office_of_chief_counsel internal_revenue_service memorandum number release date cc tege eoeg et1 lmdonis posts-128984-10 uilc date october to linda p azmon senior counsel tax exempt government entities from janine cook branch chief employment_tax branch exempt_organizations employment_tax government entities tax exempt government entities subject sec_7436 notice_of_determination of worker classification and backup withholding this chief_counsel_advice responds to your questions about backup withholding issues that may arise in connection with sec_7436 litigation issues whether the tax_court has jurisdiction over backup withholding whether the issuance of the sec_7436 notice_of_determination of worker classification nwdc suspends the period of limitations for assessment of backup withholding conclusions issue the tax_court does not have jurisdiction under sec_7436 to determine the application of backup withholding liability for any workers determined to be independent contractors issue posts-128984-10 if a taxpayer filed forms and thus started the running of the period of limitations on assessment with regard to backup withholding the issuance of the ndwc may nonetheless suspend the period of limitations with respect to the backup withholding facts a ndwc issued under sec_7436 notifies the taxpayer that the service has determined that one or more individuals performing services for the taxpayer are employees for purposes of subtitle c the taxpayer is not entitled to relief under sec_530 of the revenue act of sec_530 with respect to such individuals and the taxpayer owes additional employment_tax and possibly additions to tax and or penalties on account of such determinations the ndwc does not determine or propose backup withholding liability the issuance of the ndwc provides the taxpayer the opportunity to file a pleading in tax_court to seek review of the service’s determinations in some cases the status of workers as employees may ultimately be conceded settled or resolved by the court’s determination that they are not employees law and analysis issue sec_7436 grants the tax_court jurisdiction to verify the determinations by the service that one or more individuals performing services are employees for purposes of subtitle c that the employer is not entitled to sec_530 relief and the amount related to those determinations while sec_3406 imposing backup withholding is part of subtitle c the reference in sec_7436 is to determinations that the individuals in question are employees that the taxpayer is not entitled to treatment under sec_530 and the amounts tied to those determinations whereas sec_3406 contemplates a determination that the individuals performing services are not employees consequently since a controversy for purposes of sec_7436 involves a determination that individuals performing services are employees backup withholding liability for payments to nonemployees cannot arise pursuant to a sec_7436 determination therefore since tax_court jurisdiction under sec_7436 is limited to the actual controversy that arises pursuant to a sec_7436 determination the tax_court does not have jurisdiction under sec_7436 over the application of backup withholding liability attending a determination whether due to concession settlement or court decision that certain workers are independent contractors rather the backup withholding liability arises outside of the context of a sec_7436 determination and the resulting litigation in tax_court issue we are not addressing whether the tax_court could have equitable_recoupment jurisdiction under sec_6214 posts-128984-10 generally under sec_6501 the service has three years from the filing of the return to assess tax therefore once a taxpayer has filed a return specifically form_945 annual return of withheld federal_income_tax the service will have only three years from the filing_date within which to assess once the period of limitations on assessment for backup withholding has expired the subsequent issuance of a ndwc will not revive the period of limitations for assessment when the service determines a deficiency sec_6213 prohibits assessment of that deficiency or any levy or proceeding in court for its collection until after the time to petition the tax_court has expired or if a petition is filed until the tax_court decision is final this rule is based on the principle that the government should not be able to assess and pursue collection of a tax while a taxpayer’s liability for that tax is before the tax_court for decision sec_6503 provides that the issuance of a statutory_notice_of_deficiency by certified or registered mail will suspend the running of the period of limitations on assessment for the period during which the secretary is prohibited from making the assessment or from collecting by levy or a proceeding in court and in any event if a proceeding in respect of the deficiency is placed on the docket of the tax_court until the decision of the tax_court becomes final and for days thereafter the principle underlying this provision is that the limitations_period for the service to assess or pursue collection of a tax should not expire or be cut short by the pendency of a proceeding that prevents the service from assessing the tax sec_7436 of the code provides in relevant part that the principles of subsections a b c d and f of sec_6213 sec_6214 sec_6215 sec_6503 sec_6512 and sec_7481 shall apply to proceedings brought under this section in the same manner as if the secretary's determination described in subsection a were a notice_of_deficiency emphasis added the secretary’s determination described in subsection a of sec_7436 is the issuance of the ndwc therefore pursuant to sec_7436 a ndwc is to be treated analogously to a notice_of_deficiency for purposes of the cited sections of the code specifically sec_6213 and sec_6503 sec_3406 imposes a tax backup withholding only with regard to amounts that are reportable on forms if the payee fails to furnish his taxpayer_identification_number tin to the payor in the manner required and thus does not include wages paid to employee sec_3 conversely a proceeding under sec_7436 can only be brought when the secretary has determined that individuals are employees once a proceeding ha sec_2 for purposes of employment_tax returns if a return for any period with or within a calendar_year is filed before april of the succeeding calendar_year such return is considered filed on april of such succeeding calendar_year see sec_6501 sec_301_6501_b_-1 sec_3406 provides that in the case of a reportable_payment if the payee fails to furnish his tin to the payor in the manner required then the payor shall deduct and withhold from such payment a tax equal to the product of the fourth lowest rate_of_tax applicable under sec_1 as modified by sec_1 sec_3406 defines reportable_payment as any payment of a kind and to a payee required to be shown on form_1099 sec_3406 provides that backup withholding does not apply to any amount for which withholding is otherwise required posts-128984-10 begun pursuant to sec_7436 the possibility that a taxpayer might be liable for sec_3406 taxes will arise only if and when the matter before the tax_court is resolved ie by concession settlement or court decision that the individuals are not employees based on the principles of sec_6213 the service should not be able to assess and collect a tax that is potentially inconsistent with the tax court’s ruling in the proceeding before it or while that proceeding is pending because the service should not assess and collect the backup withholding liability during the pendency of the tax_court sec_7436 proceeding the statute_of_limitations on assessment of the liability should be suspended under sec_6503 more specifically assuming the period of limitations on assessment of sec_3406 taxes is open ie three years has not run from the date of filing of a return when the ndwc is issued the proper issuance of a ndwc under sec_7436 should suspend the running of that period with respect to any backup withholding liability pursuant to sec_6213 sec_6503 and sec_7436 for the 90-day period during which the taxpayer can begin a suit in tax_court and if the taxpayer files a timely petition in tax_court pursuant to sec_7436 during the tax_court proceedings and until the tax_court decision becomes final and for days thereafter we recognize the potential incongruity in noting that the tax_court does not have jurisdiction over sec_3406 taxes in a sec_7436 proceeding while also asserting that the proper issuance of the ndwc suspends the period of limitations with respect to sec_3406 taxes however due to the unique nature of employment_taxes there is no perfect analogy in the deficiency arena to apply to the operation of sec_6503 a provision involving income_tax deficiencies in the employment_tax arena the principles we distill above from sec_6213 and sec_6503 are especially apt in light of the uniqueness of the situation where assessing one type of employment_tax eg backup withholding on non-employees is inconsistent with assessing another type of employment_tax eg social_security and medicare_tax on employees furthermore these principles only apply to situations where the period of limitations for assessment of sec_3406 taxes is open at the time the ndwc is issued case development hazards and other considerations --------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- ---------------- posts-128984-10 this writing may contain privileged information any unauthorized disclosure of this writing may undermine our ability to protect the privileged information if disclosure is determined to be necessary please contact this office for our views please call ligeia donis at if you have any further questions


t c memo united_states tax_court thomas d stricker petitioner v commissioner of internal revenue respondent docket no filed date thomas d stricker pro_se mark a weiner for respondent memorandum findings_of_fact and opinion cohen judge respondent determined a deficiency in the amount of dollar_figure in petitioner's federal_income_tax for unless otherwise indicated all section references are to the internal_revenue_code in effect for the year in issue and all rule references are to the tax_court rules_of_practice and procedure after concessions by both parties we must decide the following issues whether petitioner is entitled to a deduction for legal expenses whether petitioner is entitled to a deduction for rent expenses greater than that allowed by respondent and whether petitioner is entitled to a deduction for the cost of a sales course as well as for other expenses associated with the course findings_of_fact some of the facts have been stipulated and the stipulated facts are incorporated in our findings by this reference at the time the petition was filed petitioner resided in sacramento california in while petitioner was driving his truck in the conduct of his business his truck was struck by a california highway patrol chp car petitioner sought advice from an attorney about the possibility of filing a personal injury suit against the chp petitioner wanted to seek monetary damages for injuries he received from the accident after determining that the possibility of recovery_of damages was slight petitioner did not pursue the action any further petitioner incurred expenses of dollar_figure for the attorney's services petitioner deducted these legal expenses on his federal_income_tax return respondent disallowed this deduction during petitioner began his own business selling meat and seafood petitioner rented a house located at bridgeford drive in sacramento california the bridgeford property to use for his business petitioner used the bridgeford drive address for his personal and business checking accounts on his return petitioner deducted as a business_expense percent of the rent he paid on the bridgeford property respondent disallowed percent of this deduction the bridgeford property was a house containing three bedrooms two bathrooms a family room dining room and a kitchen petitioner placed freezers where he stored his food products in the garage petitioner used only one or two rooms of the house in addition to the garage for business purposes petitioner traveled on business monday through friday petitioner stayed overnight at the bridgeford drive property and cooked meals there petitioner enrolled in the big league sales course in late the course was offered exclusively to scientologists through the church of scientology and took place on church-owned property in florida the course was not offered in any other location while in florida petitioner's accommodations were in the fort harrison hotel which the church of scientology owned after approximately days petitioner completed the course and received a certificate designating him a hubbard professional service consultant the course required petitioner to read assigned portions of a 193-page book by les dane dane entitled big league sales closing techniques petitioner had purchased and read the book in its entirety in and read it again in relation to the course taken in the big league sales course also used church of scientology scriptures on consulting in addition to the dane book as part of his course of study petitioner was to practice the sales techniques from his reading on other students because petitioner was the only person enrolled in the sales course at the time however this was not possible after petitioner finished a reading assignment a supervisor who oversaw several of the scientology course offerings would examine petitioner about the portion of the book he had read this examination consisted of petitioner's attesting to the completion of the materials the supervisor would ask can you apply those materials petitioner would respond yes i can apply those materials during petitioner was enrolled in other church of scientology courses the other courses however related solely to spiritual counseling on his federal_income_tax return petitioner deducted the dollar_figure course fee and dollar_figure in additional money spent on travel accommodations and other expenses relating to the course respondent disallowed the deduction opinion petitioner bears the burden of establishing that he is entitled to the claimed deductions rule a 503_us_79 512_f2d_882 9th cir affg tcmemo_1972_133 legal expense petitioner argues that legal expenses_incurred to investigate the possibility of a personal injury claim against the chp are deductible business_expenses because the accident giving rise to the possible personal injury claim occurred while petitioner was engaged in business activities respondent asserts that the legal expenses are personal in nature and not deductible pursuant to sec_262 we agree with respondent this case is indistinguishable from our decision in 48_tc_569 in which we said congress has seen fit to regard an individual as having two personalities one as a seeker of profit who can deduct the expenses_incurred in that search the other as a creature satisfying his needs as a human and those of his family but who cannot deduct the expenditures incurred in such satisfaction see 372_us_39 petitioner possessed both personalities at the time of his accident while it is true that petitioner was a profit seeker at the time of the accident the damages that petitioner sought were not profits in the sense of compensation_for his business efforts murphy v commissioner supra pincite rather as payments solely for personal injuries the damages petitioner sought were designed to indemnify him for bodily impairment that he suffered id because the legal expenses were not incurred in the carrying on of a trade_or_business the expenditures are nondeductible personal expenses home_office expense petitioner used the bridgeford property as the principal_place_of_business for his meat and seafood sales respondent thus allowed petitioner to deduct percent of the rent expense on the bridgeford property petitioner argues that percent of the rental expense should be allowed as a deduction sec_280a establishes the general_rule that no deduction is allowed with respect to business use of a taxpayer's personal_residence sec_280a however provides that sec_280a shall not apply if a portion of the taxpayer's personal_residence is exclusively used on a regular basis as the principal_place_of_business for any trade_or_business of the taxpayer see 88_tc_1532 the evidence presented by petitioner consisting of photographs of the bridgeford property along with petitioner's testimony fails to establish that petitioner used more than percent of the bridgeford property exclusively for business purposes the legislative_history of sec_280a dealing with exclusive use explains exclusive use of a portion of a taxpayer's dwelling_unit means that the taxpayer must use a specific part of a dwelling_unit solely for the purpose of carrying on his trade_or_business the use of a portion of a dwelling_unit for both personal purposes and for the carrying on of a trade_or_business does not meet the exclusive use test thus for example a taxpayer who uses a den in his dwelling_unit to write legal briefs prepare tax returns or engage in similar activities as well as for personal purposes will be denied a deduction for the expenses paid_or_incurred in connection with the use of the residence which are allocable to these activities s rept pincite 1976_3_cb_186 h rept pincite 1976_3_cb_853 the majority of the photographs of the bridgeford property introduced by petitioner depict the exterior of the house the interior photographs show the garage where petitioner kept his inventory in freezers a hallway with an office chair and two rooms containing office furniture at least one bedroom the family room dining room and the kitchen are not shown in these photographs petitioner's testimony at trial indicated that he used the kitchen to cook his meals and it appears that he stayed overnight at the bridgeford property this evidence is not sufficient to show that percent of the rental expense of the bridgeford property is deductible certain areas of the house were not used exclusively for business purposes still other areas have not been shown to have been used for business purposes at all therefore respondent's determination that petitioner cannot deduct the remaining percent of the rental expense of the bridgeford property will be sustained education expense petitioner asserts that the cost of the big league sales course and associated expenditures were deductible as ordinary and necessary business_expenses pursuant to sec_162 respondent contends that the course cost and the associated expenses were personal expenses and not ordinary and necessary business_expenses and therefore were not deductible pursuant to sec_262 sec_162 allows a deduction for all the ordinary and necessary expenses paid_or_incurred during the taxable_year in carrying on any trade_or_business certain expenditures made by an individual for education are deductible as ordinary and necessary business_expenses if the expenditure maintains or improves skills required by the individual in his employment or other trade_or_business or meets the express requirements of the individual's employer or other requirements of applicable law or regulations imposed as a condition to the retention by the individual of an established employment relationship status or rate of compensation sec_1_162-5 income_tax regs petitioner's participation in a sales course may have maintained or improved the skills required of him in his occupation as a salesman the expenditure for such coursework however must still be ordinary and necessary in order to be deductible sec_162 ordinary has been defined as that which is normal usual or customary in the taxpayer's particular trade_or_business 308_us_488 the expense need not be one common for the particular taxpayer but instead be one that is not rare in the taxpayer's business see 290_us_111 enrolling in a sales course to improve sales skills is a normal expenditure for a salesman in this instance however petitioner left his home and his business for over days to attend a sales course that consisted of his reading a 193-page book the lack of intensity in study coupled with the length of time away from his business is certainly not ordinary in the sale of meat and seafood necessary has been construed to mean appropriate or helpful not indispensable or required 56_tc_1300 affd 487_f2d_1025 9th cir it is sufficient if there are also reasonably evident business ends to be served and the intention to serve them appears adequately from the record 10_tc_1139 sales training is an appropriate expenditure for a salesman from the record we conclude that petitioner had an intention to serve his business when he participated in the big league sales course inherent in the concept of necessary however is that an expenditure must be reasonable in relation to its purpose to the extent that an expenditure is not reasonable it is not necessary an expenditure may be by its nature ordinary and necessary but at the same time it may be unreasonable in amount 380_f2d_786 9th cir the focus must be therefore on the primary purpose of the expenditure as it may be inferred from the totality of the facts concerning the benefits to be achieved the direct relationship of those benefits to petitioner's business and the reasonableness of the expenses love box co v commissioner tcmemo_1985_13 affd 842_f2d_1213 10th cir whether an expenditure is reasonable is a question of fact 320_us_467 74_tc_82 in this case petitioner deducted over dollar_figure in expenses relating to his participation in the big league sales course the big league sales course while promoted as a sales training course involved little more than petitioner's reading dane's book although petitioner stated that the course was not offered at any other location it is difficult to believe that petitioner could not have received the same training from reading the dane book in the comfort of his home the examinations by the course supervisor did nothing to reinforce petitioner's learning furthermore the location of the course on church of scientology property the restriction of participation to scientologists alone and the apparent use of scientology scriptures as part of the course indicate that the pervasive purpose of this course was not that of improving petitioner's sales skills the course cost and expenditures associated with the course are not reasonable in light of the benefits to petitioner's business and therefore are not necessary respondent's determination that the course fee and associated expenses are not deductible will be sustained to reflect the foregoing and concessions of the parties decision will be entered under rule


internal_revenue_service department of the treasury index number washington dc number release date person to contact telephone number refer reply to cc dom corp 4-plr-106144-99 date date legend purchaser disregarded sub parent sellers plr-106144-99 target target target country x date a date b date c date d date y x taxable_year officials outside tax plr-106144-99 professional authorized representatives business a business b this responds to your authorized representatives’ date letter requesting an extension of time under sec_301_9100-1 through of the procedure and administration regulations to make late elections purchaser for itself and parent and as the deemed purchasing_corporation is requesting an extension of time to make late sec_338 elections under sec_338 of the internal_revenue_code and sec_1_338-1 with respect to the acquisitions of the stock of target target and target sometimes hereinafter such elections are collectively referred to as the election or elections on date a parent has joined this request for an extension to make the elections additional information was received in letters dated may june and date the material information is summarized below parent is a publically traded corporation that is the common parent of a consolidated_group has a calendar taxable_year and uses the accrual_method of accounting purchaser was a wholly-owned subsidiary of parent and included in its consolidated_return see the below discussion regarding the spin-off of purchaser after the acquisitions but before the elections were made disregarded sub is a country x corporation the specific country of incorporation is set forth above in the redacted legend that prior to the subject acquisition and on or before date y was newly formed by purchaser as a wholly owned subsidiary to acquire the stock of target target and target target target and target are country x corporations that were entirely owned by sellers individuals and trusts who are citizens and residents of country x except as described in the above redacted legend purchaser and target are engaged in business a and target and target are engaged in business b plr-106144-99 prior to the below described acquisition sellers target target and target did not file u s income_tax returns and were not subject_to u s income_taxation further neither target target nor target was a controlled_foreign_corporation within the meaning of sec_957 a passive_foreign_investment_company as defined in sec_1297 a foreign_investment_company or a foreign_corporation the stock ownership of which is described in sec_552 or required under sec_1_6012-2 to file a u s income_tax return in addition prior to the acquisition neither sellers target target nor target owned u s real_property interests as defined in sec_897 purchaser further represents that disregarded sub is a separate_unit within the meaning of sec_1_1503-2 and treated as a dual_resident_corporation withing the meaning of sec_1_1503-2 as a result the limitations under sec_1_1503-2 on the use of a dual_consolidated_loss to offset the income of any domestic affiliate including purchaser will be followed and there have not been nor are there currently any loans royalties or management fees between disregarded sub and target target or target other than certain minor intercompany activity between these entities eg miscellaneous small payments related to one entity paid_by another for convenience purposes and charged to an intercompany account on date a sellers purchaser disregarded sub target target and target entered into a stock purchase agreement for disregarded sub to acquire all of sellers’ stock of target target and target also on date a disregarded sub acquired all of the sellers’ stock of target target and target pursuant to the stock purchase agreement solely for cash and the assumption of target 1's target 2's and target 3's liabilities in fully taxable transactions after the acquisitions new target target and target were included in purchaser's return by being listed on form_5471 information_return with respect to certain foreign_corporations it is represented that purchaser was not related to sellers within the meaning of sec_338 and purchaser's deemed acquisition of the stock of target target and target each qualified as a qualified_stock_purchase as defined in sec_338 the period of limitations on assessments under sec_6501 has not expired for purchaser’s target 1's target 2's or target 3's taxable_year s in which the acquisitions occurred the taxable_year s in which the elections should have been filed or any taxable_year s that would have been affected by the elections had they been timely filed on date y disregarded sub filed an election under sec_301_7701-3 ie by filing form_8832 entity classification election to be treated as a disregarded_entity effective on date a on date b which is after the acquisition on date a but before the due_date of the elections on date c parent distributed all of the stock of purchaser its wholly owned subsidiary to its shareholders in a distribution that is represented to qualify as a tax-free distribution under sec_355 of the code see plr dated date sellers did not receive any stock of purchaser in the spin-off plr-106144-99 the elections were due on date c however for various reasons the elections were not filed on date d which is after the due_date for the elections purchaser’s company official outside tax professional and authorized representatives discovered that the elections had not been filed subsequently this request was submitted under sec_301_9100-1 for an extension of time to file the elections 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 month acquisition period sec_338 provides that the term purchase means any acquisition of stock but only if 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 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 regulations in which the transferor does not recognize the entire amount of the gain_or_loss realized on the transaction and 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-a or form_8023 as applicable 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 form 8023-a and form_8023 as applicable must be filed as described in the form and its instructions 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 of the consolidated_return_year see also form 8023-a form_8023 and the instructions thereto sec_1_338-2 provides that an election may be made for target after the acquisition of assets of the purchasing_corporation by another corporation in a transaction described in sec_381 provided that the purchasing_corporation is considered for tax purposes as the purchasing_corporation of the target stock the acquiring_corporation in the sec_381 transaction may make an election under sec_338 for target plr-106144-99 sec_301_7701-3 provides that a business_entity that is not classified as a corporation under b or an eligible_entity may elect its classification for federal tax purposes an eligible_entity with a single owner can elect to be disregarded as an entity separate from its owner elections are necessary only when an eligible_entity chooses to be classified initially as other then the default classification or when an eligible_entity chooses to change its classification sec_301_7701-3 provides that an eligible_entity may elect to be classified other than as provided under sec_301_7701-3 or to change its classification by filing form_8832 entity classification election with the appropriate service_center under sec_301_7701-3 this election will be effective on the date specified by the entity on form_8832 the date specified on form_8832 cannot be more than days prior to the date on which the election is filed under sec_301_9100-1 c 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 provided the taxpayer demonstrates 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 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 times for filing the elections were fixed by the regulations ie sec_1_338-1 therefore the commissioner has discretionary authority under sec_301_9100-1 to grant an extension of time for parent and purchaser to file the elections provided parent and purchaser show that they 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 officials outside tax professional and authorized representatives explain the circumstances that resulted in the failure_to_file valid elections the information establishes that tax plr-106144-99 professionals were responsible for the elections that purchaser and parent relied on the tax professionals to timely make the elections and requested this relief before the omission was discovered by the service and that the government will not be prejudiced if relief is granted see sec_301_9100-3 and v based on the facts and information submitted including the representations that have been made we conclude that purchaser and parent acted reasonably and in good_faith in failing to timely file the elections 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 purchaser for itself and parent and as the deemed purchasing_corporation to file the elections with respect to the acquisition of the stock of target target and target as described above the above extension of time is conditioned on the taxpayers' purchaser's parent’s disregarded sub’s target 1's target 2's target 's and sellers’ to the extent they have any us tax_liability tax_liability being not lower in the aggregate for all years to which the elections apply than it would have been if the elections had been timely made taking into account the time_value_of_money no opinion is expressed as to the taxpayers' tax_liability for the years involved a determination thereof will be made by the 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' liability is lower sec_301_9100-3 purchaser and parent should file the elections in accordance with sec_1_338-1 that is new elections on form 8023-a or form_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 together with the information that is required to be attached to the election form a separate election form is needed for each target a copy of this letter should be attached to the election form parent and purchaser for its short taxable_year must file or amend its return to report the acquisitions as sec_338 transactions with a copy of this letter and a copy of the election forms and the information required therewith the old targets must file final separate returns if and as applicable and the new targets must be included in parent’s and purchaser's returns by being listed on form_5471 or as otherwise applicable for the first year following the acquisition see announcement 1998_2_irb_38 with regard to which election form to use no opinion is expressed as to whether the acquisition of the stock of each of the target corporations qualifies as a qualified_stock_purchase whether the acquisition of the stock of each of the target corporations qualifies for sec_338 treatment if the acquisition of the stock of each of the target corporations qualifies for sec_338 treatment the amount of gain_or_loss recognized if any by the target corporations on the deemed asset sales or whether disregarded sub is in fact a disregarded_entity for purposes of the federal_income_tax code plr-106144-99 in addition no opinion is expressed as to the tax effects or consequences of filing the elections late under the provisions of any other section of the code and regulations or as to the tax treatment of any conditions existing at the time of or resulting from filing the elections 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 a copy of this letter is being sent to the authorized representatives you so designated pursuant to the power_of_attorney on file in this office this letter is directed only to the taxpayer who requested it sec_6110 provides that it may not be used or cited as precedent sincerely yours assistant chief_counsel corporate by richard todd counsel to the assistant chief_counsel corporate


significant index number department of the treasury internal_revenue_service washington d c mar tep na al re taxpayer dear this letter constitutes notice that approval has been granted for your request for a 5-year automatic_extension for amortizing the unfunded liabilities as of date for the above-named plan which are described in sec_431 and sec_431 of the internal_revenue_code code and sec_304 and sec_304 of the employee_retirement_income_security_act_of_1974 erisa this extension is effective with the plan_year beginning september identified in your application submission established as of date with a total outstanding balance of dollar_figure this extension applies to the amortization charge bases as as of that date the extension of the amortization periods of the unfunded liabilities of the plan was granted in accordance with sec_431 of the code sec_431 of the code requires the secretary to extend the period of time required to amortize any unfunded_liability of a plan for a period of time not in excess of years if the plan submits an application meeting the criteria stated in sec_431 the plan has submitted the required information to meet the criteria in sec_431 including a certification from the plan’s actuary that i absent the extension under subparagraph a the plan would have an accumulated_funding_deficiency in the current plan_year or any of the succeeding plan years ii the plan_sponsor has adopted a plan to improve the plan's funding status iii the plan is projected to have sufficient assets to timely pay expected benefits and anticipated expenditures over the amortization period as extended and iv the notice required under paragraph a has been provided we have sent a copy of this letter to the and to your authorized representatives pursuant to a power_of_attorney on tile in this office to the this ruling is directed only to the taxpayer that requested it sec_6110 of the internal_revenue_code provides that it may not be used or cited by others as precedent if you require further assistance in this matter please contact sincerely yours david m ziegler manager ep actuarial group


internal_revenue_service director exempt_organizations release number release date date legend department of the treasury p o box cincinnati ohio employer identification person to contact - id contact telephone numbers phone fax uil number dollar_figure amount of set-aside f g projected project expenditures through h projected project expenditures through j k disbursements out of set-aside through december m undisbursed set-aside as of december approximate expenditures to date dear this is in response to your letter dated date requesting a thirty six month extension to pay out a set-aside previously approved under the suitability test of sec_53 g -3 b of the foundation and similar excise_tax regulations one of your charitable objectives is to develop internet-based resources that will enable members of the public to obtain a high quality education free of charge in an online environment as an essential first step toward this goal you developed a proposal in to build a centralized internet-based courseware library that would make multimedia educational materials available to the public free-of-charge the project the materials would cover the subjects in the standard curriculum for u s students from kindergarten through college having developed a detailed multi-year plan you submitted a request for approval of a set-aside in the amount of dollar_figuref for the year ended december december you represented that the set-aside amount would be distributed by your set-aside request was approved by our letter dated april when you submitted your request for the set-aside you believed that your online encyclopedia would be the only one of its kind during the initial developmental phase of the project however it became apparent that the public's need for centralized repository of multimedia educational content would be satisfied before your online repository could be launched because other entities had anticipated the same need and were already beginning to put very similar repositories of content online these developments were entirely unforeseen not wishing to replicate these content repositories in you conducted a comprehensive survey of free online resources and evaluated the results based on this analysis you determined that the next critical stage along the path to your overall objective of providing free high quality online education to the public would be to catalogue the multimedia courseware amassed by others in a way that would enable members of the public to complete a course of study online and obtain the equivalent of a degree in a chosen discipline this online course outline would incorporate links to all of the lectures texts readings and other elements of content that make up a course of college study in you identified core fields of study and the courseware needed for them consulting with experts in curriculum development in and you began hiring and training qualified personnel to develop course outlines for the ten most popular disciplines in the u s university system between the end of and the present time the number of contributors working on course outlines and other program materials have increased from more than a dozen to more than working on course outlines although you have made substantial progress to date the launch of the online course is still some time away work on the course blueprints will continue through the process of discovering and pairing content with course blueprints will continue through and the creation of content required by course outlines where suitable materials are not currently available will commence in and could take up to three years to complete because the project must be executed in overlapping phases it is not susceptible to division into two or more projects covering periods of no more than months each the additional technical complexity of the project has caused the projected cost of completion to be much higher than initially projected the cost of the project is now estimated to be at least dollar_figureg through and at least dollar_figureh through to date you have expended more than dollar_figurej on the budget including dollar_figurek of the set-aside funds and it is now entering into the latter phases of development which will entail the greatest expense project expenditures in the year sec_2011 through will be sufficient to satisfy the distributable amounts for through as well as pay out the undistributed portion of the set-aside dollar_figurem by date after the planned content repository described in set-aside request was unexpectedly preempted by other online programs you were forced to return to the drawing board and reconceptualize the project so long as this occupied you expenditures_for the project were necessarily in suspense finally commencing only in this delay ensured that the funds set_aside in will not be exhausted by the end of a three year extension of the set-aside will ensure that the funds set_aside will be expended in their entirety for the project where they are truly needed rather than disbursed in whole or in part for purposes which while charitable do not help to bring the project to fruition sec_4942 of the code provides requirements for approval of a set-aside for a specific project that will be paid out in years a foundation must establish that the project is one which can better be accomplished by such set-aside than by the immediate payment of funds moreover a set-aside which satisfies the requirements of sec_4942 of the code may have the period to pay the set-aside amount extended if good cause is shown sec_53_4942_a_-3 of the foundation and similar excise_taxes regulations provides that an amount set-aside for a specific project may be treated as a qualifying it satisfies the suitability test and that if the suitability test is otherwise distribution if satisfied the month period for paying the amount of the set-aside may for good cause shown be extended by the commissioner sec_53_4942_a_-3 of the regulations provides that the suitability test for a set- aside is met if the foundation establishes the specific project is one in which relatively long-term grants or expenditures must be made in order to assure the continuity of particular charitable projects or program-related investments sec_53_4942_a_-3 provides that a statement showing good cause why the period for paying the amount set_aside should be extended including a showing that the proposed project could not be divided into two or more projects covering periods of no more than months each and setting forth the extension of time required must be provided based on the information submitted we conclude that you have established good cause to extend the period of time in which to pay out the set-aside of dollar_figuref approved on date therefore we approve your request for a thirty-six month extension of time to pay out the remainder of the set-aside amount this letter will be made available for public inspection under sec_6110 of the code after certain deletions of identifying information are made for details see enclosed notice notice of intention to disclose a copy of this ruling with deletions that we intend to make available for public inspection is attached to notice if you disagree with our proposed deletions you should follow the instructions in notice this letter 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 a copy of this letter has been sent to your representative if you have any questions about this ruling please contact the person whose name and telephone number are shown in the heading of this letter sincerely yours robert choi director exempt_organizations rulings and agreements enclosure notice


internal_revenue_service number release date index number 45g ------------------------ ---------------------------- ---------------------------------------------------------- ------------------------------------- ------------------------------------- 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 plr-139825-12 date date legend taxpayer --------------------------------------------------- ------------------------------------ year a year b year c year d date a date b a b c d e ------- ------- ------- ------- -------------- ----------------------- -- -- -- -------------- -------------- tax director ------------------------ plr-139825-12 dear ------------ this letter responds to a letter dated date submitted on behalf of taxpayer by its authorized representative requesting an extension of time under sec_301_9100-1 of the procedure and administration regulations to file forms qualified railroad_track_maintenance_credit for its year a through year d tax years taxpayer the common parent of an affiliated_group is engaged in the rail and related transportation business taxpayer’s subsidiaries include a railroads classified as class i railroads by the surface transportation board stb and b to c railroads depending on the year classified as class ii or class iii railroads for purposes of filing form r-1 railroad annual report the stb requires consolidated reporting for each group of railroads that operate as a single integrated united_states rail system whose cumulative operating revenues meet the class i threshold in compliance with this stb requirement taxpayer filed its form r-1 for its year a through year d tax years as if all of its subsidiary railroads consisted of a single consolidated class i railroad in year a and year b b members of taxpayers consolidated_group were eligible to claim the railroad_track_maintenance_credit in year c and year d c members of the consolidated_group were eligible to claim the credit these members satisfied the stb’s definition of a class ii or class iii railroad and incurred qualified_railroad_track_maintenance_expenditures during those years the amount of the railroad_track_maintenance_credit for these years is dollar_figured for year a and year b and dollar_figuree for year c and year d in date a taxpayer’s tax director learned that the stb’s requirement for integrated railroads to file as a consolidated class i railroad was for revenue measurement purposes only and did not otherwise affect the stb’s classification designation of the individual railroads in the consolidated reporting group in a date b letter from the stb the stb confirmed that taxpayer’s consolidated reporting requirements for form r-1 do not affect the classification designation of the individual railroads in taxpayer’s consolidated reporting group taxpayer requests a ruling that it be granted an extension of time under sec_301_9100-1 to file forms qualified railroad_track_maintenance_credit for its year a through year d tax years under sec_45g of the internal_revenue_code the railroad_track_maintenance_credit for the taxable_year is equal to percent of the qualified_railroad_track_maintenance_expenditures paid_or_incurred by an eligible_taxpayer during the taxable_year under sec_45g the term eligible_taxpayer means and class ii or class iii railroad and any person who transports property using the rail facilities of a class ii or class iii railroad or who furnishes railroad-related property or services to a class ii or plr-139825-12 class iii railroad but only with respect to miles of railroad track assigned to such person by the class ii or class iii railroad sec_1_45g-1 of the income_tax regulations requires that a taxpayer claiming the railroad_track_maintenance_credit must do so by filing form_8900 with its timely filed including extensions federal_income_tax return for the taxable_year the railroad_track_maintenance_credit is claimed sec_301_9100-1 provides that the commissioner may grant a reasonable extension of time under the rules set forth in sec_301_9100-2 and sec_301_9100-3 to make a regulatory election or a statutory election but no more than six months except in the case of taxpayer who is abroad under all subtitles of the code except subtitles e g h and i sec_301_9100-1 provides that the term regulatory election means 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_9100-2 and sec_301_9100-3 provide the standards the commissioner will use to determine whether to grant an extension of time to make an election sec_301_9100-2 provides automatic extensions of time for making certain elections sec_301_9100-3 provides extensions of time for making elections that do not meet the requirements of sec_301_9100-2 a request for relief under sec_301_9100-3 will be granted when the taxpayer provides evidence to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government in this case taxpayer made protective claims for refund for year a and year b relating to the railroad_track_maintenance_credit based solely on the facts and the representations submitted we conclude that the requirements of sec_301_9100-1 and sec_301_9100-3 have been satisfied accordingly taxpayer’s forms will be considered timely filed for year a through year d for purposes of sec_1_45g-1 if they are filed no later than days after the date of this letter a copy of this letter should be sent to the appropriate service_center with a request that it be attached to taxpayer's amended tax returns for year a and year b and filed with taxpayer’s amended tax returns for year c and year d a copy is enclosed for that purpose alternatively taxpayers filing their returns electronically may satisfy this requirement by attaching a statement to their returns that provides the date and control number of the letter_ruling except as specifically set forth above we express no opinion concerning the federal_income_tax consequences of the facts described above under any other provisions of the code in particular we express no opinion on whether taxpayer’s expenditures qualify for the railroad_track_maintenance_credit plr-139825-12 this ruling is directed only to the taxpayer requesting it sec_6110 provides that it may not be used or cited as precedent the ruling contained in this letter is based upon information and representations submitted by 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 in accordance with a power_of_attorney on file with this office we are sending a copy of this letter to your authorized representative also we are sending a copy of this letter to the appropriate lb_i official sincerely curt g wilson associate chief_counsel passthroughs and special industries by _____________________________ paul f handleman branch chief branch office of associate chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes


internal_revenue_service number release date index numbers --------------------------------------------------------- --------------------------------------------------------------- ------------- ----------------------------------------------- ---------------------------------------- department of the treasury washington dc person to contact ------------------ id no ------------- telephone number --------------------- refer reply to cc fip b03 - plr-140509-09 date january legend legend trust ------------------------------------------------------------------------ -------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------- company a --------------------------------- --------------------------------------------------------------------- company b ---------------------------------------- operating partnership ----------------------------------------------- state x ------------ state y ------------- a --- date ----------------- date ----------------------- date ----------------------- dear ---------------------- this responds to a letter dated date on behalf of trust and company a requesting an extension of time under sec_301_9100-1 of the procedure and plr-140509-09 administration regulations to make an election under sec_856 of the internal_revenue_code to treat company a as a taxable_reit_subsidiary of trust effective as of date facts trust a state x corporation was incorporated on date it has elected to be treated for federal_income_tax purposes as a real_estate_investment_trust it owns its assets and conducts its operations through operating partnership and owns an approximately a percent interest in operating partnership company a a state y corporation was incorporated on date as a wholly owned subsidiary of company b a state y limited_liability_company that is wholly owned by operating partnership two other wholly owned subsidiaries of company b were formed that acquired real_estate property and leased it to company a the chief financial officer cfo of trust was responsible for ensuring that a taxable_reit_subsidiary election was made for company a at the time of the transaction however the cfo resigned his position and a new interim cfo took over his duties as a result of these changes the taxable_reit_subsidiary election was not made until the failure_to_file was discovered the following year trust and company a subsequently filed form_8875 with the service making a taxable_reit_subsidiary election for company a with an effective date of date trust and company now seek relief to make an election to treat company a as a taxable_reit_subsidiary of trust effective as of date trust and company a make the following additional representations the request for relief was filed by trust and company a before the failure to make regulatory elections was discovered by the service granting the relief requested will not result in trust and company a having a lower tax_liability in the aggregate for all years to which the regulatory election applies then that they would have had if the election had been timely made taking into account the time_value_of_money trust and company a did not seek to alter a return position for which an accuracy-related_penalty has been or could have been imposed under sec_6662 of the code at the time they requested relief and the new position requires or permits a regulatory election for which relief is requested being fully informed of the required regulatory election and related tax consequences trust and company a did not choose to not file the election law and analysis plr-140509-09 the ticket to work and work incentives improvement act of p l included a change for tax years beginning after date to the reit provisions of sec_856 this change allows a reit to form a taxable_reit_subsidiary that can perform activities that otherwise would result in impermissible_tenant_service_income the election under sec_856 is made on form_8875 taxable_reit_subsidiary election officers of both the reit and the taxable_reit_subsidiary must jointly sign the form which is filed with the irs service_center in ogden ut sec_856 of the code provides that a reit and a corporation other than a reit may jointly elect to treat such corporation as a taxable_reit_subsidiary to be eligible for treatment as a taxable_reit_subsidiary sec_856 provides that the reit must directly or indirectly own stock in the corporation and the reit and the corporation must jointly elect such treatment the election is irrevocable once made unless both the reit and the subsidiary consent to its revocation in addition sec_856 specifically provides that the election and any revocation thereof may be made without the consent of the secretary in announcement i r b the service announced the availability of new form_8875 taxable_reit_subsidiary election according to the announcement this form is to be used for tax years beginning after for eligible entities to elect treatment as a taxable_reit_subsidiary the instructions to form_8875 provide that the subsidiary and the reit can make the election at any time during the tax_year however the effective date of the election depends upon when the form_8875 is filed the instructions further provide that the effective date on the form cannot be more than months and days prior to the date of filing the election or months after the date of filing the election if no date is specified on the form the election is effective on the date the form is filed with the service sec_301_9100-1 of the regulations provides that the commissioner has discretion to grant a reasonable extension of time to make a regulatory election defined in sec_301_9100-1 as an election whose due_date is prescribed by regulations or by a revenue_ruling a revenue_procedure a notice or an announcement published in the internal_revenue_bulletin 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_9100-3 through c i sets forth rules that the internal_revenue_service generally will use to determine whether under the particular facts and circumstances of each situation the commissioner will grant an extension of time for regulatory elections that do not meet the requirements of sec_301_9100-2 sec_301_9100-3 provides that subject_to paragraphs b i through iii of sec_301_9100-3 when a taxpayer applies for relief under this section before the failure to make the regulatory election is discovered by the service the taxpayer will be deemed to have plr-140509-09 acted reasonably and in good_faith and sec_301_9100-3 provides that the interests of the government are prejudiced if granting relief would result in the taxpayer having a lower tax_liability in the aggregate for all years to which the regulatory election applies than the taxpayer would have had if the election had been timely made taking into account the time_value_of_money conclusion based on the information submitted and representations made we conclude that trust and company a have satisfied the requirements for granting a reasonable extension of time to elect under sec_856 to treat company a as a taxable_reit_subsidiary of trust effective as of date trust and company a have days from the date of this letter to make the intended election this ruling is limited to the timeliness of the filing of the form_8875 this ruling’s application is limited to the facts representations code sections and regulations cited herein no opinion is expressed with regard to whether trust qualifies as a reit or whether company a otherwise qualifies as a taxable_reit_subsidiary under subchapter_m of the code no opinion is expressed with regard to whether the tax_liability of trust and company a is not lower in the aggregate for all years to which the election applies than such tax_liability would have been if the election had been timely made taking into account the time_value_of_money upon audit of the federal_income_tax returns involved the director’s office will determine such tax_liability for the years involved if the director’s office determines that such tax_liability is lower that office will determine the federal_income_tax effect the ruling contained in this letter is based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in support of the request for rulings it is subject_to verification on examination except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter this ruling is directed only to the taxpayer requesting it sec_6110 of the code provides that it may not be used or cited as precedent plr-140509-09 in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representatives sincerely alice m bennett alice m bennett chief branch office of associate chief_counsel financial institutions products enclosures copy of this letter copy for sec_6110 purposes


internal_revenue_service number release date index number ------------------------- --------------------------------- ------------------------------------------ -------------------------- ---------------------------------- - department of the treasury washington dc person to contact ------------------------ id no ------------- telephone number --------------------- refer reply to cc fip b02 - plr-122214-04 date date ------- -------------------------- --------------------------- -------------------------------- ------------------------------------------ legend taxpayer ---------------------------------------------------------------------- date year trust subsidiary ---------------------------------------------------------------------- corporations a-g ------------------------------------------------------ ---------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------ ----------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------- accounting firm law firm date corporation h date -------------------------------------------------- ------------------------ ------------------ ------------------ --------------- this is in reply to a letter requesting a ruling on behalf of taxpayer and taxpayer is a domestic_corporation that elected to be taxed as a real_estate plr-122214-04 dear ------------------ subsidiary granting taxpayer and subsidiary an extension of time under sec_301_9100-1 and sec_301_9100-3 of the procedure and administration regulations to file an election for subsidiary to be treated as a taxable_reit_subsidiary trs of taxpayer under sec_856 of the internal_revenue_code facts investment_trust reit under subchapter_m of chapter of the code in its initial tax_return for the taxable_year ended date ------------------------------------------------------------- ------------------------------------- taxpayer specializes in the acquisition of hospitality properties for long-term investment incentives improvement act of p l the reit modernization act all of taxpayer’s properties were leased out to third-party tenants because the reit modernization act permitted a reit to form a trs and lease qualifying hospitality properties to the trs without violating the related_party tenant rules under sec_856 subject_to the requirements under sec_856 and d taxpayer formed several trss for this purpose and properly filed trs elections with respect to those entities in year taxpayer entered into negotiations with trust a publicly traded reit to acquire all of the assets of trust like taxpayer trust had formed numerous trss to act as lessees of its hospitality properties one of trust’s trss subsidiary owned all of the stock and securities of seven lower-tier trss corporations a-g provide tax_accounting and due diligence services accounting firm provided their due diligence report and recommendations to taxpayer in writing prior to execution of the merger agreement the report contains a discussion of trust trss and a recommendation that taxpayer confirm that a valid trs election was made with respect to those entities but does not recommend or advise taxpayer that new trs elections should be filed by taxpayer with respect to the acquired trust trss counsel to trust relating to trust’s qualification as a reit the tax opinion recites that in connection with the planned merger taxpayer retained accounting firm to prior to the merger taxpayer also received an opinion of law firm who was prior to the enactment of sec_856 under the ticket to work and work on date taxpayer and trust closed the transaction and taxpayer acquired the although they employ internal financial and tax professionals taxpayer relies on plr-122214-04 counsel has reviewed in addition to other documents the trs elections for nine specified entities assets of trust in a forward cash_merger in which the shareholders of trust received cash in exchange for their trust stock trust went out of existence in connection with the merger following the merger taxpayer continues to own indirectly through one or more disregarded entities all of the stock and securities of subsidiary subsidiary continues to hold all of the stock and securities of corporations a-g sophisticated outside national accounting and law firms to advise them on the tax_accounting and securities issues concerning the operation of the reit and its compliance obligations taxpayer represents that it was not aware of the necessity to file trs elections for the entities acquired in the merger with trust and based upon its review of the report from accounting firm the tax opinion of law firm and other related materials it believed that no additional filing was necessary this fact is highlighted by the fact that subsequent to the merger taxpayer caused subsidiary to form a new subsidiary_corporation h and taxpayer and corporation h made a joint election to treat corporation h as a trs of taxpayer ------------------------------------------------------------------------------------------------------------ --------------------------------------------------------------------------------------------------------------------- ------------------------- on date --------------------------------------------------------------------------- --------------------------------- it was determined that taxpayer did not file a trs election with respect to subsidiary taxpayer immediately requested the relief sought in this private_letter_ruling request relief under sec_301_9100-3 would not result in taxpayer or subsidiary or corporations a-g having a lower tax_liability in the aggregate for all years to which the election applies than they would have had if the election had been timely made taking into account the time_value_of_money neither taxpayer nor subsidiary was informed in all material respects of the required election and related tax consequences but chose not to file the election neither taxpayer nor subsidiary used hindsight in requesting relief finally taxpayer and subsidiary represent that they are not seeking to alter a return position for which an accuracy-related_penalty has been or could be imposed under sec_6662 financial officer in support of this requested ruling taxpayer has submitted the affidavit of its executive vice-president and principal taxpayer and subsidiary make the following representations the granting of plr-122214-04 law and analysis sec_856 provides that a reit and a corporation other than a reit may jointly elect to treat such corporation as a taxable_reit_subsidiary to be eligible for treatment as a taxable_reit_subsidiary sec_856 provides that the reit must directly or indirectly own stock in the corporation and the reit and the corporation must jointly elect such treatment the election is irrevocable once made unless both the reit and the subsidiary consent to its revocation in addition the election and the revocation may be made without the consent of the secretary service announced the availability of form_8875 taxable_reit_subsidiary election according to the announcement this form is to be used for tax years beginning after for eligible entities to elect treatment as a taxable_reit_subsidiary the instructions to form_8875 provide that the subsidiary and the reit can make the election at any time during the tax_year the instructions further provide that the effective date of the election cannot be more than months and days prior to the date of filing the election or more than months after the date of filing the election if no date is specified on the form the election is effective on the date the form is filed with the service officers of both the reit and the taxable_reit_subsidiary must jointly sign the form which is filed with the irs service_center in ogden utah in announcement 2001_1_cb_716 the internal_revenue_service sec_301_9100-1 provides that the commissioner has discretion to grant a reasonable extension of time to make a regulatory election defined in sec_301_9100-1 as an election whose due_date is prescribed by regulations or by a revenue_ruling a revenue_procedure a notice or an announcement published in the internal_revenue_bulletin 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_9100-3 through c i sets forth rules that the internal_revenue_service generally will use to determine whether under the particular facts and circumstances of each situation the commissioner will grant an extension of time for regulatory elections that do not meet the requirements of ' sec_301_9100-3 provides that subject_to paragraphs b i through iii of ' when a taxpayer applies for relief under this section before the failure to make the regulatory election is discovered by the service the taxpayer will be deemed to have acted reasonably and in good_faith and ' c provides that the interests of the government are prejudiced if granting relief would result in the taxpayer having a lower tax_liability in the aggregate for all years to which the regulatory election applies than the taxpayer would have had if the election had been timely made taking into account the time_value_of_money conclusion based on the information submitted and representations made we conclude that plr-122214-04 taxpayer and subsidiary have satisfied the requirements for granting a reasonable extension of time to elect under sec_856 to treat subsidiary as a taxable_reit_subsidiary of taxpayer as of date therefore taxpayer and subsidiary are granted a period of time not to exceed days from the date of this letter to submit the form_8875 this ruling is limited to the timeliness of the filing of the form_8875 this ruling s application is limited to the facts representations code sections and regulations cited herein no opinion is expressed with regard to whether taxpayer otherwise qualifies as a reit under subchapter_m of the code no opinion is expressed with regard to whether the tax_liability of taxpayer and subsidiary is not lower in the aggregate for all years to which the election applies than such tax_liability would have been if the election had been timely made taking into account the time_value_of_money upon audit of the federal_income_tax returns involved the director s office will determine such tax_liability for the years involved if the director s office determines that such tax_liability is lower that office will determine the federal_income_tax effect this ruling is directed only to the taxpayers who requested it sec_6110 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 representatives sincerely yours enclosures copy of this letter copy for sec_6110 purposes william e coppersmith william e coppersmith chief branch office of associate chief_counsel financial institutions products


internal_revenue_service department of the treasury number release date index number washington dc person to contact plr-108080-01 cc psi b5 telephone number refer reply to date date legend corp state a b firm a sb_se official this is response to a request for rulings dated date submitted by your authorized representative requesting relief under of the procedure and administration regulations to make the consent_dividend election under sec_565 of the internal_revenue_code corp a was incorporated in state a on b corp a is currently invested primarily in rental properties municipal_bonds and stocks the majority of the rentals consist of real_property leased to commercial businesses according to the information submitted during the tax years ending date and date corp a was a personal_holding_company as defined under sec_542 of the code corp a had personal_holding_company_income of dollar_figure and dollar_figure for the and tax years respectively and paid dividends in the amount of for the tax_year and dollar_figure for the tax_year corp a had undistributed_personal_holding_company_income of dollar_figure and dollar_figure for the and tax years respectively corp a did not have a tax director or any other tax professional on its staff firm a had been providing accounting and tax services since and had knowledge of all the relevant facts regarding corp a and its shareholders firm a was required by contract to provide consultation on accounting and tax matters as you may require during the year and at year end corp a and its shareholders relied on firm a to analyze all aspects of their tax situation to make appropriate recommendations to carry out the implementation of those recommendations to determine what elections it was required or advisable to file to supervise the preparation and presentation of all such elections and to ensure that the appropriate documents were completed firm a prepared compiled financial statements and income_tax returns for corp a and its shareholders for the and tax years firm a affirms by affidavit that it did not discuss the availability or recommend the consent_dividend election orally or in written format with any of the corporate officers or shareholders of corp a during the course of the preparation of the compiled financial statements the preparation of the income_tax returns for corp a and shareholders or in any other meetings with the corporate officers or the shareholders of corp a during the and tax years 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 defines the term regulatory election as including an election whose due_date is prescribed by a regulation revenue_ruling revenue_procedure notice or announcement published in the internal_revenue_bulletin under sec_301_9100-1 the commissioner has discretion to grant a reasonable extension of time under the rules set forth in sec_301_9100-2 and sec_301_9100-3 to make a regulatory election or a statutory election but no more than months except in the case of a taxpayer who is abroad under all subtitles of the code except subtitles e g h and i sec_301_9100-2 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 evidence to establish that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government in this case good cause has been shown and the requirements of sec_301_9100-1 and sec_301_9100-3 have been met accordingly based on the facts submitted and the representations made corp a is granted an extension of time to file form sec_972 and for the and tax years until or before days from the date of this letter in addition a copy of this letter along with copies of the forms should be sent to the sb_se official a copy of this letter is enclosed for this purpose no opinion is expressed or implied regarding the application of any other provisions of the code or regulations this ruling is directed only to the taxpayer who requested it sec_6110 provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file a copy of this letter is being sent to your authorized legal_representative sincerely yours paul f kugler associate chief_counsel passthroughs and special industries enclosures copy copy of letter


internal_revenue_service number release date index number ------------------------------- ------------------------------------- ------------------------- --------------------- -------------------------------------- department of the treasury washington dc person to contact ------------------- id no ------------- telephone number --------------------- refer reply to cc psi b04 - plr-151976-09 date may re -------------------------------------------------------- re -------------------------------------------------------- legend decedent ------------------------------------------------ personal_representatives ---------------------------------------- cpa ---------------------------------------------------------------------------- date ------------------------- date -------------------------- date ------------------------- dear -------------- this responds to a letter from your authorized representative dated date requesting an extension of time under sec_301 of the procedure and administration regulations to make an alternate_valuation election under sec_2032 of the internal_revenue_code the facts and representations submitted are summarized as follows decedent died on date and the personal_representatives of decedent’s estate timely filed form_706 united_states estate and generation-skipping_transfer_tax return on date the personal_representatives hired cpa to prepare form_706 the cpa prepared the form_706 without considering the alternate_valuation election under sec_2032 the error was discovered on date more than months after the due_date including extensions of the form_706 sec_2032 provides in part that the value of the gross_estate may be determined if the executor so elects by valuing all the property included in the gross_estate as follows in the case of property distributed sold exchanged or otherwise_disposed_of within months after the decedent’s death such property plr-151976-09 shall be valued as of the date of distribution sale exchange or other_disposition in the case of property not distributed sold exchanged or otherwise_disposed_of within months after the decedent’s death such property shall be valued as of the date months after the decedent’s death sec_2032 provides that no election may be made under sec_2032 with respect to an estate unless such election will decrease the value of the gross_estate and the sum of the tax imposed by chapter and the tax imposed by chapter with respect to property includible in the decedent’s gross_estate reduced by credits allowable against such taxes sec_2032 provides that an election under sec_2032 shall be made by the executor on the return of tax imposed by chapter under sec_2032 no election may be made under sec_2032 if such return is filed more than year after the time prescribed by law including extensions for filing such return sec_20_2032-1 of the estate_tax regulations provides that a request for an extension of time to make the sec_2032 election pursuant to sec_301_9100-1 and sec_301_9100-3 will not be granted unless the estate_tax_return is filed no later than year after the due_date of the return including extensions to time actually granted under sec_301_9100-1 the commissioner may grant a reasonable extension of time to make a regulatory election or 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 an automatic_extension of time for making certain elections sec_301_9100-3 provides extensions of time for making elections that do not meet the requirements of sec_301_9100-2 requests for relief under sec_301_9100-3 will be granted when the taxpayer provides the evidence to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government plr-151976-09 sec_301_9100-3 provides that a taxpayer is deemed to have acted reasonably and in good_faith if the taxpayer 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 based on the facts submitted and the representations made we conclude that the estate does not satisfy the requirements of sec_2032 because the election was not filed within year of the due_date of the return accordingly we cannot grant an extension of time to make the alternate_valuation election under sec_2032 except as specifically ruled herein we express or imply no opinion on the federal tax consequences of the transaction under the cited provisions or under any other provisions of the code the ruling in this letter pertaining to the federal estate and or generation-skipping_transfer_tax apply only to the extent that the relevant sections of the internal_revenue_code are in effect during the period at issue 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 your authorized representative sincerely associate chief_counsel passthroughs special industries by _________________ lorraine gardner senior counsel branch office of associate chief_counsel passthroughs special industries enclosures copy for sec_6110 purposes copy of this letter


office_of_chief_counsel department of the treasury i n t e r n a l r e v e n u e s e r v i c e washington d c date number info release date conex-159924-05 cc tege eoeg et2 uil the honorable barbara boxer united_states senator montgomery st suite san francisco california attention mr omar torres dear senator boxer i apologize for the delay in responding to your inquiry dated date on behalf of your constituent ------------------------------------------------------------------------------------------- ---------------------------------------requested information on the issue of constructive receipt as it applies to income_tax_withholding i hope the following general information is helpful publication accounting periods and methods discusses the principle of constructive receipt individuals generally must include in gross_income all items of income actually or constructively received during the tax_year an individual constructively receives income when the employer credits it to the individual’s account or makes it available without restriction an individual has not constructively received income if control of its receipt is subject_to substantial restrictions or limitations i am enclosing a copy of publication for your convenience the employment_tax regulations apply the principle of constructive receipt to an employer’s income_tax_withholding obligations the law requires employers to deduct and withhold income_tax on wages paid to an employee as and when the wages are paid either actually or constructively wages are constructively paid when they are credited to the account of or set apart for an employee so that they may be drawn upon at any time without any substantial limitation of restriction see regulation sec_31_3402_a_-1 whether a particular payment arrangement results in constructive_payment by the employer and constructive receipt by the employee at a time earlier than when the wages are actually paid depends on the facts and circumstances of how the arrangement is structured again i hope this general information is helpful to ------------- if i can assist you further please call me or --------------------of my staff at ---------------------------- sincerely lynne camillo branch chief employment_tax branch exempt_organizations employment_tax government entities tax exempt government entities enclosures