxable_year additional information was received in subsequent correspondence the material information is summarized below parent a corporation incorporated on date a under the laws of state a uses a calendar_year and the accrual_method for years prior to year parent owned no subsidiaries pursuant to the stock ownership requirements of sec_1504 and filed corporate federal_income_tax returns as a stand-alone entity during year parent acquired all the stock in two domestic subsidiaries sub and sub parent together with sub and sub the parent group filed a consolidated federal_income_tax return by the year due_date however inadvertently sub and sub failed to file properly executed forms in addition inadvertently parent filed two short_year returns for year one that included parent as a stand-alone company until date c and one that included parent sub and sub as a consolidated_group from date e to date f on date d parent sold all the stock in sub to an unrelated entity thus sub has ceased to be a member of the parent group information affidavits and representations submitted by parent parent official and tax professional explain the circumstances that resulted in these year inadvertent errors representations a for year and all subsequent years the members of the parent group have reported and will continue to report all of their income and deductions in the parent group on a timely filed consolidated federal_income_tax return for the parent group plr-125669-08 b parent’s two short_year returns for year in total included the proper amount of income and deductions for the parent group for the entire year taxable_year had parent group’s consolidated federal_income_tax return been properly filed for its year taxable_year no change in federal_income_tax liability would have occurred or will occur in any parent group consolidated_return_year relative to the liability stated in the federal_income_tax returns actually filed c except for the failure_to_file properly executed forms with the parent group’s year consolidated federal_income_tax return the parent group’s members were eligible to file a consolidated federal_income_tax return for the year taxable_year d neither sub nor sub filed a separate federal_income_tax return for year or any subsequent year except for any filing by sub with regard to periods after it ceased to be a member of the parent group e for year and all subsequent years all of the members of the parent group were included and for future filings will be included on the affiliations schedule form_851 attached to the consolidated federal_income_tax returns filed by the parent group f as of the date the request for this ruling letter was submitted to this office the internal_revenue_service had not contacted any member of parent group concerning the failure to timely file executed forms for year or any subsequent year applicable law sec_1_1502-75 provides 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 to the regulations under sec_1502 in accordance with sec_1_1502-75 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 filing the common parent’s return sec_1_1502-75 provides that a group which filed or was required to file a consolidated_return for the immediately preceding_taxable_year is required to file a consolidated_return for the taxable_year unless it has been granted permission by the commissioner to discontinue filing consolidated_returns pursuant to sec_1_1502-75 with regard to the consent of a corporation for a group’s first consolidated_year sec_1_1502-75 provides as a general_rule that the consent of a corporation shall be made by such corporation joining in the making of the consolidated_return for such year plr-125669-08 and that a corporation shall be deemed to have joined in the making of such return if it files a form_1122 in the manner specified in sec_1_1502-75 sec_1_1502-75 provides that if under the provisions of sec_1 a a group wishes to file a consolidated_return for a taxable_year a form_1122 must be executed by each subsidiary this regulation provides rules for properly executing forms and attaching them to a consolidated_return and also provides that form_1122 is not required for a taxable_year if a consolidated_return was filed or was required to be filed by the group for the immediately preceding_taxable_year sec_1_1502-75 provides that if a member of the group fails to file form_1122 the commissioner may under the facts and circumstances determine that such member has nonetheless joined in the making of a consolidated_return by such group factors that the commissioner will take into account in making this determination include the following i whether or not the income and deductions of the member for such taxable_year were included in the consolidated_return ii whether or not a separate_return was filed by the member for that taxable_year and iii whether or not the member was included in the affiliations schedule form_851 for such taxable_year where the commissioner under the facts and circumstances determines that the member has joined in the making of the consolidated_return such member will be treated for purposes of sec_1_1502-75 as if it had filed a form_1122 for such year sec_1_1502-75 ruling based solely on the information submitted and the representations made we rule as follows parent and sub and sub are treated under sec_1_1502-75 as if sub and sub each had filed a properly executed form_1122 with the consolidated federal_income_tax return of the parent group for the year taxable_year sec_1_1502-75 and h caveat we express no opinion as to whether in fact parent and its subsidiaries qualify substantively to file a consolidated_return furthermore except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any aspect of any matter or item discussed or referenced in this ruling letter procedural statements plr-125669-08 this ruling letter is directed only to the taxpayer s who requested it sec_6110 of the code provides that it may not be used or cited as precedent it is important that a copy of this letter be attached to any income_tax return to which it is relevant alternatively a taxpayer filing its return electronically may satisfy this requirement by attaching to the return a statement that provides the date and control number plr-125669-08 of this ruling letter pursuant to a power_of_attorney on file in this matter a copy of this letter is being sent to your authorized representative sincerely _______________________________ debra l carlisle chief branch office of associate chief_counsel corporate cc


internal_revenue_service department of heat v4 washington dc contact person telephone number in reference to t ep ra t3 date mar uics d legend taxpayer a taxpayer b company c plan x tra y ira z date date month date date month date date year amount page amount dear mr this is in response to the your behalf by your authorized representative as supplemented by correspondence dated and in which you request a series of letter rulings with respect to sec_401 and sec_408 of the internal_revenue_code following facts and representations support your ruling requests the request for letter_ruling submitted on taxpayer a whose date of birth was date attained age on date taxpayer a is an active employee of company c taxpayer a is not and has never been a five_percent_owner as that term is defined in code sec_416 b q of company c taxpayer a is an participant in plan x a defined_contribution_plan maintained by company c which your authorized representative asserts is a qualified_plan within the meaning of code sec_401 your authorized representative has presented documentation to the internal_revenue_service which indicates that plan x permits a company c employee plan x participant who is not a five-percent owner as that term is defined in code sec_416 to defer receiving required distributions from plan x until april of the calendar_year following that calendar_year in which the employee terminates employment with company c the documentation also verifies that you are not a five-percent owner of company c during month taxpayer a received an in-service distribution in the amount of amount from plan x which distribution was directly transferred to ira y a pre-existing individual_retirement_arrangement the amounts transferred rolled over from plan x to ira y were accounted for separately from amounts in ira y prior to said transfer in month taxpayer a married taxpayer b whose date of birth was during year on or about date taxpayer a named taxpayer b as the beneficiary of his ira y on or about date assets of ira y in the amount of amount were transferred by means of a trustee to trustee transfer to ira z the amounts that were transferred from ira y to ira z consisted solely of the amounts originally transferred from plan x with adjustment for gains and losses assets that were present in ira y ee prior to the month transfer rollover referenced above were not transferred to ira z on or about date taxpayer a named taxpayer b as the beneficiary of his ira z taxpayer a elected to receive required distributions from his ira z over his and taxpayer b’s joint life expectancy by means of a form dated date taxpayer a elected not to recalculate either his or taxpayer b’s life expectancy based on the above facts and representations you through your authorized representative request the following letter rulings that as of month taxpayer a had not attained his code sec_401 required_beginning_date with respect to his interest in plan x that taxpayer a’s required code sec_401 required_beginning_date with respect to his interest in plan x is april of the calendar_year following the later of the calendar_year in which he attains age or the calendar_year in which he separates from the service of company c that amount which was directly transferred rolled over from taxpayer a’s plan x account to his ira y during month was not subject_to the code sec_401 required_distribution rules made applicable to iras under code sec_408 during calendar_year that amount transferred from ira y to ira z on or about date will not be subject_to the required_distribution rules of code sec_401 and sec_408 until date the first required_distribution year with respect to ira z which consists of amounts originally distributed from plan x to ira y adjusted for gains and losses is calendar_year and the required_distribution date with respect thereto is date that the required_distribution date referenced in ruling_request is the required_distribution date for purposes of code sec_401 and sec_408 that with respect to ira z that consists of amounts originally distributed from plan x to ira y adjusted for gains and losses taxpayer a was eligible to designate a beneficiary for purposes of code sec_401 and sec_408 until date page that taxpayer a timely designated taxpayer b as the beneficiary of his raz - that consists of amounts distributed from plan x to ira y adjusted for gains and losses that taxpayer a may timely elect the term-certain method non-recalculation with respect to calculating his code sec_401 and sec_408 required distributions from ira z on or before date that taxpayer a timely elected the joint life expectancy term-certain method of receiving code sec_401 and sec_408 required distributions from his ira z that distributions from ira z must begin no later than date in order to satisfy code sec_401 and sec_408 that required distributions from taxpayer a’s ira z for calendar_year which must be made no later than date must be based on the ira z balance as of date which consisted of the amounts transferred from ira y to ira z during month adjusted for gains and ' losses divided by the joint life expectancy of taxpayers a and b which life expectancy is not recalculated pursuant to taxpayer a’s electing the term certain method of calculating life expectancies and that required distributions from taxpayer a’s ira z for calendar_year which must be made no later than date may be based on the ira z balance as of date which consists of the amounts transferred from ira y to ira z during month adjusted for gains and losses divided by the joint life expectancy of taxpayers a and b which life expectancy is not recalculated pursuant to taxpayer a’s electing the term certain method of calculating life expectancies with respect to your initial three ruling requests sec_401 a c of the code provides in relevant part that for purposes of this paragraph the term required_beginning_date means april of the calendar_year following the later of i the calendar_year in which the employee attains age or ii the calendar_year in which the employee retires in general sec_401 does not apply for purposes of code sec_408 i-e does not apply to distributions from iras and also does not apply to employees who are 5-percent owners as defined in code sec_416 code sec_401 as above is a result of an amendment to the code made by section of the small_business job protection act sbjpa the code amendments made by section of the sbjpa apply to years beginning after date page your ruling_request and the documentation which accompanied it indicates that taxpayer a is an active employee of company c who is not and has never been a five- percent owner thereof it also indicates that he attained age in and is not required to commence code sec_401 required distributions under plan x prior to terminating service with company c with respect to amount distributed from taxpayer a’s plan x account and transferred rolled over to his ira y taxpayer a had not attained his required_beginning_date with reference to plan x however once the amounts were rolled over into ira y they became subject_to the required_distribution rules applicable to iras the amounts transferred rolled over from plan x into taxpayer a’s ira y during calendar_year were accounted for separately from other_amounts present in ira y thus the issue with respect to said amounts which were subsequently transferred to ira z is when must required distributions commence with respect to said amounts no account balance existed in ira y as of date thus with respect to ira y no account balance existed for purposes of computing a required_distribution for calendar_year however an account balance for purposes of computing required distributions did exist as of date based on the above the service concludes with respect to your first three ruling requests as follows that as of month taxpayer a had not attained his code sec_401 required_beginning_date with respect to his interest in plan x that taxpayer a’s required code sec_401 required_beginning_date with respect to his interest in plan x is april of the calendar_year following the later of the calendar_year in which he attains age or the calendar_year in which he retires from company c and that amount which was directly transferred rolled over from taxpayer a’s plan x account to his ira y during month was not subject_to the code sec_401 required_distribution rules made applicable to iras under code sec_408 during calendar_year as noted above the amendment made to code sec_401 by section of the sbjpa does not apply to ira_distributions a c as made applicable to iras because of code sec_408 thus pursuant to code section b18 paes distributions from an ira must commence no later than april of the calendar_year during which the ira holder attained age in this case taxpayer a attained age during calendar_year thus with respect to his iras his code sec_401 required_beginning_date was date as noted above with respect to amounts transferred from plan x to ira y no account balance existed in ira y as of date thus with respect to ira y no account balance existed for purposes of computing a required_distribution for calendar_year however an account balance for purposes of computing required distributions did exist as of date thus it is reasonable to conclude that consistent with applicable sections of the code and proposed_regulations distributions from ira y of the amounts transferred rolled over from plan x and separately accounted for amount must have commenced no later than date sec_1_401_a_9_-1 of the proposed income_tax regulations question and answer g-3 provides in pertinent part that a transfer from one plan ira to another is not treated as a distribution for purposes of code sec_401 as noted above taxpayer a transferred his ira y account balance to the extent it consisted of amount initially transferred from plan x to ira y as adjusted for gains and losses to ira z however said transfer will have no effect on determining taxpayer a’s required_beginning_date with respect to said amounts which remains date required_minimum_distribution furthermore such transfer does not constitute a calendar_year code sec_401 provides in short that the term designated_beneficiary is any individual designated as a beneficiary by the employee ira holder sec_1_401_a_9_-1 of the proposed income_tax regulations question and answer d-3 provides that for purposes of calculating the distribution period for distributions that begin prior to death the designated_beneficiary will be determined as of the plan participant’s ira holder’s required_beginning_date in this case as noted above with respect to taxpayer a’s ira y to the extent it consisted of amounts transferred from plan x and ira z taxpayer a’s required_beginning_date is date thus taxpayer a may designate a beneficiary with respect thereto by date page as noted above taxpayer a named taxpayer b as the beneficiary of his ira y and of his ira z during calendar_year said action on the part of taxpayer a was timely for purposes of code sec_401 code sec_401 provides in short that the life expectancy of an employee ira holder and his spouse may be recalculated but not more frequently than annually sec_1_401_a_9_-1 of the proposed income_tax regulations question and answer e-7 c provides in relevant part that an employee ira holder and or his spouse must elect whether or not life expectancy will be recalculated no later than the time of the first required_distribution as of the date of the first required_distribution a method either recalculation or no recalculation which is in effect with respect to the employee and or his spouse is irrevocable and applies to all subsequent calendar years in this case as noted above taxpayer a during calendar_year elected to not recalculate either his or his spouse’s taxpayer b’s life expectancy for purposes of code sec_401 sec_1_408-8 of the proposed income_tax regulations question and answer a-5 provides in relevant part that for purposes of determining the minimum distribution from an jra in any calendar_year the account balance of the ira as of the december of the calendar_year immediately preceding the calendar_year for which distributions are being made will be used will be substituted in sec_1_401_a_9_-1 q a f-1 for the benefit of the employee sec_1_401_a_9_-1 of the proposed income_tax regulations question and answer f-1 provides in relevant part that for purposes of determining required distributions the amount required to be distributed must at least equal the quotient obtained by dividing the employee’s benefit account balance determined with respect to iras as of december of the relevant calendar_year by the applicable life expectancy thus based on the above with respect to your fourth through thirteenth ruling requests the service concludes as follows that amount transferred from ira y to ira z on or about date will not be subject_to the required_distribution rules of code sec_401 and sec_408 until date the first required_distribution year with respect to ira z which consists of amounts originally distributed from plan x to ira y adjusted for gains and page losses is calendar_year and the required_distribution date with respect thereto is date that the required_distribution date referenced in ruling_request is the required_distribution date for purposes of code sec_401 and sec_408 that with respect to ira z that consists of amounts originally distributed from plan x to ira y adjusted for gains and losses taxpayer a was eligible to designate a beneficiary for purposes of code sec_401 and sec_408 until date that taxpayer a timely designated taxpayer b as the beneficiary of his ira z that consists of amounts distributed from plan x to ira y adjusted for gains and losses that taxpayer a may timely elect the term-certain method non-recalculation with respect to calculating his code sec_401 and sec_408 required distributions from ira z on or before date that taxpayer a timely elected the joint life expectancy term-certain method of receiving code sec_401 and sec_408 required distributions from his ira z that distributions from ira z must begin no later than date in order to satisfy code sec_401 and sec_408 that required distributions from taxpayer a’s ira z for calendar_year which must be made no later than date must be based on the ira z balance as of date which consists of the amounts transferred from ira y to ira z during month adjusted for gains and losses divided by the joint life expectancy of taxpayers a and b which life expectancy is not recalculated pursuant to taxpayer a’s electing the term certain method of calculating life expectancies and that required distributions from taxpayer a’s ira z for calendar_year which must be made no later than date may be based on the ira z balance as of date which consists of the amounts transferred from ira y to ira z during month adjusted for gains and losses divided by the joint life expectancy of taxpayers a and b which life expectancy is not recalculated pursuant to taxpayer a’s electing the term certain method of calculating life expectancies page this ruling letter is based on the assumption that plan x is and has been a qualified_retirement_plan within the meaning of code sec_401 at all times relevant thereto it also assumes that iras y and z either meet or have met the requirements of code sec_408 at all times relevant thereto finally it assumes as represented that taxpayer a has not ever been a five-percent owner as that term is used in code sec_416 of company c as represented this ruling letter addresses issues dealing with distributions either made or to be made through calendar_year as a result no reference is made to the changes made to sec_1_401_a_9_-1 and sec_1_408-8 of the proposed_regulations published in the federal_register on date this ruling is directed solely to the taxpayer who requested it sec_6110 of the code provides that it may not be used or cited by others as precedent pursuant to a power_of_attorney on file in this office a copy of this letter_ruling is being sent to your authorized representative sincerely yours frances v sloan manager employee_plans technical group tax_exempt_and_government_entities_division enclosures deleted copy of letter_ruling form_437 gor


department of the treasury internal_revenue_service washington d c tax_exempt_and_government_entities_division date number release date uil org address taxpayer_identification_number person to contact employee identification_number employee telephone number last date for filing a pleading with the tax_court the claims_court or the united_states district_court for the district of columbia december 20xx certified mail- return receipt requested dear ' this is a final adverse determination regarding your exempt status under sec_501 of the internal_revenue_code the code our favorable determination_letter to you issued in november of 19xx is hereby revoked and you are no longer exempt under sec_501 of the code effective january 20xx the revocation of your exempt status was made for the following reason s during the examination you advised the internal_revenue_service that you suspended your operations you did not provide information in response to our reasonable request for information about your operations and did not file a final information_return despite information showing a filing responsibility sec_1_6033-2 of the income_tax regulations provides in part that every organization which is exempt from tax shall submit such additional information as may be required by the internal_revenue_service for the purpose of inquiring into its exempt status you have failed to produce documents to establish that you are operated exclusively for exempt purposes within the meaning of code sec_501 and that no part of your net_earnings inure to the benefit of private shareholders or individuals also you have failed to keep adequate books_and_records as required by code sec_6001 and the regulations there under and failed to file returns as required by code sec_6033 contributions to your organization are no longer deductible under sec_170 after january 20xx you are required to file income_tax returns on form_1120 these returns should be filed with the appropriate service_center for the tax_year ending december 20xx and for all tax years thereafter in accordance with the instructions of the return 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 internal_revenue_code if you decide to contest this determination under the declaratory_judgment provisions of sec_7428 of the code a petition to the united_states tax_court the united_states claims_court or the district_court of the united_states for the district of columbia must be filed before the ' day after the date this determination was mailed to you please contact the clerk of the appropriate court for rules regarding filing petitions for declaratory judgments you may write to the united_states tax_court at the following address 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 matter that may not have been resolved through normal channels gets prompt and proper handling you may call toll-free and ask for taxpayer_advocate assistance if you prefer you may contact your local taxpayer_advocate at we will notify the appropriate state officials of this action as required by code sec_6104 you should contact your state officials if you have any questions about how this final_determination may affect your state responsibilities and requirements if you have any questions please contact the person whose name and telephone number are shown in the heading of this letter sincerely douglas h shulman commissioner by vicki l hansen acting director eo examinations internal_revenue_service department of the treasury te_ge exempt_organizations examinations ’ second avenue m s w540 seattle washington taxpayer_identification_number form tax_year s ended person to contact id number contact numbers telephone fax date date org address certified mail - return receipt requested dear we have enclosed a copy of our report of examination explaining why we believe revocation of your exempt status under sec_501 of the internal_revenue_code code is necessary if you accept our findings take no further action we will issue a final revocation letter if you do not agree with our proposed revocation you must submit to us a written request for appeals_office consideration within days from the date of this letter to protest our decision your protest should include a statement of the facts the applicable law and arguments in support of your position an appeals officer will review your case the appeals_office is independent of the director eo examinations the appeals_office resolves most disputes informally and promptly the enclosed publication the examination process and publication exempt_organizations appeal procedures for unagreed issues explain how to appeal an internal_revenue_service irs decision publication also includes information on your rights as a taxpayer and the irs collection process you may also request that we refer this matter for technical_advice as explained in publication if we issue a determination_letter to you based on technical_advice no further administrative appeal is available to you within the irs regarding the issue that was the subject of the technical_advice letter rev catalog number 34809f if we do not hear from you within days from the date of this letter we will process your case based on the recommendations shown in the report of examination if you do not protest this proposed determination within days from the date of this letter the irs will consider it to be a failure to exhaust your available administrative remedies sec_7428 of the code provides in part a declaratory_judgment or decree under this section shall not be issued in any proceeding unless the tax_court the claims_court or the district_court of the united_states for the district of columbia determines that the organization involved has exhausted its administrative remedies within the internal_revenue_service we will then issue a final revocation letter we will also notify the appropriate state officials of the revocation in accordance with sec_6104 of the code you 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 matter that may not have been resolved through normal channels gets prompt and proper handling you may call toll-free and ask for taxpayer_advocate assistance if you prefer you may contact your local taxpayer_advocate at if you have any questions please call the contact person at the telephone number shown in the heading of this letter if you write please provide a telephone number and the most convenient time to call if we need to contact you thank you for your cooperation sincerely marsha a ramirez director eo examinations enclosures publication publication report of examination letter rev catalog number 34809f schedule number or exhibit form 886-a rev date name of taxpayer org explanations of items year period ended 20xx tax identification_number legend org organization name poa poa address address city city president president xx date xyz state ceo ceo issue whether org qualifies for exemption under sec_501 of the internal_revenue_code facts org ein filed form_941 for the quarter ended march 20xx on april 20xx reporting dollar_figure in taxable wages the organization filed form_941 for the quarter ended june 20xx on january 20xx reporting dollar_figure in taxable wages the form_941 for the quarter ended september 20xx was filed on october 20xx reporting dollar_figure in taxable wages the organization filed a form_941 for the quarter ended december 20xx on january 20xx reporting dollar_figure in taxable wages org is recognized as exempt under sec_501 of the internal_revenue_code and as a public charity under sec_509 of the code the last form_990 return of organization exempt from income_tax filed by the organization was for the tax period ended december 20xx received on november 20xx this form_990 reported a year end total asset balance of dollar_figure on october 20xx a phone call was placed to ceo the chief_executive_officer and registered agent of org upon contact ceo was notified of a pending examination of the books_and_records of the organization for the tax period ended december 20xx ceo indicated that a power_of_attorney was on file requested that the irs contact the power_of_attorney and that as operations had ceased in june of 20xx that the appropriate party to contact was the power_of_attorney ceo was informed that an examination was to be conducted and that per the secretary of state of xyz no termination was on file on october 20xx a phone call was placed to poa the power_of_attorney of record for the organization no one responding to the call and a message was left on the positively identified answering machine of the poa a second call was made on october 20xx to poa when a message was left with a secretary a call back was received from poa after a brief discussion of the pending audit poa indicated that she had no idea where the records were that the organization was defunct that it owed her money and that she wished to revoke her power_of_attorney a faxed form_2848 was subsequently received revoking the power_of_attorney of poa on october 20xx a phone call was placed to president president of the organization there was no response after six rings catalog number 20810w form 886-a page ‘ on october 20xx a summons was issued to the xyz state gambling commission for records pertaining to the tax period ended december 20xx copies of the summons were sent to the organization at address city xyz the address of record no response was received from the organization with respect to the summons publish no irs gov department of the treasury-internal revenue service 886-a schedule number or exhibit explanations of items form ala aan name of taxpayer org on january 20xx three letters were issued to the org the three letters were identical save for the mailing addresses the first letter was addressed to the organization at address city xyz the second letter was addressed to the organization care of ceo registered agent at address city xyz the third letter was issued to the organization care of ceo registered agent address city xyz all three letters requested the organization to file the form_990 for the tax period ending december 20xx year period ended 20xx tax identification_number subsequent to the issuance of the letters ceo called on february 20xx at which time the letter and accompanying information_document_request were discussed ceo was informed of how to dissolve the organization with the state how to remove herself from registered agent status and that she had until march 20xx to file articles of dissolution with the secretary of state of xyz no further contact has been received from ceo law sec_6001 of the code provides that every person liable for any_tax imposed by the code or for the collection thereof shall keep adequate_records as the secretary_of_the_treasury or_his_delegate may from time to time prescribe sec_6033 of the code provides except as provided in sec_6033 every organization exempt from tax under sec_501 shall file an annual return stating specifically the items of gross_income receipts and disbursements and such other information for the purposes of carrying out the internal revenue laws as the secretary may by forms or regulations prescribe and keep such records render under oath such statements make such other returns and comply with such rules and regulations as the secretary may from time to time prescribe sec_1_6001-1 of the regulations in conjunction with sec_1_6001-1 provides that every organization exempt from tax under sec_501 of the code and subject_to the tax imposed by sec_511 on its unrelated_business_income must keep such permanent books or accounts or records including inventories as are sufficient to establish the amount of gross_income deduction credits or other matters required to be shown by such person in any return of such tax such organization shall also keep such books_and_records as are required to substantiate the information required by sec_6033 sec_1_6001-1 of the regulations states that the books_or_records required by this section shall be kept at all times available for inspection by authorized internal revenue officers or employees and shall be retained as long as the contents thereof may be material in the administration of any internal revenue law sec_1_6033-1 h of the regulations provides that every organization which has established its right to exemption from tax whether or not it is required to file an annual return of information shall submit such additional information as may be required by the district_director for the purpose of enabling him to inquire further into its exempt status and to administer the provisions of subchapter_f sec_501 and the following chapter of the code and sec_6033 form 886-a catalog number 20810w page_2 publish no irs gov department of the treasury-internal revenue service schedule number or exhibit tax identification_number explanations of items form 886-a rev date name of taxpayer org revrul_59_95 1959_1_cb_627 concerns an exempt_organization that was requested to produce a financial statement and statement of its operations for a certain year however its records were so incomplete that the organization was unable to furnish such statements the service held that the failure or inability to file the required information_return or otherwise to comply with the provisions of sec_6033 of the code and the regulations which implement it may result in the termination of the exempt status of an organization previously held exempt on the grounds that the organization has not established that it is observing the conditions required for the continuation of exempt status 20xx year period ended in accordance with the above cited provisions of the code and regulations under sec_6001 and sec_6033 organizations recognized as exempt from federal_income_tax must meet certain reporting requirements these requirements relate to the filing of a complete and accurate annual information and other required federal tax forms and the retention of records sufficient to determine whether such entity is operated for the purposes for which it was granted tax- exempt status and to determine its liability for any unrelated_business_income_tax government’s position conclusion the organization failed to meet the reporting requirements under sec_6001 and sec_6033 to be recognized as exempt from federal_income_tax under c of the internal_revenue_code the org is subject_to a filing requirement to file a form_990 when gross_receipts exceeds dollar_figure during a tax_year with payroll reported to the irs at over dollar_figure for the year and the beginning assets for 20xx valued at dollar_figure the organization has clearly demonstrated that income was in excess of dollar_figure for the year ended december 20xx accordingly the organization's exempt status is revoked effective january 20xx form_1120 returns should be filed for the tax periods ending december 20xx and december 20xx in accordance with regulation sec_301_6213-1 the effective date of the revocation will be the first day after the end of the 90-day period day form 886-a catalog number 20810w page publish no irs gov department of the treasury-internal revenue service