internal_revenue_service number release date index number ---------------------------------- ------------------------------ ----------------------------------------------------- ---------------------------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ----------------------------- id no ------------------ telephone number ---------------------- refer reply to cc psi b01 plr-108914-15 date june legend x ----------------------------------------------------------------------------------------------------------------- --------------------------------------------------- ----------------------------------------------------------------------------------------- country d ----- ------------------ dear ---------------- this responds to a letter dated date and subsequent correspondence submitted on behalf of x requesting an extension of time under sec_301_9100-3 of the procedure and administration regulations for x to file an entity classification election under sec_301_7701-3 to be treated as an association_taxable_as_a_corporation for federal tax purposes facts according to the information submitted x was formed under the laws of country x intended to elect be treated as an association_taxable_as_a_corporation for federal tax purposes effective d however x inadvertently failed to timely file form_8832 entity classification election to elect to be treated as an association_taxable_as_a_corporation for federal tax purposes plr-108914-15 x represents that it acted reasonably and in good_faith x also represents that granting the relief requested will not prejudice the interests of the government law and analysis sec_301_7701-3 provides in part that a business_entity that is not classified as a corporation under sec_301_7701-2 or an eligible_entity can elect its classification for federal tax purposes an eligible_entity with at least two members can elect to be classified as either an association or a partnership and an eligible_entity with a single owner can elect to be classified as an association or to be disregarded as an entity separate from its owner sec_301_7701-3 provides that an entity classification election must be filed on form_8832 and can be effective up to days prior to the date the form is filed or up to months after the date the form is filed sec_301_7701-3 provides that such an election must be signed by either a each member of the electing entity who is an owner at the time the election is filed or b any officer manager or member of the electing entity who is authorized under local law or the entity’s organization documents to make the election and who represents to having such authorization under penalties of perjury sec_301_9100-1 provides that the commissioner may grant a reasonable extension of time to make a regulatory election or a statutory election but no more than months except in the case of a taxpayer who is abroad under all subtitles of the internal_revenue_code except subtitles e g h and i sec_301_9100-1 defines the term regulatory election as an election whose due_date is prescribed by a regulation published in the federal_register or a revenue_ruling revenue_procedure notice or announcement published in the internal_revenue_bulletin sec_301_9100-1 through provide the standards the commissioner will use to determine whether to grant an extension of time to make the election sec_301_9100-2 provides the rules governing automatic extensions of time for making certain elections sec_301_9100-3 provides the standards the commissioner will use to determine whether to grant an extension of time for regulatory elections that do not meet the requirements of sec_301_9100-2 under sec_301_9100-3 a request for relief will be granted when the taxpayer provides evidence to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and granting relief will not prejudice the interests of the government conclusion based solely on the information submitted and the representations made we conclude that the requirements of sec_301_9100-3 have been satisfied as a result x is granted an extension of time of days from the date of this letter to file a form_8832 plr-108914-15 with the appropriate service_center to elect to be treated an association_taxable_as_a_corporation for federal tax purposes effective d a copy of this letter should be attached to the form_8832 a copy is enclosed for that purpose this ruling is contingent on x and its owner filing within days of this letter all required information and tax returns for all open years consistent with the requested relief these returns may include but are not limited to the following forms i forms information_return of u s persons with respect to certain foreign_corporations ii forms return of u s persons with respect to certain foreign_partnerships and iii forms information_return of u s persons with respect to disregarded entities such that these forms reflect the consequences of the relief granted in this letter a copy of this letter should be attached to any such returns except as specifically set forth above no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter this ruling is directed only to the taxpayer requesting it sec_6110 provides that it may not be used or cited as precedent pursuant to a power_of_attorney on file with this office a copy of this letter is being sent to x's authorized representative sincerely associate chief_counsel passthroughs special industries by laura c fields laura c fields senior technician reviewer branch office of associate chief_counsel passthroughs special industries enclosures copy of this letter copy of this letter for sec_6110 purposes


internal_revenue_service department of the treasury number release date uil internal_revenue_service constitution avenue nw washington dc person to contact telephone number refer reply to cc ita b6 cam-100745-99 date date subject request concerning method_of_accounting for transportation and material handling costs related to coal used to produce electricity we have sent the following letter to ein hereinafter the taxpayer detailing our reasons for refusing to grant permission for its subsidiary ein hereinafter the subsidiary to make an accounting_method change the taxpayer had sought permission to change the subsidiary’s accounting_method for certain coal transportation and material handling costs for the tax_year beginning facts the taxpayer is the parent_corporation of an affiliated_group filing consolidated income_tax returns on a calendar_year basis the taxpayer and all of its subsidiaries use an overall accrual_method of accounting the taxpayer has filed a form_3115 to obtain permission to change the accounting_method for certain coal transportation and material handling costs incurred by the subsidiary the subsidiary is a public_utility in the trade_or_business of generation transmission distribution and sale of electricity no change in accounting_method has been requested regarding the taxpayer or its other subsidiaries to produce electricity for sale the subsidiary burns coal at power generating plants the taxpayer seeks permission to change how the subsidiary accounts for the costs of transporting coal between the point where title to the coal is obtained which ordinarily is at the mine itself and the power plant where the coal will be used in the production of electricity this transportation may be via rail car barge truck or conveyor belt the taxpayer also seeks permission to change how the subsidiary accounts for the costs associated with the handling of the coal after it is delivered to the power plant for example payroll_taxes and salaries and benefits paid to personnel page alternatively the taxpayer requests approval for the subsidiary to use a particular facts and circumstances allocation method as referenced by sec_1 263a- f under the present accounting_method the subsidiary capitalizes coal transportation and material handling costs as part of the cost of the coal thus these costs do not enter into the subsidiary's computation of taxable_income until the tax_year in which the coal is actually burned to generate electricity because of the nature of electricity the burning of coal is almost simultaneous with the sale of the electricity produced under the proposed accounting_method the subsidiary would deduct under sec_162 and sec_461 coal transportation and material handling costs in the tax_year in which the costs are incurred none of these costs would be capitalized at the time the taxpayer filed the form_3115 the taxpayer was under examination for tax years through the form_3115 was filed with the consent of the director as specified in section of revproc_97_27 1997_1_cb_680 denial of consent the cost of transporting coal from the place where title is obtained to a power plant where it can be used in the production of electricity is a cost of acquisition that is properly treated as part of the cost of the coal see generally revrul_72_113 1972_1_cb_99 maier brewing company v commissioner tcmemo_1987_385 aff’d 916_f2d_716 9th cir sears oil co inc v commissioner tcmemo_1965_39 34_tc_776 aff’296_f2d_732 6th cir cert denie369_us_860 accordingly the subsidiary’s present method of capitalizing coal transportation costs is a correct method_of_accounting and not an incorrect method as asserted by the taxpayer as part of the cost of coal these transportation costs would not enter into the computation of taxable_income until the coal is consumed when electricity is produced the particular method proposed is as follows inventoriable costs x ending inventory costs allocated to inventory kilowatt-hours produced inventoriable costs includes the cost of the coal consumed and all coal transportation and material handling costs incurred in the year kilowatt-hours produced is the actual amount of kilowatt-hours of electricity produced in the year ending inventory is the amount of kilowatt-hours of electricity produced in the year that have yet to be sold and remain on hand at year end page and sold this would be the case regardless of whether the cost including acquisition costs of coal used to produce electricity is deemed to be a direct or indirect material cost subject_to sec_263a or materials_and_supplies subject_to sec_1_162-3 in contrast the cost of handling coal at a power plant is not a cost of acquisition see sec_1_162-3 however the subsidiary's present method of capitalizing these costs is also a correct method_of_accounting under sec_263a costs associated with this coal do not enter into the computation of taxable_income until the coal is consumed when electricity is produced and sold handling costs as a cost associated with property that is held for future production must be capitalized in accordance with the requirements of sec_263a application of sec_263a sec_263a applies to the cost of transporting and handling coal used in the production of electricity for sale to customers as follows producers of electricity are subject_to sec_263a generation of electricity constitutes production of tangible_personal_property see helvey v wabash county remc n e 2d ind app minnesota power light company v taxing district n w 2d minn curry v alabama power co so 2d ala state tax commission v marcus j lawrence mem hosp p 2d ariz thus all direct and indirect_costs attributable to the production of electricity for sale to customers are subject_to capitalization in accordance with the requirements of sec_263a and the regulations thereunder see sec_263a and sec_263a sec_1 263a- a ii the cost of coal becomes a cost of electricity produced when the coal is consumed in the ordinary course of production sec_1 263a- e i a provides that producers must capitalize direct_material_costs which include the cost of those materials that become an integral part of specific property produced and those materials that are consumed in the ordinary course of production and that can be identified or associated with particular units or groups of units of property produced arguably coal used to produce electricity constitutes a direct material cost because it is consumed in the production of electricity and can be directly associated with particular units of property produced that is there is a direct connection between tons of coal consumed and kilowatt-hours of electricity thereby produced however even if the cost of coal was deemed to not qualify as a direct material cost under sec_1_263a-1 coal would still be subject_to sec_263a as an indirect material cost sec_1_263a-1 provides that taxpayers subject_to sec_263a must capitalize all indirect_costs properly allocable to property produced or property acquired for resale including page indirect material_costs which include the cost of materials that are not an integral part of specific property produced and the cost of materials consumed in the ordinary course of performing production or resale activities that cannot be identified or associated with particular units or groups of units of property note a cost described in sec_1_162-3 relating to the cost of a material or supply specifically is listed as an indirect material cost for purposes of sec_263a sec_263a requires capitalization of coal transportation and handling costs sec_263a requires accumulation of costs associated with the production of property until those costs can be attributed to property produced and matched with income from the sale of that property see preamble to sec_263a s rep no 99th cong 2d sess coal transportation costs that is those costs not already accounted for as an acquisition_cost that is part of the cost of coal and material handling costs must be accumulated until the subsidiary is able to allocate those costs as a cost of the electricity produced when the associated coal is consumed accumulating coal transportation and material handling costs until the coal is consumed is consistent with the rule for pre-production costs that appears in sec_1 263a- a ii which provides that if property is held for future production taxpayers must capitalize direct and indirect_costs allocable to that property for example purchasing storage handling and other costs even though production has not begun application of sec_1_162-3 the cost of transporting coal from the place where title is obtained to a power plant where it can be used in the production of electricity cannot be deducted until the coal is consumed even if coal is deemed to be materials_and_supplies subject_to sec_1_162-3 sec_1_162-3 provides that taxpayers carrying materials_and_supplies on hand should include in expenses the charges for materials_and_supplies only in the amount that they are actually consumed and used in operation during the taxable_year for which the return is made these charges include acquisition transportation costs conclusion coal transportation and material handling costs are subject_to capitalization requirements and cannot be deducted until the associated coal is consumed and electricity is produced sec_1_446-1 provides that no method_of_accounting is acceptable unless in the opinion of the commissioner it clearly reflects income see also sec_446 sec_446 and sec_1_446-1 provide that a taxpayer must secure consent of the commissioner before changing a method_of_accounting in order to clearly reflect income the subsidiary must continue to capitalize coal transportation and material handling costs and not include those page costs in the computation of taxable_income until the associated coal is consumed in the actual production of electricity accordingly permission to change to the proposed method_of_accounting for coal transportation and material handling costs which would not clearly reflect income is denied similarly permission for the subsidiary to change to the proposed alternative facts and circumstances allocation method is denied the alternative method would not clearly reflect income because it improperly accelerates the deduction of coal transportation and material handling costs that are associated with electricity that will not be produced until a subsequent tax_year this letter is directed only to the taxpayer and may not be used or cited as precedent sincerely office of associate chief_counsel income_tax and accounting thomas a luxner chief branch cc


department of the treasury internal rev enue se rvice washington d c ta x e x e m p t a n d g o v e r n m e n t e n t i t i e s d i v i s i o n release number release date date date contact person identification_number telephone number employer_identification_number this is in response to n’s request for a ruling that certain proposed contractual legend m n dear ------------------ relationships will not generate unrelated_business_taxable_income under sec_512 of the internal_revenue_code the code m is exempt under sec_501 of the code as an organization described in sec_501 and has been classified as an educational_organization under sec_509 and sec_170 m is the trustee of a number of charitable_remainder trusts collectively the trusts and as trustee m is the legal owner of the trusts’ assets in addition m has a remainder_interest in each of the trusts n is one such charitable_remainder_trust in which m is trustee and remainder beneficiary substantial interest in the value of each trust moreover the donors to the trusts have funded the trusts with the intention that m benefit substantially from the assets of the trusts and that the assets will be managed to achieve the greatest possible return on investment as a result of the relationship with the trusts as both trustee and beneficiary m has a m’s endowment is invested in traditional publicly traded assets and private investments m’s private investments include real_estate and certain other venture investments undertaken primarily through partnership structures much of the income earned by the portfolio consists of passive dividends interest rents and long and short-term_capital_gains but some income is debt-financed or otherwise treated as unrelated_business_taxable_income m proposes to create a contractual obligation pursuant to which it would issue a contract right to each of the trusts for a proportionate share of m’s endowment the cumulative value of the shares would be the dollar value of the assets held by the individual trusts combined with the shares of the endowment held by the various departments and schools making up m’s institution the contract right would entitle the trusts to receive periodic_payments based on the shares owned by each of the trusts the trusts would thereby be able to receive an investment return equal to that of the endowment m determines a payout rate on the endowment each year based in part on the endowment’s investment performance through a custodian bank m calculates the market_value of each endowment share on a monthly basis the market_value of each endowment share initially equals the value_of_the_gift or contribution to the endowment and is subsequently adjusted in accordance with the market_value of the endowment each department and division is entitled to an amount equal to the payout rate times the number of shares it holds m seeks to enable the trusts to invest in the endowment in a manner identical to m’s departments or schools a_trust would acquire a share in the endowment which would give the trusts a contractual right against the university but no interest whatsoever in the underlying investment_assets of the endowment the shares would have the same value that m uses for internal accounting purposes by it equal to the payout rate m establishes for the endowment with payouts made at least annually or more frequently as appropriate a_trust could choose either to reinvest part of the payout or redeem additional shares depending on its cash requirements the trusts will treat payouts as ordinary_income regardless of the character of the underlying income of the endowment whether capital_gain ordinary_income or return_of_capital and regardless of whether the payout is made entirely by distributions of income or in part by redemption of shares the trusts will treat redemptions of shares over and above receipt of the payout rate as generating long or short-term_capital_gain or loss depending on the holding_period of the redeemed shares assets of the endowment or any contract rights with respect to the other trusts the trusts would have no power or right of any kind to control direct supervise recommend or review m’s business activities operations or decisions with respect to the endowment except the right to review the payout computations they would not have the right to veto or opt_out of any of the underlying endowment investments the contract would provide that with respect to the issuance of shares m is neither a partner nor an agent of the trusts that the trusts would never be or become liable for any cost expense or payment incurred or due by m or for which m is liable or responsible relating to the endowment or the underlying endowment assets and the contract would provide that each trust would receive payments on the shares held under the contract the trusts would not have any ownership_interest in the underlying m would indemnify and hold the trusts harmless from and against any liability arising out of any_action or inaction by m with respect to the endowment or the underlying endowment assets n has requested the following ruling the issuance of shares by m to the trusts the making or receipt of payments with respect to the shares and the holding or redemption of the shares will not generate unrelated_business_taxable_income to n law sec_512 of the code defines the term unrelated_business_taxable_income as the gross_income derived by any organization from any unrelated_trade_or_business regularly carried on by it less the allowable deductions which are directly connected with the carrying on of such trade_or_business both computed with the modifications provided in sec_512 sec_512 of the code sets forth so-called modifications which are excluded from the computation of unrelated_business_taxable_income these modifications include dividends interest royalties rent from real_property and gain from the sale of property sec_513 of the code defines the term unrelated_trade_or_business as any trade_or_business the conduct of which is not substantially related aside from the need of such organization for income or funds or the use it makes of the profits derived to the exercise or performance by such organization of its exempt_purpose or function sec_513 of the code provides that the term trade_or_business includes any activity which is carried on for the production_of_income from the sale_of_goods or the performance of services sec_1_513-1 of the income_tax regulations provides that gross_income of an exempt_organization subject_to the tax imposed by sec_511 of the code is includible in the computation of unrelated_business_taxable_income if it is income from a trade_or_business such trade_or_business is regularly carried on by the organization and the conduct of such trade_or_business is not substantially related other than through the production of funds to the organization's performance of its exempt functions sec_1_513-1 of the regulations provides that for purposes of sec_513 the term trade_or_business has the same meaning it has in sec_162 and generally includes any activity carried on for the production_of_income from the sale_of_goods or performance of services sec_1_513-1 of the regulations provides that in determining whether trade_or_business from which a particular amount of gross_income derives is regularly carried on within the meaning of sec_512 of the code regard must be had to the frequency and continuity with which the activities productive of the income are conducted and the manner in which they are pursued for example specific business activities of an exempt_organization will ordinarily be deemed to be regularly carried on if they manifest a frequency and continuity and are pursued in a manner generally similar to comparable commercial activities of non-exempt organizations sec_1_513-1 of the regulations provides that in general gross_income derives from unrelated_trade_or_business within the meaning of sec_513 of the code if the conduct of the trade_or_business which produces the income is not substantially related other than through the production of funds to the purposes for which exemption is granted the presence of this requirement necessitates an examination of the relationship between the business activities which generate the particular income in question -- the activities that is of producing or distributing the goods or performing the services involved -- and the accomplishment of the organization's exempt purposes sec_1_513-1 of the regulations provides that trade_or_business is related to exempt purposes in the relevant sense only where the conduct of the business activities has a causal relationship to the achievement of exempt purposes and is substantially related for purposes of sec_513 of the code only if the causal relationship is a substantial one thus for the conduct of trade_or_business from which a particular amount of gross_income is derived to be substantially related to purposes for which exemption is granted the production or distribution of the goods or the performance of the services from which the gross_income is derived must contribute importantly to the accomplishment of those purposes where the production or distribution of the goods or the performance of the services does not contribute importantly to the accomplishment of the exempt purposes of an organization the income from the sale of the goods or the performance of the services does not derive from the conduct of related trade_or_business whether activities productive of gross_income contribute importantly to the accomplishment of any purpose for which an organization is granted exemption depends in each case upon the facts and circumstances involved revrul_69_528 1969_2_cb_127 describes an organization that was formed to provide investment services on a fee basis exclusively to organizations exempt under sec_501 of the code it receives funds from the participating exempt_organizations invests in common stocks reinvests income and realized appreciation and upon request liquidates a participant's interest and distributes the proceeds to the participant the rev_rul states that providing investment services on a regular basis for a fee is a trade_or_business ordinarily carried on for profit if the services were regularly provided by one tax-exempt_organization for other tax-exempt organizations such activity would constitute unrelated_trade_or_business the rev_rul holds that the organization is not exempt under sec_501 as noted previously organizations described in sec_501 of the code are subject_to tax on their unrelated_business_income under sec_511 in order for such an organization’s income to be subject_to the unrelated_business_income_tax three requirement must be met the income must be from a trade_or_business the trade_or_business must be regularly carried on and the conduct of the trade_or_business must not be substantially related to the organization’s exempt_purpose or function see sec_1_513-1 of the regulations analysis m proposes to enter into a contractual relationship with certain trusts that are charitable_remainder trusts in which m has an interest as a beneficiary and serves as trustee of the trust under such a contractual relationship each trust would receive payments on the shares held by it equal to the payout rate m establishes for its endowment with payouts made in accordance with the trust instruments a_trust would acquire shares from m’s endowment which would give the trusts a contractual right against m but no interest whatsoever in the underlying investment_assets of the endowment the contract between m and the trusts would provide that the price of the shares would equal their value at the time of acquisition the shares would have the same value that m uses for internal accounting purposes consequently a_trust could choose either to reinvest part of the payout or redeem a portion of the shares depending on its cash requirements thus under the contractual relationship with m the trusts would have a right to the payout declared by m plus the right to redeem the shares at the value that m uses for internal accounting purposes generally an organization that otherwise qualifies for recognition of exemption under sec_501 of the code and provides investment services on a regular basis for a fee to other exempt or nonexempt organizations would be engaged in an unrelated_trade_or_business under sec_513 see revrul_69_528 supra such an activity would constitute a trade_or_business under sec_513 and sec_1_513-1 of the regulations and would be regularly carried on under sec_512 and sec_1_513-1 thus if m charged a fee for investment management services provided to organizations unrelated to m or generated income from the management of the funds invested by such organizations these activities could result in unrelated_business_taxable_income under sec_512 here however m is not charging a fee for its services and not otherwise receiving income from the services it provides to the trusts thus under these circumstances m will not receive unrelated_business_taxable_income under sec_512 the fact that m will engage in the investment activity for the benefit of individuals who are co-beneficiaries of the trusts at the same time that it engages in investment activity for its own benefit as the remainder beneficiary limits the scope of the service provided to others and distinguishes it from a commercial venture as stated above under the contract the trusts would not have any ownership_interest in the underlying assets of the endowment nor any contract rights with respect to the other trusts the trusts would have no power or right of any kind to control direct supervise recommend or review m’s business activities operations or decisions with respect to the endowment except the right to review the payout computations they would not have any right to veto or opt_out of any of the underlying endowment investments the contract would provide that with respect to the issuance of the shares m is neither a partner nor an agent of the trusts that the trusts would never be or become liable for any cost expense or payment incurred or due by m or for which m is liable or responsible relating to the endowment or the underlying endowment assets and m would indemnify and hold the trusts harmless from and against any liability arising out of any_action or inaction by m with respect to the endowment or the underlying endowment assets the trusts do not have a position of ownership in the underlying assets of m’s endowment since the contractual relationship between m and the trusts is not in the nature of a partnership or agency the income earned by the trusts from the payout m establishes for the shares reflects ordinary_income and does not take on the character of the income of the underlying assets or debt-financed or unrelated_business_taxable_income m would pay any_tax owed on ubti earned by the endowment portfolio with no deduction taken against ubti for any payments made to the trusts in view of the foregoing we rule as follows the issuance of shares from m to the trusts the making or receipt of payments with respect to the shares and the holding or redemption of the shares will not generate unrelated_business_taxable_income to n a charitable_remainder_trust this ruling is based on the understanding that there will be no material changes in the facts upon which it is based we express no opinion as to the tax consequences of the proposed transaction under any other section of the code pursuant to a power_of_attorney on file in this office a copy of this letter is being sent to n’s authorized representatives a copy of this letter should be kept in its permanent records this ruling is directed only to the organization that requested it sec_6110 of the code provides that it may not be used or cited by others as precedent if there are any questions about this ruling please contact the person whose name and telephone number are shown in the heading of this letter enclosure notice steven grodnitzky manager exempt_organizations technical group sincerely


department of the treasury internal_revenue_service washington d c tax_exempt_and_government_entities_division nov uniform issue list se tep rat legend taxpayer a ira b financial institutionc financial_institution d fund e financial institutionf financial institutiong account h amount dear this letter is in response to a request for a letter_ruling dated date as supplemented by email correspondence dated date from your authorized representative in which you request a waiver of the 60-day rollover requirement contained in sec_408 of the intemal revenue code code the following facts and representations have been submitted under penalty of perjury in support of the ruling requested taxpayer a age represents that she took a distribution from ira b totaling amount taxpayer a asserts that her failure to accomplish a rollover within the 60-day period prescribed by sec_408 of the code was due to an error by financial_institution d taxpayer a further asserts that amount has not been used for any purpose taxpayer a maintained ira b an individual_retirement_account under sec_408 of the code with financial_institution c financial_institution d manages fund e a pooled investment fund that invests in publicly-traded equity securities of companies with market capitalizations below certain prescribed levels the custodian for fund e is financial_institution f a subsidiary of financial_institution g financial_institution d had served as an investment_advisor to taxpayer a by regularly providing investment_asset management and advisory services in may a financial advisor at financial_institution d recommended that taxpayer a transfer funds in ira b to fund e because it presented a good investment opportunity on date the financial advisor at financial_institution d prepared on taxpayer a’s behalf a subscription agreement for investing in fund e taxpayer a completed and executed the subscription agreement electing an investment of amount and designating taxpayer a ira as the investor in the fund taxpayer a included this designation on the subscription agreement as a written instruction to financial_institution d that the new account be an ira financial listing institution d mailed a new account opening form to financial_institution g taxpayer a ira as accountholder subsequently taxpayer a directed financial_institution c to execute a wire transfer of amount from ira b to an account with financial_institution g in the name of taxpayer a ira the transfer was completed on date taxpayer a expected financial institutions d and g to coordinate the transfer of in a manner that assured it would be deposited into an ira taxpayer amount a had no direct contact with financial_institution g regarding the transaction financial institutions c and d requested confirmation from financial_institution g that the transfer had taken place and that account h was labeled taxpayer a ira respectively financial_institution g provided a letter accepting transfer of after the transfer of amount into an account in the name of taxpayer a ira amount from ira b taxpayer a received monthly statements for account h which indicated it was an ira in late march of taxpayer a’s financial advisor at financial_institution d a communicated with financial_institution g regarding another client's beneficiary designation for fund e after a series of discussions on or around date financial_institution g informed taxpayer a’s financial advisor that account h was not an ira even though he was told it would be an ira and that it was titled as an ira account financial_institution d has acknowledged in writing that it erred when it failed to assure that amount would be transferred to an ira based on the above facts and representations you request that the internal_revenue_service service waive the 60-day rollover requirement contained in sec_408 of the code with respect to the distribution of amount sec_408 of the code provides that except as otherwise provided in sec_408 of the code any amount_paid or distributed out of an ira shall be included in gross_income by the payee or distributee as the case may be in the manner provided under sec_72 of the code sec_408 of the code provides the rules applicable to ira_rollovers sec_408 of the code provides that sec_408 of the code does not apply to any amount_paid or distributed out of an ira to the individual for whose benefit the ira is maintained if - i the entire amount received including money and any other_property is paid into an ira for the benefit of such individual not later than the day after the day on which the individual receives the payment or distribution or ii the entire amount received including money and any other_property is paid into an eligible_retirement_plan other than an ira for the benefit of such individual not later than the day after the date on which the payment or distribution is received except that the maximum amount which may be paidinto such plan may not exceed the portion of the amount received which is includible in gross_income determined without regard to sec_408 of the code - sec_408 of the code provides that sec_408 of the code does not apply to any amount described in sec_408 3axi of the code received by an individual from an ira if at any time during the 1-year period ending on the day of such receipt such individual received any other amount described in sec_408 of the code from an ira which was not includible in gross_income because of the application of sec_408 of the code sec_408 d d of the code provides a similar 60-day rollover period for partial rollovers sec_408 of the code provides that the secretary may waive the 60-day requirement under sec_408 and sec_408 of the code where the failure to waive such requirement would be against equity or good conscience including casualty disaster or other events beyond the reasonable control of the individual subject_to such requirement only distributions that occurred after date are eligible for the waiver under sec_408 of the code provides that in revproc_2003_16 2003_4_irb_359 january determining whether to grant a waiver of the 60-day rollover requirement pursuant to sec_408 of the code the service will consider all relevant facts and circumstances including errors committed by a financial_institution inability to complete a rollover due to death disability hospitalization incarceration restrictions imposed by a foreign_country or postal error the use of the amount distributed for example in the case of payment by check whether the check was cashed and the time elapsed since the distribution occurred the information presented and the documentation submitted by taxpayer a is consistent with her assertion that her failure to accomplish a timely rollover of - amount was due to an error by financial_institution d therefore pursuant to sec_408 of the code the service hereby waives the 60-day rollover requirement with respect to the distribution of amount from ira b taxpayer a is granted a period of days from the issuance of this letter_ruling to contribute amount into a rollover ira provided all other requirements of sec_408 of the code except the 60-day requirement are met with respect to such contribution amount will be considered a rollover_contribution within the meaning of sec_408 no opinion is expressed as to the tax treatment of the transaction described herein under the provisions of any other section of either the code or regulations which may be applicable thereto this letter is directed only to the taxpayer who requested it sec_61 k'3 of the code provides that it may not be used or cited as precedent a copy of this letter_ruling has been sent to your authorized representative pursuant to a power_of_attorney on file in this office this ruling please contact if you wish to inquire about i d at deleted copy of this letter notice of intention to disclose notice manager employee_plans technical group cme vill enclosures cc


internal_revenue_service director exempt_organizations rulings and agreements department of the treasury p o box cincinnati ohio number release date date decamber employer_identification_number person to contact - id contact telephone numbers phone fax oil legend dear is classified as of the cede and that it we have considered your request for advance approval of your grant-making program under sec_4945 of the internal_revenue_code dated july our records indicate that b was recognized as exempt from federal_income_tax under sec_501 private_foundation as defined in sec_509 your letter indicates that b will operate a grant-making program to benefit students from low-income families who would otherwise continue their education in public schools that have limited resources in grants will be the form of scholarships for the chosen students to attend highly regarded private boarding schools each boarding school will be chosen by b based on the school's academic reputation and geographic proximity to the student's family residence grants will be paid directly to the private_schools and will cover the full cost of tuition room and board and all incidental_expenses of attendance for up to four years in the final a public school located in a student at g stages of process for a grant to a very low income largely minority neighborhood additional students will be dependent on the success of the initial grant no grant has yet been made though b future grants to is a a is g and is a teacher at to make selection decisions b and other opportunities for other active or former members of a member of the corps of teachers of h the financial resources available to contributions consistent with b's exempt_purpose potential recipients will be identified through the recommendation of teachers and school administrators the principal criteria for selection of the grantee will be academic achievement and demonstration of capacity to benefit froma first rate education selection of recipients will be made by c a family_member of b's trustees publicly-supported sec_501 organization that operates a prominent program of recruiting outstanding recent college graduates to serve for two years teaching in underserved urban and rural public schools at the primary or secondary education level h may be selection decisions whether designated by b by c or others will be made in consultation with other members of h's program and with other school faculty approval of b's board grantees may be selected from students enrolled at g or from any other school in the nation served by h's program no disqualified_person as described in sec_4946 will be eligible for a grant b will receive and xeview reports from the boarding school to assure that funds are used for their intended purpose discovered b will take all steps necessary to recover the funds and will grant no further funds for use by the institution involved b will maintain reasonable records relating to the evaluation and selection of grantees identification of whether a grantee is and documentation of actions taken in cases of misused grant funds sec_4945 a and of the code impose certain excise_taxes on taxable_expenditures made by a private_foundation sec_4945 d of the code provides that the term taxable_expenditure means any amount_paid or incurred by a private_foundation as a grant to an individual for travel study or other similar purposes by such individual unless such grant satisfies the requirements of subsection a all selections are subject_to the a disqualified_person should any misuse be b of the code provides that sec_4945 shall not sec_4945 q apply to individual grants awarded on an objective and nondiscriminatory basis pursuant to is demonstrated that a procedure approved in advance if it the grant constitutes a scholarship or fellowship_grant which is subject_to the provisions of sec_117 a be used for study at an educational_organization described in section b a ibs the grant constitutes a prize or award which is subject_to the provisions of sec_74 if the recipient of such prize or award is selected from the general_public or and is to the purpose of the grant is to achieve a specific objective produce a report or similar product or improve or enhance a literary artistic musical scientific teaching or other similar capacity skill or talent of the grantee sec_53_4945-4 c approval a private_foundation must demonstrate tha of the regulations provides that to secure ii its grant procedure includes an objective and nondiscriminatory selection process such procedure is reasonably calculated to result in performance by grantees of the activities that the grants are intended to finance and iii the foundation plans to obtain reports to determine whether the grantees performed activities that the grants are intended to finance based on the information submitted and assuming your award programs will be conducted as proposed with a view to provide objectivity and nondiscrimination in making the awards we have determined that your procedures for granting the awards comply with the requirements contained in sec_4945 of the code and that awards granted in accordance with such procedures will not constitute taxable_expenditures within the meaning of sec_4945 in addition we have determined that awards made under your procedures aze excludable from the gross_income of the recipients subject_to the limitations provided by sec_117 of the code this determination is conditioned on the understanding that there will be is further no material_change in the facts upon which it conditioned on the premise that no grants will be awarded to foundation managers ox members of the selection committee or inconsistent with the purpose described in sec_170 c b of the code the approval of your award program procedures herein constitutes a one-time approval of your system standards and procedures designed to result in of the code this awards which meet the requirements of sec_4945 determination only covers the grant programs described above thus approval shall apply to subsequent award programs only as long as the standards and procedures under which they are conducted do not differ materially from those described in your request for a purpose that is is based it any funds you distribute to individuals must be made on a true charitable basis in furtherance of the purposes for which you are organized therefore you should maintain adequate_records and case histories so that any or all award distributions can be substantiated upon request by the internal_revenue_service of the code provides that it may not be used or cited as this determination is directed only to the organization that requested it sec_6110 a precedent you must report any future changes in your grant making procedures keep a copy of this letter in your permanent records if you have any questions please contact the person whose name and telephone number are shown above please sincerely yours robert choi director exempt_organizations rulings and agreements


internal_revenue_service index no number release date department of the treasury p o box ben franklin station washington dc person to contact telephone number refer reply to cc dom p si plr-114361-98 date date re legend this is in response to your submission of date and prior correspondence in which you requested a ruling under sec_2652 of the internal_revenue_code and sec_301_9100-1 of the procedure and administration regulations decedent died testate on date survived by spouse article sixth of decedent's will provides that the residue of decedent’s estate is to pass to a_trust for the benefit of spouse article eighth provides that the trustee is to hold the property in one or more trusts as the trustee in his discretion shall determine to be advisable for the purpose of minimizing the generation- skipping transfer_tax during her life spouse is to receive all of the net_income from the trust at least annually upon spouse's death article eighth of decedent's will provides that any accumulated income in the trust is to be distributed to spouse’s estate the remainder of the trust after payment of taxes is to be distributed for the benefit of decedent’s issue on schedule m of form_706 timely filed by the estate the executors made an election under sec_2056 with respect to the entire value of the trust a deduction under sec_2056 was claimed for this amount the executors however failed to make an election under sec_2652 with respect to the trust on date the estate filed an amended schedule r that signifies that a reverse_qtip_election is being made with respect to the trust the decedent’s personal_representatives request an extension of time under sec_301_9100-1 to make an election under sec_2652 with respect to the trust sec_2001 imposes a tax on the transfer of the taxable_estate of every decedent who is a citizen or resident_of_the_united_states sec_2056 provides that for purposes of the tax imposed by sec_2001 the value of the taxable_estate is to be determined by deducting from the value of the gross_estate an amount equal to the value of any interest in property that passes or has passed_from_the_decedent to the surviving_spouse sec_2056 provides the general_rule that no deduction shall be allowed for an interest passing to the surviving_spouse if on the lapse of time on the occurrence of an event or contingency or on the failure of an event or contingency to occur the interest will terminate or fail sec_2056 provides that in the case of qualified_terminable_interest_property the entire property shall be treated as passing to the surviving_spouse for purposes of sec_2056 and no part of the property shall be treated as passing to any person other than the surviving_spouse in a form described in sec_2056 sec_2056 defines qualified_terminable_interest_property qtip as property which passes from the decedent in which the surviving_spouse has a qualifying_income_interest_for_life and to which an election under sec_2056 applies sec_2601 imposes a tax on every generation-skipping_transfer under sec_2631 with regard to the generation-skipping_transfer_tax gstt each individual is allowed an exemption of dollar_figure which may be allocated by such individual or by his or her executor to any property with respect to which such individual is the transferor under sec_2632 the allocation may be made at any time on or before the date prescribed for filing the individual's estate_tax_return including extensions under sec_2632 any portion of an individual’s gstt exemption not allocated within the time prescribed in sec_2632 is allocated in accordance with that section sec_2652 provides that in the case of any trust with respect to which a deduction is allowed to the decedent's_estate under sec_2056 the estate of the decedent may elect to treat all of the property in the trust for purposes of the gstt as if the election to be treated as qualified_terminable_interest_property had not been made this election is referred to as the reverse_qtip_election the consequence of a reverse_qtip_election is that the decedent remains for gstt purposes the transferor of the qtip_trust for which the election is made as a result the decedent’s gstt exemption may be allocated to the qtip_trust under sec_301_9100-1 of the procedure and administration regulations the commissioner may grant a reasonable extension of time to make a regulatory election or a statutory election but no more than months except in the case of a taxpayer who is abroad under all subtitles of the internal_revenue_code except subtitles e g h and i if the taxpayer demonstrates to the satisfaction of the commissioner that the taxpayer has acted reasonably and in good_faith and granting relief will not prejudice the interests of the government sec_301_9100-1 through provide the standards the commissioner will use to determine whether to grant an extension of time to make an election sec_301_9100-1 sec_301_9100-2 provides automatic extensions of time for making certain elections sec_301_9100-3 provides extensions of time for making elections that do not meet the requirements of sec_301_9100-2 requests for relief under sec_301_9100-3 will be granted when the taxpayer provides the evidence to establish that the taxpayer acted reasonably and in good_faith and granting relief will not prejudice the interests of the government sec_301_9100-3 in this case the standards of sec_301_9100-1 and sec_301_9100-3 have been satisfied consequently an extension of time is granted until date for making an election under sec_2652 with respect to the marital trust except as specifically ruled herein we express no opinion on the federal tax consequences of the transaction under the cited provisions or under any other provisions of the code we note that an extension of time to make the reverse_qtip_election under sec_2652 does not extend the time to make an allocation of any remaining gstt exemption in the instant case the executors did not make any allocation of the gstt exemption on the estate_tax_return accordingly in view of the reverse_qtip_election decedent's available gstt exemption is allocated in accordance with the rules of sec_2632 this ruling is directed only to the taxpayer who requested it sec_6110 provides that it may not be used or cited as precedent sincerely yours paul f kugler assistant chief_counsel passthroughs and special industries enclosure copy for sec_6110 purposes


internal_revenue_service number release date index number ------------------------------------------------------------ ------------------- ------------------------------------------------------------ ------- -------------------------------------------------- ----------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ------------------ id no ----------------- telephone number --------------------- refer reply to cc ita b05 plr-155823-09 date date legend issuer notes date date date x -------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------- ----------------------------------------------- ---------------- -------------------- ---------------------- -------------- this is in response to your authorized representatives’ letter dated date requesting a ruling that sec_56 of the internal_revenue_code will not apply to the interest on bonds issued after date and before date to refund commercial paper the issue_date of which is after date and before date and such bonds will not be treated as private_activity_bonds under sec_57 facts and representations on date which occurred after date and before date issuer executed a single master legal document master document that governs notes which are exempt facility private_activity_bonds having a maturity of days or less and are issued pursuant to the same commercial paper program to finance or refinance the same governmental purpose on the same date the master document was executed issuer issued x dollars of notes which amount exceeds dollar_figure after date issuer issued both new money notes and refunding notes pursuant to the commercial paper program the last date on which issuer issued new money notes was date which is less than eighteen months after date plr-155823-09 since date only refunding notes have been issued and none of the refunding notes issued since date have increased the principal_amount of the outstanding notes the term of the commercial paper program for notes will not extend beyond date which is less than years from date in its tax certificates issuer elected to treat notes as a single issue the issue_date of which is date pursuant to sec_1_150-1 of the income_tax regulations issuer intends to issue bonds bonds to refund all outstanding notes the issuer intends to issue the bonds after date and before date requested rulings sec_56 will not apply to the interest on the bonds the bonds will not be treated as private_activity_bonds under sec_57 law and analysis sec_103 provides that except as provided in sec_103 gross_income does not include interest on any state_or_local_bond in addition to the other taxes imposed by subtitle a of the internal_revenue_code sec_55 imposes the alternative_minimum_tax to calculate the alternative_minimum_tax imposed by sec_55 a taxpayer must calculate its alternative_minimum_taxable_income sec_55 of the code provides that the term alternative_minimum_taxable_income means the taxable_income of the taxpayer for the taxable_year determined with the adjustments provided in sec_56 and sec_58 and increased by the amount of the items of tax preference described in sec_57 sec_57 provides that one item_of_tax_preference is tax-exempt_interest on specified private_activity_bonds reduced by any deduction not allowable in computing the regular_tax which would have been allowable if such interest were includible in gross_income sec_57 provides that generally a specified_private_activity_bond is any private_activity_bond as defined in sec_141 which is issued after date and the interest on which is not includible in gross_income under sec_103 one of the adjustments taken into account in determining the alternative_minimum_taxable_income of a corporation is the adjusted_current_earnings adjustment sec_56 provides that the alternative_minimum_taxable_income of any corporation for any taxable_year shall be increased by percent of the excess if any of the adjusted_current_earnings of the corporation over the alternative_minimum_taxable_income plr-155823-09 determined without regard to sec_56 and the alternative_tax_net_operating_loss_deduction the ace_adjustment sec_56 provides that for purposes of sec_56 the term adjusted_current_earnings means the alternative_minimum_taxable_income for the taxable_year determined with the adjustments provided in sec_56 and determined without regard to the alternative_tax_net_operating_loss_deduction or the ace_adjustment sec_56 includes in adjusted_current_earnings amounts that are otherwise excludable from gross_income for purposes of computing alternative_minimum_taxable_income if such amounts are includable in determining the amount of earnings_and_profits for this purpose sec_1_56_g_-1 makes clear that amounts are treated as excludable from gross_income for purposes of computing alternative_minimum_taxable_income only if such amounts are permanently excludable from inclusion in gross_income for alternative_minimum_tax purposes sec_56 reduces the amount of income included in adjusted_current_earnings under g b i i by any deduction which would have been allowable in computing alternative_minimum_taxable_income if such amount had been includible in gross_income sec_1_56_g_-1 provides a partial list of income items excluded from gross_income for purposes of computing alternative_minimum_taxable_income prior to taking into account the ace_adjustment but that are included in earnings_and_profits which list includes interest excluded under sec_103 consequently unless an exception applies interest on a bond that is excludable from gross_income in computing regular taxable_income may be includible in alternative_minimum_taxable_income either as interest on a specified_private_activity_bond pursuant to sec_57 or as a result of an increase in adjusted_current_earnings pursuant to sec_56 sec_57 provides i for purposes of sec_57 the term private_activity_bond shall not include any bond issued after date and before date ii for purposes of sec_57 a refunding_bond whether a current or advance refunding shall be treated as issued on the date of the issuance of the refunded bond or in the case of a series of refundings the original bond and iii sec_57 shall not apply to any refunding_bond which is issued to refund any bond which was issued after date and before date sec_56 provides i sec_56 shall not apply in the case of any interest on a bond issued after date and before date ii for purposes of sec_56 a refunding_bond whether a current or advance refunding shall be treated as issued on the date of the issuance of the refunded bond or in the case of a series of refundings the original bond and iii sec_56 plr-155823-09 shall not apply to any refunding_bond which is issued to refund any bond which was issued after date and before date sec_103 provides that interest on a state_or_local_bond is not excluded from gross_income if the bond is a private_activity_bond that is not a qualified_bond within the meaning of sec_141 under sec_141 a qualified_bond includes an exempt_facility_bond so long as other applicable_requirements are satisfied sec_150 provides that for purposes of sec_141 through the term bond includes any obligation sec_1_150-1 provides that generally issue_date in reference to an issue is the first date on which the issuer receives the purchase_price in exchange for delivery of the evidence_of_indebtedness representing any bond included in the issue issue_date in reference to a bond is the date on which the issuer receives the purchase_price in exchange for that bond and in no event is the issue_date earlier than the first day on which interest begins to accrue on the bond or bonds for federal_income_tax purposes sec_1_150-1 provides that generally the term issue means two or more bonds that are sold at substantially the same time are sold pursuant to the same plan of financing and are reasonably expected to be paid from substantially the same source of funds sec_1_150-1 provides that short-term bonds having a maturity of days or less commercial paper issued pursuant to the same commercial paper program may be treated as part of a single issue the issue_date of which is the first date the aggregate amount of commercial paper issued under the program exceeds the lesser_of dollar_figure or percent of the aggregate issue_price of the commercial paper in the program a commercial paper program is a program to issue commercial paper to finance or refinance the same governmental purpose pursuant to a single master legal document commercial paper is not part of the same commercial paper program unless issued during an 18-month period beginning on the deemed issue_date in addition commercial paper issued after the end of this 18-month period may be treated as part of the program to the extent issued to refund commercial paper that is part of the program but only to the extent that there is no increase in the principal_amount outstanding and the program does not have a term in excess of i years or ii the period reasonably necessary for the governmental purposes of the program issuer executed the master document on date also on date issuer issued notes in excess of dollar_figure issuer has subsequently issued other notes pursuant to the same commercial paper program but all new money notes were issued within the month period beginning on date only refunding notes were issued outside this month period and none of these notes increased the principal_amount of notes plr-155823-09 outstanding the term of issuer’s commercial paper program does not exceed years in its tax certificates issuer elected to treat notes as a single issue the issue_date of which is date pursuant to sec_1_150-1 thus pursuant to sec_1 c ii a the issue_date of the notes is date sec_1_56_g_-1 specifically lists interest that is excluded under sec_103 as an item to be included in a corporation’s adjusted_current_earnings for purposes of calculating alternative_minimum_taxable_income sec_103 specifically references sec_141 in determining which private_activity_bonds are qualified bonds because the provisions of sec_150 and the regulations thereunder including sec_1_150-1 otherwise apply to private_activity_bonds under sec_141 and because sec_141 through application of sec_103 is used as the basis for determining adjusted_current_earnings for purposes of calculating alternative_minimum_taxable_income we conclude that the special rule for commercial paper financings applies for the purpose of determining the issue_date of an issue under sec_56 because the issue_date of the notes pursuant to sec_1_150-1 is date the issue_date of the notes for purposes of sec_56 is date under sec_56 sec_56 will not apply to bonds because bonds will be issued to refund notes which were issued on date and date is after date and before date because sec_56 will not apply to bonds for purposes of sec_56 the issue_date of the bonds is determined pursuant to the general rules contained in sec_1_150-1 and c based on issuer’s representations that the bonds will be issued after date and before date for purposes of sec_56 the issue_date of the bonds will be after date and before date sec_56 states that sec_56 shall not apply in the case of any interest on a bond issued after date and before date therefore if bonds are issued after date and before date sec_56 will not apply to the interest on the bonds sec_57 includes as items of tax preference private_activity_bonds as defined in sec_141 the interest on which is excluded under sec_103 because the provisions of sec_150 and the regulations thereunder including sec_1_150-1 otherwise apply to private_activity_bonds under sec_141 and because sec_141 through the application of sec_103 and otherwise is also used as the basis for inclusion of certain interest as an item_of_tax_preference for purposes of calculating alternative_minimum_taxable_income we also conclude that the special rule for commercial paper financings applies for the purpose of determining the issue_date of an issue under sec_57 because the issue_date of the notes pursuant to sec_1_150-1 is date the issue_date of the notes for purposes of sec_57 is date under sec_57 sec_57 will not apply to bonds because bonds will be issued to refund notes which were issued on date and date is after date and before date because sec_57 will not apply to bonds plr-155823-09 for purposes of sec_57 the issue_date of the bonds is determined pursuant to the general rules contained in sec_1_150-1 and c based on issuer’s representations that the bonds will be issued after date and before date for purposes of sec_57 the issue_date of the bonds will be after date and before date sec_57 states that for purposes of sec_57 the term private_activity_bond shall not include any bond issued after date and before date therefore if bonds are issued after date and before date the bonds will not be treated as private_activity_bonds under sec_57 conclusions based on the facts presented and representations made if bonds are issued after date and before date sec_56 will not apply to the interest on the bonds the bonds will not be treated as private_activity_bonds under sec_57 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 issuer 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 the rulings contained in this letter are based upon information and representations submitted by issuer and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in support of the request for rulings it is subject_to verification on examination sincerely jeffrey rodrick senior technician reviewer branch income_tax accounting cc


number release date id office uilc cca_2009061011221437 -------------- from ------------------- sent wednesday date am to ------------------ cc ----------- subject re consent questions -------------------------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------------------------------- ---------------------- the questions below reflect a misconception a tefra proceeding is a proceeding of the partners not the partnership and each year is a separate cause of action the tmp is the designated agent for the partners for each year for which it is designated so for entity lp the form 872-p should reflect the name of the partnership for the years in issue see 95_tc_388 subsequent dissolution of partnership is irrelevant since a tefra proceeding is a proceeding of the partners not the partnership the tmp designation for the two years under audits terminated when the tmp dissolved into another entity sec_301_6231_a_7_-1 the partnership cannot designate the remaining partner as tmp because it is a limited_partner sec_6231 the service however could designate the limited_partner as tmp under sec_301_6231_a_7_-1 and then get it to sign a form 872-p its name or status in subsequent years is irrelevant for entity llc sec_301_6231_a_7_-2 applies to the designation of a tmp manger as you indicate then all members are deemed to be member-managers treated as general partners for tmp designation purposes in the absence of a designation the member with the largest profits interest as on the end of the year is automatically the tmp sec_6231 sec_301_6231_a_7_-1 if no member is a


department of the treasury person to contact d number contact telephone numbers employer_identification_number vil internal_revenue_service p o box cincinnati ohio release number release date date date legend b state c foundation d award e program p number q number r dollars amount dear this is in response to your request dated date for advance approval that a potential grant or contribution constitutes an unusual grant based on information submitted we’ve determined that you don’t meet the requirements for approval of your request the basis for our conclusion is set forth in enclosure we'll make our proposed adverse determination_letter available for public inspection under internal_revenue_code sec_6110 after deleting certain identifying information please read the enclosed notice notice of intention to disclose and review the two attached letters that show our proposed deletions if you disagree with our proposed deletions you should follow the instructions in notice if you agree with our deletions you don’t need to take any further action for important information about your responsibilities as a tax-exempt_organization go to www irs gov charities enter 4221-pc in the search bar to view publication 4221-pc letter catalog number 58229x compliance guide for c public_charities which describes your recordkeeping reporting and disclosure requirements you should keep a copy of this letter in your permanent records we have sent a copy of this letter to your representative as indicated in your power_of_attorney if you have any questions please contact the person whose name and telephone are shown in the heading of this letter sincerely stephen a martin director exempt_organizations rulings and agreements enclosures enclosure notice letter catalog number 58229x enclosure facts you are a b corporation that qualifies as an organization under sec_501 and sec_170 of the internal_revenue_code you are primarily an educational and academic organization on date you requested a potential grant be classified as an unusual grant c proposed a one-time inter_vivos contribution of r dollars to you to provide permanent support for two core programs d and e c represents there will be no material restrictions or conditions regarding the grant other than restrictions which are consistent with the establishment and maintenance of an endowment fund under b law and the gift be administered as an endowment fund for certain named programs previously supported by c in furtherance of your charitable purposes and mission c has previously contributed a substantial part of your support approximately p of your total fy you cite revrul_76_440 as authority supporting your position for the grant being classified as unusual revenue and q of fy law sec_1_170a-9 and sec_1_509_a_-3 set forth the criteria for an unusual grant sec_1_170a-9 states that for purposes of applying the 2-percent limitation to determine whether the percent-of-support test is satisfied one or more contributions may be excluded from both the numerator and the denominator of the applicable percent-of-support fraction the exclusion is generally intended to apply to substantial contributions or bequests from disinterested parties which are attracted by reason of the publicly supported nature of the organization are unusual or unexpected with respect to the amount thereof and would by reason of their size adversely affect the status of the organization as normally being publicly supported sec_1_509_a_-3 states that all pertinent facts and circumstances will be taken into consideration to determine whether a particular contribution may be excluded no single factor will necessarily be determinative such factors may include e e e whether the contribution was made by a person who a created the organization b previously contributed a substantial part of its support or endowment c stood in a position of authority with respect to the organization such as a foundation_manager within the meaning of sec_4946 catalog number 58229x letter directly or indirectly exercised control_over the organization or d e was ina relationship described in internal_revenue_code sec_4946 through a g with someone listed in bullets a b c ord above a contribution made by a person described in a - e is ordinarily given less favorable consideration than a contribution made by others not described above whether the contribution was a bequest or an inter_vivos transfer a bequest will ordinarily be given more favorable consideration than an inter_vivos transfer whether the contribution was in the form of cash readily marketable_securities or assets which further the exempt purposes of the organization such as a gift of a painting to a museum whether except in the case of a new organization prior to the receipt of the particular contribution the organization a has carried on an actual program of public solicitation and exempt_activities and b has been able to attract a significant amount of public support whether the organization may reasonably be expected to attract a significant amount of public support after the particular contribution continued reliance on unusual grants to fund an organization's current operating_expenses as opposed to providing new endowment funds may be evidence that the organization cannot reasonably be expected to attract future public support whether prior to the year in which the particular contribution was received the organization met the one-third support_test described in sec_1 a - a without the benefit of any exclusions of unusual grants pursuant to sec_1 c whether the organization has a representative governing body as described in sec_1_509_a_-3 and whether material restrictions or conditions within the meaning of sec_1_507-2 have been imposed by the transferor upon the transferee in connection with such transfer revrul_76_440 states in part that a large inter_vivos gift of undeveloped land from a disinterested donor to a normally publicly_supported_organization exempt under sec_501 of the code conditioned on the land's being used in perpetuity to further the exempt organization's purposes of preserving natural_resources constitutes an unusual grant and will not adversely affect the status of the organization as a publicly letter catalog number 58229x supported_organization the gift in question was made by an otherwise disinterested party neither the donor nor any person whose relationship to the donor is described in sec_4946 through g of the code created the organization previously contributed a substantial part of the organization's support or endowment or stands ina position of authority with respect to the organization application of law we have concluded the proposed grant does not constitute an unusual grant under sec_1_170a-9 based on the information provided the donor c is not a disinterested party as they have previously and continually contributed to you substantial revenue we find you are distinguishable from revrul_76_440 due to the historic relationship between you and c the proposed grant is not unusual or unexpected subsequent grants from the same donor are logically more usual and more expected while not determinative the other factors weighing on whether the grant is considered unusual as outlined in the regulations as well as revrul_76_440 are that the proposed cash transfer is inter_vivos not by bequest and is not attracted by reason of the your publicly supported nature but by your continual relationship with the donor letter catalog number 58229x


internal_revenue_service department of the treasury index number washington dc number release date person to contact telephone number refer reply to cc corp 1-plr-106719-00 date date re legend group parent parent purchaser target fholdco purchaser sellers company official tax professional date a date b date c date d date e plr-106719-00 business w country x this letter responds to your authorized representative’s letter dated date requesting an extension of time under sec_301_9100-1 through of the procedure and administration regulations to file an election group parent as common parent of the consolidated_group of which parent the united_states_shareholder of purchaser the foreign purchasing company is a member is requesting the extension to file an election under sec_338 of the internal_revenue_code and sec_1_338-1 and sec_1_338-1 of the income_tax regulations with respect to the acquisition of the stock of target sometimes hereinafter referred to as the election additional information was received in letters dated may may july and date the information submitted for consideration is summarized below all citations in this letter refer to regulations as in effect for date a group parent is the common parent of a consolidated_group that has a week taxable_year and uses the accrual_method of accounting parent is a wholly owned u s subsidiary of group parent and is included in group parent’s consolidated federal_income_tax return purchaser is a wholly owned country x subsidiary of parent and is part of the same affiliated_group for purposes of sec_338 company official is an officer of group parent prior to the acquisition described below target was wholly owned by sellers target is a country x corporation sellers are nonresident foreign individuals target is engaged in business w prior to the acquisition sellers and target did not file u s income_tax returns and they were not subject_to u s income_taxation target was not a controlled_foreign_corporation within the meaning of sec_957 a passive_foreign_investment_company or a foreign_corporation for which an election under sec_1295 is in effect a foreign_investment_company or a foreign_corporation the stock ownership of which is described in sec_552 a united_states_real_property_holding_corporation or required under sec_1_6012-2 to file a u s income_tax return additionally it is represented that sellers are not subject_to a tax on the sale of their respective shares of target under sec_871 on date a pursuant to a stock purchase agreement with sellers purchaser acquired the stock of target for cash in a fully taxable transaction on date d purchaser sold the stock of target to fholdco on date e purchaser and target merged in a purported reorganization under sec_368 and the surviving corporation took a different name the election was due on date b however for various reasons the election was not filed on date c which is after the due_date for the election tax professional discovered that the election had not been filed plr-106719-00 it is represented that purchaser was not related to sellers within the meaning of sec_338 and the acquisition of the stock of target qualified as a qualified_stock_purchase as defined in sec_338 the period of limitations on assessments under sec_6501 has not expired for group parent’s or target’s taxable_year s in which the acquisition occurred the taxable years in which the election should have been filed or any taxable_year s that would have been affected by the election had it been timely filed sec_338 permits certain stock purchases to be treated as asset purchases if the purchasing_corporation makes or is treated as having made a sec_338 election under sec_338 and the acquisition is a qualified_stock_purchase sec_338 defines a qualified_stock_purchase as any transaction or series of transactions in which stock meeting the requirements of sec_1504 of one corporation is acquired by another corporation by purchase during the 12-month_acquisition_period sec_1_338-1 and v provide inter alia that a foreign purchasing_corporation or deemed foreign purchasing_corporation is not eligible for the special rule under sec_1_338-1 ie which specifies a filing_date for the election that is later than the filing_date required by sec_338 and sec_1_338-1 if such corporation is considered subject_to united_states tax eg is a controlled_foreign_corporation cfc or is required to file a united_states income_tax return sec_338 provides that the term purchase means any acquisition of stock but only if i the basis of the stock in the hands of the purchasing_corporation is not determined in whole or in part by reference to the adjusted_basis of such stock in the hands of the person from whom acquired or under sec_1014 relating to property_acquired_from_a_decedent ii the stock is not acquired in an exchange to which sec_351 sec_354 sec_355 or sec_356 applies and is not acquired in any other transaction described in the regulations in which the transferor does not recognize the entire amount of the gain_or_loss realized on the transaction and iii the stock is not acquired from a person the ownership of whose stock would under sec_318 be attributed to the person acquiring such stock sec_1_338-1 provides that a purchasing_corporation makes a sec_338 election for target by filing a statement of sec_338 election on form_8023 in accordance with the instructions on the form the sec_338 election must be filed not later than the 15th day of the ninth month beginning after the month in which the acquisition_date occurs a sec_338 election is irrevocable sec_1_338-1 provides that the united_states_shareholders as defined in sec_951 of a foreign purchasing_corporation that is a cfc as defined in sec_957 taking into account sec_953 may file a statement of sec_338 election on behalf of the purchasing_corporation if the purchasing_corporation is not required plr-106719-00 under sec_1_6012-2 other than sec_1_6012-2 to file a united_states income_tax return for its taxable_year that includes the acquisition_date form_8023 must be filed in accordance with the instructions to the form and a copy of the form must be attached to form_5471 information_return with respect to foreign_corporation and filed with respect to the purchasing_corporation by each united_states_shareholder for the purchasing_corporation sec_1_338-2 provides that if an election under sec_338 is made for target old target is deemed to sell target’s assets and new target is deemed to acquire those assets sec_1_1502-77 provides that the common parent for all purposes other than for several purposes not relevant here shall be the sole agent for each subsidiary in the group duly authorized to act in its own name in all matters relating to the tax_liability for the consolidated_return_year see also form_8023 and the instructions thereto under sec_301_9100-1 the commissioner has discretion to grant a reasonable extension of time to make a regulatory election or a statutory election but no more than six months except in the case of a taxpayer who is abroad under all subtitles of the internal_revenue_code except subtitles e g h and i sec_301_9100-1 defines the term regulatory election as including an election whose due_date is prescribed by a regulation revenue_ruling revenue_procedure notice or announcement sec_301_9100-1 through provide the standards the commissioner will use to determine whether to grant an extension of time to make a regulatory election sec_301_9100-1 sec_301_9100-2 provides automatic extensions of time for making certain elections sec_301_9100-3 provides extensions of time for making regulatory elections that do not meet the requirements of sec_301_9100-2 requests for relief under sec_301_9100-3 will be granted when the taxpayer provides evidence to establish that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government sec_301_9100-3 in this case the time for filing the election is fixed by the regulations ie sec_1_338-1 and sec_1_338-1 therefore the commissioner has discretionary authority under sec_301_9100-1 to grant an extension of time for group parent to file the election provided group parent shows it acted reasonably and in good_faith the requirements of sec_301_9100-1 and sec_301_9100-3 are satisfied and granting relief will not prejudice the interests of the government information affidavits and representations submitted by company official and tax professional explain the circumstances that resulted in the failure_to_file a valid election the information establishes that a tax professional was responsible for the plr-106719-00 election that group parent relied on the tax professional to timely make or advise the taxpayer to make the election and that the government will not be prejudiced if relief is granted see sec_301_9100-3 based on the facts and information submitted including the representations that have been made we conclude that group parent has established that it acted reasonably and in good_faith in failing to timely file the election the requirements of sec_301_9100-1 and sec_301_9100-3 are satisfied and granting relief will not prejudice the interests of the government accordingly we grant an extension of time under sec_301_9100-1 until days from the date_of_issuance of this letter for group parent to file the election with respect the acquisition of the stock of target as described above the above extension of time is conditioned on the taxpayers’ group parent’s consolidated group’s tax_liability being not lower in the aggregate for all years to which the election applies than it would have been if the election had been timely made taking into account the time_value_of_money no opinion is expressed as to the taxpayer’s tax_liability for the years involved a determination thereof will be made by the district director's office upon audit of the federal_income_tax returns involved further no opinion is expressed as to the federal_income_tax effect if any if it is determined that the taxpayers' tax_liability is lower sec_301_9100-3 group parent should file the election in accordance with sec_1_338-1 and sec_1_338-1 that is a new election on form sec_8023 must be executed on or after the date of this letter which grants an extension and filed in accordance with the instructions on the election form a copy of this letter should be attached to the election forms group parent and target must file or amend if and as applicable its applicable returns to report the acquisition as a sec_338 transaction and to attach a copy of the form_8023 and a copy of this letter see sec_1_338-1 and1 g no opinion is expressed as to whether the acquisition of the target’s stock qualifies as a qualified_stock_purchase whether the acquisition of the target’s stock qualifies for sec_338 treatment and if the acquisition of the target’s stock qualifies for sec_338 treatment as to the amount of gain_or_loss recognized if any by such target_corporation on its deemed asset sale no opinion is expressed with regard to the application of sec_304 or sec_951 or any other section of the code or regulations to the sale of target by purchaser to fholdco further no opinion is expressed with regard to the application of sec_367 sec_1_367_b_-7 or any other section of the code or regulations to the merger of purchaser and target in addition no opinion is expressed as to the tax effects or consequences of filing the election late under the provisions of any other section of the code and regulations or as to the tax treatment of any conditions existing at the time of or plr-106719-00 resulting from filing the election late that are not specifically set forth in the above ruling for purposes of granting relief under sec_301_9100-1 we relied on certain statements and representations made by the taxpayer its employees and representatives however the district_director should verify all essential facts in addition notwithstanding that an extension is granted under sec_301_9100-1 to file the election penalties and interest that would otherwise be applicable if any continue to apply the rulings contained in this letter are based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in support of the request for rulings it is subject_to verification on examination this letter is directed only to the taxpayer who requested it sec_6110 provides that it may not be used or cited as precedent pursuant to the power_of_attorney on file in this office a copy of this letter is being sent to your authorized representative sincerely yours philip j levine deputy associate chief_counsel corporate