t c summary opinion united_states tax_court svend f and mischelle t stenslet petitioners v commissioner of internal revenue respondent docket no 23402-05s filed date svend f and mischelle t stenslet pro sese beth a nunnink for respondent carluzzo special_trial_judge this case was heard pursuant to the provisions of sec_7463 pursuant to sec_7463 the decision to be entered is not reviewable by any other court 1unless otherwise indicated subsequent section references are to the internal_revenue_code_of_1986 as amended in effect for the relevant period rule references are to the tax_court rules_of_practice and procedure and this opinion shall not be treated as precedent for any other case in a notice_of_deficiency dated date respondent determined the following deficiencies in and penalties with respect to petitioners’ federal income taxes year deficiency penalty sec_6662 dollar_figure big_number big_number dollar_figure dollar_figure dollar_figure after concessions the issues for decision are as follows whether petitioners were engaged in the trade_or_business_of_farming during any of the years in issue whether for and or certain expenditures incurred by mischelle t stenslet to qualify her as a massage therapist are deductible as trade_or_business_expenses whether certain expenditures incurred by svend f stenslet in connection with his employment as a commercial pilot are nondeductible personal expenses or deductible as unreimbursed employee business_expenses whether petitioners are entitled to a deduction for the mechanical failure of a lawnmower during and whether petitioners are liable for sec_6662 accuracy-related_penalties for any of the years in issue background some of the facts have been stipulated and are so found at the time the petition was filed and at all times relevant here petitioners resided in tennessee petitioners’ employment background sec_1 svend f stenslet petitioner at all times relevant to this proceeding petitioner was employed full time as a pilot for united express airlines airlines in connection with that employment he performed services as both a pilot and a flight simulator trainer petitioner’s flight assignments during the years in issue originated and terminated at dulles international airport dulles in sterling virginia in connection with his flight assignments he routinely drove from his residence in tennessee to a nearby airport and then flew to dulles in order to arrive in sufficient time for his flight assignment upon returning to dulles when his flight assignment terminated he returned to his home in tennessee sometimes petitioner’s flight assignments required that he spend the night near dulles accordingly from through petitioner incurred expenses for lodging in sterling he also incurred lodging_expenses in sterling for the period that he remained in the area for training purposes from time to time petitioner kept a car in the dulles area as an airlines pilot petitioner was entitled to and received a per_diem_allowance in connection with his flight assignments the per_diem_allowance began accruing hour before the check-in time at dulles and stopped accruing hours after arrival back at dulles most of petitioner’s flight assignments began and ended on the same day if petitioner’s flight assignment required that he spend a night away from the dulles area then airlines paid the expense of the overnight lodging mischelle t stenslet mrs stenslet as best as can be determined from the record mrs stenslet was employed as a registered nurse during each year in issue at some point in her career as a registered nurse mrs stenslet became interested in becoming a licensed massage therapist starting in she began to pursue that interest petitioners’ farming activity in the early 1990s mrs stenslet’s mother purchased acres in tennessee described by petitioners as untouched land consisting of fields and wooded areas covered in blackberry bushes the property in petitioners who expected that they would inherit at least a quarter of the property decided to locate their residence there they first began to live on the property in a mobile home over the years they transformed the property from what was essentially undeveloped land to land suitable to support a permanent residence during petitioners purchased approximately chickens and emus from time to time during that year they sold chicken eggs for dollar_figure a dozen they also sold unspecified amounts of emu feathers apparently used to make lures for fly fishing purposes in petitioners purchased a goat and a horse the goat was sold soon after it was purchased because according to petitioners it was scary although it is not entirely clear from the record during petitioners might have purchased another horse during that year electric fencing was installed on the property petitioners did not maintain formal books of account with respect to any income generated from or expenses_incurred in connection with the chickens horse s emus and if only for a brief period the goat maintained on the property they did however keep receipts evidencing the purchase of feed fencing and various other supplies used or consumed in connection with the maintenance of those animals petitioners’ federal_income_tax returns for each year in issue petitioners’ timely filed joint federal_income_tax return was prepared by a paid income_tax_return_preparer as relevant here the contents of each return are summarized below petitioners’ return includes a schedule a itemized_deductions a form_2106 employee business_expenses relating to petitioner’s employment as a pilot and a schedule f profit or loss from farming on the schedule a petitioners claimed an employee_business_expense deduction2 of dollar_figure attributable to various expenses the majority of which are identified on the form petitioner incurred for lodging meals and the use of a vehicle while he was working as an airlines pilot and away from his residence in tennessee the schedule f lists the principal product as other animal income of dollar_figure is reported and deductions totaling dollar_figure are claimed on the schedule f the resultant loss dollar_figure is taken into account in the adjusted_gross_income shown on the return petitioners’ return includes a schedule a a form_2106 relating to petitioner’s employment as a pilot a schedule f and a schedule c profit or loss from business showing mrs stenslet as the proprietor 2amounts shown for this item each year are before the application of sec_67 on the schedule a petitioners claimed an employee_business_expense deduction of dollar_figure attributable to various expenses the majority of which are identified on the form petitioner incurred for lodging meals and the use of a vehicle while he was working as an airlines pilot and away from his residence in tennessee the schedule f lists the principal product as other poultry produc income of dollar_figure is reported and deductions totaling dollar_figure are claimed on the schedule f the resultant loss dollar_figure is taken into account in the adjusted_gross_income shown on the return the schedule c identifies the principle sic business or profession as other personal care no income is reported on the schedule deductions are claimed for depreciation and supplies expenses totaling dollar_figure which is the amount of the resultant loss taken into account in the adjusted_gross_income shown on the return as best as can be determined from the record the expenses relate to expenses mrs stenslet incurred in pursuit of her intention to become a massage therapist petitioners’ return includes a schedule a a form_2106 relating to petitioner’s employment as a pilot a schedule f a schedule c showing mrs stenslet as the proprietor and a form_4797 sales of business property on the schedule a petitioners claimed an employee_business_expense deduction of dollar_figure attributable to various expenses the majority of which are identified on the form petitioner incurred for lodging meals and the use of a vehicle while he was working as an airlines pilot and away from his residence in tennessee the schedule f lists the principal product as horses and other equ income of dollar_figure is reported and deductions totaling dollar_figure are claimed on the schedule f the resultant loss dollar_figure is taken into account in the adjusted_gross_income shown on the return the schedule c identifies the principle sic business or profession as other personal care no income is reported on the schedule deductions are claimed for depreciation and utilities expenses totaling dollar_figure which is the amount of the resultant loss taken into account in the adjusted_gross_income shown on the return as best as can be determined from the record the expenses relate to mrs stenslet’s intention to become a massage therapist the form_4797 shows a loss of dollar_figure relating to a mechanical failure of a lawnmower which loss is taken into account in the adjusted_gross_income shown on the return the notice_of_deficiency some of the adjustments made in the above-referenced notice_of_deficiency have been agreed to between the parties or conceded and other adjustments are computational those adjustments will not be discussed in the notice_of_deficiency respondent disallowed with minor exceptions the employee_business_expense deduction claimed for each year the net losses shown on the schedules f for and all of the deductions claimed on the schedule f for all of the deductions claimed on the schedules c for and and the loss claimed on the form_4797 for respondent also imposed a sec_6662 accuracy-related_penalty for each year in issue discussion as we have observed in countless opinions deductions are a matter of legislative grace and the taxpayer bears the burden_of_proof to establish entitlement to any claimed deduction rule a 503_us_79 292_us_435 this burden requires the taxpayer to substantiate deductions claimed by keeping and producing adequate_records that enable the commissioner to determine the taxpayer’s correct_tax liability 3petitioners do not claim that the provisions of sec_7491 are applicable and we proceed as though they are not sec_6001 65_tc_87 affd per curiam 540_f2d_821 5th cir 43_tc_824 a taxpayer claiming a deduction on a federal_income_tax return must demonstrate that the deduction is allowable pursuant to some statutory provision and must further substantiate that the expense to which the deduction relates has been paid_or_incurred see sec_6001 hradesky v commissioner supra sec_1_6001-1 income_tax regs the types of deductions here in dispute are allowable if at all under sec_162 that section generally allows a deduction for ordinary and necessary expenses paid_or_incurred during the taxable_year in carrying on any trade_or_business the term trade_or_business as used in sec_162 includes the trade_or_business of being an employee 54_tc_374 17_tc_1456 the determination of whether an expenditure satisfies the requirements for deductibility under sec_162 is a question of fact see 320_us_467 on the other hand sec_262 generally disallows a deduction for personal living or family_expenses set against these fundamental principles we turn our attention first to the deductions here in dispute schedule f and schedule c deductions consistent with the manner in which petitioners filed their and returns they contend that the deductions claimed on the schedules f and schedules c are allowable as trade_or_business_expenses respondent argues that those deductions are not allowable under sec_162 because according to respondent neither petitioners’ farming activity nor mrs stenslet’s massage therapist activity constitute a trade_or_business during the years in issue schedule f deductions giving petitioners the benefit of the doubt it appears that the property very well might have been suitable for some farming activity we also note that the animals that they owned and maintained over the years might be generally classified as farm animals living on property suitable for farming and owning a few farm animals however does not without more establish that petitioners were in the trade_or_business_of_farming during any of the years in issue we recognize that for purposes of deductions allowable under sec_162 the term trade_or_business is not precisely defined in the internal_revenue_code nevertheless in considering whether an activity constitutes a trade_or_business for purposes of sec_162 we apply a common-sense approach to examine whether the activity was conducted with continuity and regularity for the purpose of a livelihood or profit 480_us_23 in so doing we find the record to be sorely lacking in the details necessary to consider petitioners’ farming activity to be a trade_or_business petitioners’ generalized explanation of the property and the animals maintained there does little more than describe a family that resides in a rural setting their description hardly suggests much less establishes that they were engaged in a farming trade_or_business during any of the years in issue respondent’s disallowances of the losses shown on the schedules f for and are sustained as are respondent’s disallowances of all of the deductions claimed on the schedule f for schedule c deductions although the expenses are not so described on either schedule c mrs stenslet testified that the schedule c 4little point would be served by including a detailed analysis of the factors normally taken into account in considering a taxpayer’s profit_motive see sec_1_183-2 income_tax regs the lack of evidence on many of the factors leads to the inescapable conclusion that petitioners’ farming activity was not conducted with an objective intent to profit during any of the years in issue see 72_tc_411 affd without published opinion 647_f2d_170 9th cir 5deductions up to the amount of income shown on the schedule f for should be allowed see sec_183 and b deductions reported on petitioners’ and returns relate to educational expenses_incurred in pursuit of her certification as a massage therapist the record does not allow for an informed finding on whether the expenses are accurately described on the returns or by the testimony of mrs stenslet be that as it may as of the close of she had not obtained that certification and she was not performing services as a massage therapist because mrs stenslet was not yet in a trade_or_business of being a massage therapist at the time the expenses were incurred petitioners may not deduct the expenses under sec_162 see 345_f2d_901 4th cir vacated and remanded on other grounds 382_us_68 furthermore if the expenses were educational petitioners would not be entitled to a deduction for the expenses because the expenses were incurred as part of a program designed to qualify mrs stenslet for a new trade_or_business see sec_1_162-5 income_tax regs schedule a deductions the employee_business_expense deduction petitioners claimed for each year in issue relates to petitioner’s employment with airlines in general the deductions consist of the following items vehicle expenses parking fees and tolls expenses meals_and_lodging union dues uniforms for work small tools for work job supplies and other business_expenses not specifically identified or explained vehicle expenses parking fees and tolls and meals_and_lodging the expenses in this category relate to the amounts expended by petitioner in traveling back and forth from his residence in tennessee to sterling virginia and for expenses_incurred for meals lodging and vehicle expenses while present in sterling according to petitioners those expenses are properly deductible as travel_expenses petitioner incurred while traveling away from home as an employee of airlines according to respondent those expenses represent nondeductible personal living or family_expenses in general_expenses incurred for a taxpayer’s meals lodging and for commuting between the taxpayer’s residence and the taxpayer’s place of business are nondeductible personal expenses sec_262 see eg 326_us_465 see also sec_1_162-2 sec_1_262-1 income_tax regs on the other hand traveling expenses including amounts expended for meals_and_lodging other than amounts that are lavish_or_extravagant under the circumstances may be deducted if they are incurred while away from home in connection with employee’s employment sec_162 primuth v commissioner t c pincite the word home in sec_162 means the taxpayer’s tax_home 74_tc_578 67_tc_1 49_tc_557 the dispute between the parties reduces to their disagreement regarding the location of petitioner’s tax_home during the years in issue according to petitioners petitioner’s tax_home was defined by the location of their residence in tennessee and traveling expenses_incurred in connection with traveling to or remaining in sterling are deductible under sec_162 according to respondent petitioner’s tax_home was sterling and expenses_incurred to travel there and any expenses_incurred for meals lodging and vehicle expenses while present in sterling are not deductible because the expenses are personal in nature for the following reasons we agree with respondent generally a taxpayer’s tax_home is determined by the location of the taxpayer’s regular or principal if more than one regular place of business mitchell v commissioner supra pincite kroll v commissioner supra pincite cf sec_1 b income_tax regs as an airlines employee petitioner was based at dulles during each year in issue and his flight assignments began and ended there it follows that dulles was petitioner’s regular or principal_place_of_business and sterling was his tax_home during those years consequently expenses for meals_and_lodging incurred in sterling may not be deducted under sec_162 because those expenses were not incurred while petitioner was away from home furthermore because a taxpayer’s cost of commuting between the taxpayer’s personal_residence and place of employment no matter how far is a nondeductible personal_expense commissioner v flowers supra pincite sec_1_162-2 sec_1_262-1 income_tax regs petitioner is not entitled to a deduction for amounts incurred to travel between petitioner’s residence in tennessee and sterling or for vehicle expenses_incurred while in sterling union dues uniforms small tools job supplies and other business_expenses respondent has conceded that petitioners have substantiated and are otherwise entitled to deduct various amounts for each category of the above-listed expenses petitioners have failed to establish that they are entitled to additional_amounts for these expenses to the extent necessary to exceed the limitations imposed by sec_67 respondent’s adjustments with respect to these items are sustained sec_67 provides that unreimbursed employee business_expenses otherwise deductible may only be deducted to the extent that the expenses exceed percent of the taxpayers’ adjusted_gross_income loss attributable to lawnmower petitioners’ return includes a form_4797 on which petitioners reported a capital_loss of dollar_figure attributable to a lawnmower purchased in according to petitioners the mechanical failure of the lawnmower should be treated as a loss resulting from the involuntary_conversion of property used in a trade_or_business see sec_165 c and a b according to respondent petitioners are not entitled to any loss deduction because the lawnmower was not used in a trade_or_business or held in connection with a transaction entered into for profit as relevant here a loss from the destruction in whole or in part of property used in the taxpayer’s trade_or_business or held in connection with a transaction entered into for profit shall be treated as loss from an involuntary_conversion sec_1231 according to petitioners the lawnmower was used in their farming activity which they considered to be a trade_or_business because we have found that petitioners’ farming activity did not constitute a trade_or_business for purposes of sec_162 and because there is no support in the record for a finding that petitioners’ farming activity was entered into for profit it follows that petitioners are not entitled to a deduction for the loss from the destruction of the lawnmower the accuracy-related_penalties lastly we consider whether petitioners are liable for a sec_6662 accuracy-related_penalty for any of the years in issue various grounds for the imposition of that penalty are set forth in the notice_of_deficiency nevertheless if it is shown that petitioners acted in good_faith and there is reasonable_cause for the underpayment_of_tax for each year then the sec_6662 accuracy-related_penalty is not applicable to any of those years see sec_6664 116_tc_438 for each year in issue petitioners relied upon a paid income_tax_return_preparer to prepare their federal_income_tax return and to compute the federal_income_tax liability shown on the return we are satisfied that petitioners had reasonable_cause and acted in good_faith with respect to the underpayment_of_tax that will remain for each year see sec_6664 they are not liable for the sec_6662 accuracy-related_penalty for any year in issue 7there is insufficient evidence in the record to allow us to consider whether the loss resulted from a casualty see sec_165 to reflect the foregoing decision will be entered under rule


t c summary opinion united_states tax_court qui van phan petitioner v commissioner of internal revenue respondent docket no 16202-13s filed date qui van phan pro_se dean h wakayama and connor j moran for respondent summary opinion kerrigan judge this case was heard pursuant to sec_7463 of the internal_revenue_code in effect when the petition was filed pursuant to sec_7463 the decision to be entered is not reviewable by any other court and this opinion shall not be treated as precedent for any other case 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 we round all monetary amounts to the nearest dollar this case was commenced in response to a notice_of_deficiency determining a deficiency of dollar_figure and an accuracy-related_penalty pursuant to sec_6662 of dollar_figure for tax_year the issues for consideration are whether petitioner is entitled to a home mortgage interest_deduction for tax_year and whether petitioner is liable for an accuracy-related_penalty for tax_year background petitioner resided in california when he filed the petition in petitioner moved into a house on a three-acre ranch in california property to help his mother who was unable to care for the property he lived at the property during during this time his mother was in the process of divorcing his father his father left the property before and did not live there at all in as part of the divorce settlement his mother would pay his father in exchange for his father’s interest in the property in order to secure the needed funds the mortgage loan for the property was refinanced in because of his financial situation petitioner was not able to buy the property however petitioner entered into an oral agreement with his mother and his siblings that he would pay the mortgage loan and the property taxes and these payments would increase his equity_interest in the home petitioner’s sister and sister-in-law refinanced the mortgage loan for the property in in petitioner’s name was added to the legal_title to the property in the legal_title to the property was held by petitioner’s mother brother and father his brother and father were not living at the property petitioner’s mother was unable to take care of the property on her own during chase held a mortgage on the property the mortgage was not held in petitioner’s name during chase received monthly mortgage payments from petitioner of dollar_figure petitioner maintained a bank account with wells fargo and his bank statements for show a monthly check for dollar_figure paid to chase petitioner filed a form_1040 u s individual_income_tax_return for tax_year he attached a schedule a itemized_deductions to his form_1040 on which he claimed a dollar_figure deduction for home mortgage interest on date respondent issued petitioner the notice_of_deficiency disallowing petitioner’s claimed home mortgage interest_deduction and imposing the accuracy-related_penalty under sec_6662 discussion i burden_of_proof generally the commissioner’s determinations in a notice_of_deficiency are presumed correct and the taxpayer bears the burden of proving that those determinations are erroneous rule a 290_us_111 under sec_7491 in certain circumstances the burden_of_proof may shift from the taxpayer to the commissioner petitioner has not claimed to meet and has not shown that he meets the requirements of sec_7491 to shift the burden_of_proof to respondent as to any relevant factual issue ii mortgage interest_deduction deductions are a matter of legislative grace and taxpayers bear the burden of establishing entitlement to any claimed deduction rule a 503_us_79 taxpayers must maintain records sufficient to allow the commissioner to determine their correct_tax liability sec_6001 sec_1_6001-1 income_tax regs sec_163 allows a deduction for all interest_paid or accrued within the taxable_year on indebtedness sec_163 however provides that in the case of a taxpayer other than a corporation no deduction is allowed for personal_interest qualified_residence_interest is excluded from the definition of personal_interest and thus is deductible under sec_163 see sec_163 qualified_residence_interest is any interest that is paid_or_accrued during the taxable_year on acquisition_indebtedness or home_equity_indebtedness see sec_163 for any period the aggregate amount of home acquisition_indebtedness may not exceed dollar_figure million sec_163 the indebtedness generally must be an obligation of the taxpayer and not an obligation of another see 604_f2d_34 9th cir aff’g tcmemo_1976_150 sec_1_163-1 income_tax regs however provides that even if a taxpayer is not directly liable on a bond or note secured_by a mortgage the taxpayer may nevertheless deduct the mortgage interest_paid if he or she is the legal or equitable owner of the property subject_to the mortgage state law determines the nature of property rights such as legal or equitable ownership while federal_law determines the appropriate tax consequences of those rights see 472_us_713 blanche v commissioner tcmemo_2001_63 aff’d 33_fedappx_704 5th cir california law applies in determining petitioner’s property rights in the property california law provides that the owner of legal_title to property is presumed to be the owner of full beneficial title as well cal evid code sec_662 west this presumption may be rebutted by clear_and_convincing proof id petitioner’s name was not added to the legal_title to the property until petitioner must overcome the presumption by providing clear_and_convincing proof that he had an equitable ownership_interest in the property when he made the mortgage payments in under california law an individual may overcome the presumption that the legal owner is also the equitable owner by showing that there exists an agreement or understanding between the parties evidencing an intent contrary to that which is reflected in the deed in re marriage of fossum cal rptr 3d ct app petitioner testified credibly that his family had granted him an interest in the property and would allow him to add his name to the title at any time if he paid the property expenses cf puentes v commissioner tcmemo_2014_224 at holding that the taxpayer was not the equitable owner of the property because she failed to provide any evidence of an agreement evidencing an intent contrary to that reflected in the deed his name was added to the title in petitioner testified that his name was not added to the title earlier because of his financial status petitioner’s evidence is credible and shows his family’s agreement that he was a beneficial_owner of the property we have held that a taxpayer may become the equitable owner of property if he or she assumes the benefits_and_burdens_of_ownership see 68_tc_115 in determining whether the benefits_and_burdens_of_ownership have been transferred to a taxpayer this court has often considered whether the taxpayer has a right to possess the property and to enjoy the use rents or profits thereof has a duty to maintain the property is responsible for insuring the property bears the property’s risk of loss is obligated to pay the property’s taxes assessments or charges has the right to improve the property without the owner’s consent and has the right to obtain legal_title at any time by paying the balance of the purchase_price blanche v commissioner slip op pincite petitioner resided at the property in consistent with his right to possess and enjoy use of the property petitioner also took a number of actions consistent with performing his duties responsibilities and obligations under the agreement with his family he made the mortgage payments before during and after he testified credibly that he made the property_tax and insurance payments paid the cable bill maintained the property and made improvements to the property the property was three acres and he testified that his mother was unable to care for it as a result of these actions petitioner was granted the right to add his name to the legal_title to the property petitioner also bore a substantial risk of loss because he stood to lose the funds spent to build his equitable interest on the facts and circumstances of this case we find that petitioner has provided clear_and_convincing evidence that he was an equitable owner of the property in we do not sustain respondent’s deficiency determination and therefore need not decide whether an accuracy-related_penalty under sec_6662 would be appropriate any contentions we have not addressed are irrelevant moot or meritless to reflect the foregoing decision will be entered for petitioner


department of the treasury internal_revenue_service washington d c date uil number release date cc dom fs proc pwfuller spr-105733-99 memorandum for director office of interest and penalty administration op ex st i p attn pauline riendeau from chief procedural branch field service division subject delays due to customer service staffing interest abatement during the recent tax filing season the commissioner’s office directed the temporary reassignment of internal_revenue_service employees from examination and other functions to customer service since the internal_revenue_service committed itself to providing hour assistance to customers in many districts almost every office had employees reassigned as a result there was a shortage of employees to work on tax matters that were already pending before the service there have been numerous questions asking if interest should be abated due to delays in the processing or examination of pending cases attributable to these reassignments you have asked for our advice on whether the service is authorized to abate interest in this situation for tax years beginning prior to date sec_6404 allows the service to abate only interest on a deficiency or payment where the interest is attributable in whole or in part to an error or delay by an officer_or_employee of the internal_revenue_service in performing a ministerial_act a ministerial_act is a procedural or mechanical act that does not involve the exercise of judgment or discretion and that occurs during the processing of a case after all prerequisites to the act have taken place temp sec_301_6404-2t b in addition error or delay may be taken into account only if the taxpayer has not significantly contributed to the error or delay and the error or delay must have occurred after the taxpayer has been contacted in writing with respect to the deficiency or payment in enacting sec_6404 congress did not intend that the abatement of interest provision be used routinely to avoid payment of interest h_r rep no 99th cong 1st sess s rep no 99th cong 2d sess rather congress intended abatement of interest to be used in instances where failure to abate interest would be widely spr-105733-99 perceived as grossly unfair id the decision to reassign employees from examination to customer service was not a ministerial_act the taxpayer bill of right sec_2 pub_l_no 110_stat_1452 expanded sec_6404 for tax years beginning after date sec_6404 now permits the service to abate interest where there is an unreasonable error or delay in performing a managerial act a managerial act is defined as an administrative act that occurs during the processing of a taxpayer’s case involving the temporary or permanent loss of records or the exercise of judgment or discretion relating to management of personnel sec_301_6404-2 examples of managerial acts include the granting of leave for an extended period of time and the decision not to reassign a case during the employee’s absence see sec_301_6404-2 example a general administrative decision is not a managerial act for which interest can be abated sec_301_6404-2 the regulation provides two examples of a general administrative decision one example involves a delay in commencing the examination of a taxpayer’s return until the processing of another return for which the statute_of_limitations is about to expire is completed sec_301_6404-2 example the example concludes that this is a general administrative decision because it is a decision on how to prioritize the processing of returns based on the expiration of the statute_of_limitations the other example involves the decision to delay the processing of the return of a taxpayer who has invested in a tax_shelter and reported a loss from the tax_shelter on the taxpayer’s income_tax return until the completion of an examination of the tax_shelter sec_301_6404-2 example the example concludes that the decision to delay processing the taxpayer’s return is a general administrative decision because it is a decision on how to organize the processing of tax returns the commissioner’s decision to allocate the service’s resources by temporarily assigning personnel to customer service is similar to the decisions made in examples and of sec_301_6404-2 of the regulation therefore this decision is a general administrative decision on which abatement of interest may not be based accordingly the service is not authorized to abate interest that accrued as a result of the reassignment of employees from the examination_division or any other function to customer service if you have any questions please contact pamela wilson fuller at


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 b04 plr-126831-09 date date year grantor spouse clat x charitable_organization y cpa year accounting firm year year ------- ---------------------------------------------------------------------------------- ---------------------------------------------------------------------------------- -------------------------- -------------------------- ---------------------------------------------------------------------------------- ----------------------------------- -------------- ---------------------------------------------------------------------------------- - ---- ---------------- ------- ------------------------------------- ------- ------- dear ------------------------- this responds to the letter dated date submitted on your behalf requesting an extension of time under sec_2642 of the internal_revenue_code and sec_301_9100-1 and sec_301_9100-3 of the procedure and administration regulations to make allocations of generation-skipping_transfer gst_exemption to a_trust facts the facts submitted and the representations made are as follows in year grantor and spouse established the year charitable_lead_annuity_trust clat and grantor transferred dollar_figurex of publicly-traded stock to the trust the terms of clat provide for an annuity interest to be paid to charitable_organization an plr-126831-09 organization described in each of sec_170 sec_170 sec_2055 and sec_2522 for a period of y years on the expiration of the y-year period the remainder is to be paid outright to skip persons grantor and spouse notified cpa of the transfer to clat in year although cpa indicated he would prepare any necessary form sec_709 united_states gift and generation-skipping_transfer_tax form on behalf of grantor and spouse cpa failed to do so in year after consultation with an estate_planning attorney grantor and spouse contacted cpa and discovered no form sec_709 had been prepared to report the year transfer and to make any appropriate allocations thereafter grantor and spouse hired accounting firm to prepare the necessary form sec_709 for year in year grantor and spouse filed the form sec_709 prepared by accounting firm in which they elected to treat the transfer to clat as made one-half by grantor and one-half by spouse pursuant to sec_2513 in preparing the form sec_709 for grantor and spouse accounting firm failed to properly allocate the gst exemptions of grantor and spouse to the transfer treated as made one- half by each of them after the term of clat expired in year accounting firm advised grantor and spouse of the improper allocation of gst exemptions to the transfer grantor and spouse request an extension of time under sec_2642 and sec_301_9100-3 to allocate gst_exemption to the respective one-half of the value of the transfer that grantor and spouse are treated as making pursuant to their election under sec_2513 further grantor and spouse request a ruling that the amounts of gst_exemption allocated by grantor and spouse will be effective as of the date of the transfer law and analysis sec_2601 imposes a tax on every gst a gst is defined under sec_2611 as a taxable_distribution a taxable_termination and a direct_skip sec_2602 provides that the amount of the tax is the taxable_amount multiplied by the applicable_rate sec_2641 defines applicable_rate as the product of the maximum_federal_estate_tax_rate and the inclusion_ratio with respect to the transfer sec_2642 provides the method for determining the inclusion_ratio under sec_2642 the inclusion_ratio with respect to any property transferred in a generation- skipping transfer is generally defined as the excess of over the applicable_fraction the applicable_fraction as defined in sec_2642 is a fraction the numerator of which is the amount of gst_exemption under sec_2631 allocated to the trust or to property plr-126831-09 transferred in a direct_skip and the denominator of which is the value of the property transferred to the trust or involved in the direct_skip under sec_2631 in effect at the time of the transfer for purposes of determining the inclusion_ratio every individual shall be allowed a gst_exemption equal to dollar_figure for the year at issue that may be allocated by such individual or his executor to any property with respect to which such individual is the transferor sec_2631 provides that any allocation under sec_2631 once made shall be irrevocable sec_2632 provides that any allocation by an individual of his or her gst_exemption under sec_2631 may be made at any time on or before the date prescribed for filing the estate_tax_return for such individual's estate determined with regard to extensions regardless of whether such a return is required to be filed sec_26_2632-1 of the generation-skipping_transfer_tax regulations in effect at the time of the transfer provides that an allocation of gst_exemption to property transferred during the transferor's lifetime other than in a direct_skip is made on form_709 under sec_2642 in effect at the time of the transfer if an allocation of gst_exemption to any transfer of property is made on a timely-filed form_709 reporting such transfer the value of such property for purposes of determining the inclusion_ratio shall be its value for purposes of chapter and such allocation shall be effective on and after the date of such transfer under sec_2652 and sec_26_2652-1 generally the transferor for purposes of the gst tax is the individual with respect to whom the property was last subject_to federal estate or gift_tax sec_2652 and sec_26_2652-1 provide that if under sec_2513 one-half of a gift is treated as made by an individual and one-half is treated as made by the spouse of the individual then for purposes of the gst tax each spouse is treated as the transferor of one-half of the entire value of the property transferred by the donor spouse regardless of the interest the electing spouse is actually deemed to have transferred under sec_2513 sec_2642 provides that the secretary shall by regulation prescribe such circumstances and procedures under which extensions of time will be granted to make an allocation of gst_exemption described in sec_2642 or and an election under sec_2632 or c such regulations shall include procedures for requesting comparable relief with respect to transfers made before the date of the enactment of this paragraph sec_2642 provides that in determining whether to grant relief under this paragraph the secretary shall take into account all relevant circumstances including evidence of intent contained in the trust instrument or instrument of transfer and such plr-126831-09 other factors as the secretary deems relevant for purposes of determining whether to grant relief under this paragraph the time for making the allocation or election shall be treated as if not expressly prescribed by statute notice_2001_50 2001_2_cb_189 provides that under sec_2642 the time for allocating the gst_exemption to lifetime transfers and transfers at death the time for electing out of the automatic allocation rules and the time for electing to treat any trust as a gst_trust are to be treated as if not expressly prescribed by statute the notice further provides that taxpayers may seek an extension of time to make an allocation described in sec_2642 or b or an election described in sec_2632 or c under the provisions of sec_301_9100-3 of the procedure and administration regulations sec_301_9100-1 provides that 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 six months except in the case of a taxpayer who is abroad under all subtitles of the internal_revenue_code except in subtitles e g h and i sec_301_9100-3 provides that in general requests for extensions of time for regulatory elections that do not meet the requirements of sec_301_9100-2 must be made under the rules of sec_301_9100-3 under sec_301_9100-1 a regulatory election includes an election whose due_date is prescribed by a notice published in the internal_revenue_bulletin in accordance with sec_2642 and notice_2001_50 taxpayers may seek an extension of time to make an election described in sec_2642 or b or an election described in sec_2632 or c under the provisions of sec_301_9100-3 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 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 to advise the taxpayer to make the election based on the facts submitted and the representations made we conclude that the requirements of sec_301_9100-3 have been satisfied therefore an extension of sixty days from the date of this letter is granted to allocate grantor’s and spouse’s available gst_exemption to the respective one-half of the value of the transfer that each spouse is treated as making pursuant to their election under sec_2513 the allocations will be treated as being affirmatively made on the date of the transfer plr-126831-09 these allocations should be made on separate supplemental form sec_709 for the year in which the transfer was made and the form sec_709 should be filed with the internal_revenue_service center cincinnati ohio a copy of this letter should be attached to the returns except as expressly provided herein no opinion is expressed or implied concerning the federal tax consequences of any aspect of any transaction or item discussed or referenced in this letter the ruling contained in this letter is based upon information and representations submitted by grantor and spouse 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_ruling it is subject_to verification on examination this ruling is directed only to the taxpayer requesting it sec_6110 provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative sincerely curt g wilson associate chief_counsel passthroughs special industries enclosure copy for sec_6110 purposes cc


t c memo united_states tax_court jag brokerage inc petitioner v commissioner of internal revenue respondent docket no 17743-11l filed date r moves for summary_judgment in his favor because the only issue p raised in this action to review r's determination to proceed with the collection of unpaid taxes is a challenge to the amounts of petitioner's underlying tax_liabilities which issue r argues p cannot raise because it received a statutory_notice_of_deficiency deficiency_notice see sec_6330 p is a corporation however and r claims that he mailed the deficiency_notice to p at what we presume to be its last_known_address with copies to two individuals at least one of whom appears to be an officer of p r relies on a declaration and the common_law mailbox rule to establish that there is no genuine dispute as to the material fact that p received the deficiency_notice however as to the mailings to the individuals a postal service form_3877 identifies the items mailed as statutory notices of claim disallowance not deficiency notices while the item mailed to p is identified on the postal service form_3877 as a deficiency_notice the question remains whether with respect to p an artificial person receipt for purposes of sec_6330 means receipt by an individual authorized to act on its behalf of p while p did not respond to the motion and we might therefore conclude that it has failed to rebut the inference to be drawn from the mailbox rule and thus has failed to show that there is a dispute as to a material fact given the uncertainty as to the relevance of receipt by someone authorized to act for the corporation we are hesitant to and will not grant the motion held the motion for summary_judgment will be denied john a gotti and kim gotti for petitioner james p a caligure and peggy j gartenbaum for respondent memorandum opinion halpern judge this case is before us to review a determination by respondent's appeals_office appeals to proceed with collection of petitioner's unpaid federal_income_tax additions to tax and penalties for through years in issue respondent moved motion for summary_judgment in his favor petitioner was ordered to respond but did not we shall nevertheless deny the motion all section references are to the internal_revenue_code presently in effect and all rule references are to the tax_court rules_of_practice and procedure summary_judgment is a procedure used to expedite litigation it is intended to avoid unnecessary and expensive trials it is not however a substitute for trial it should not be used to resolve genuine disputes over issues of material fact e g 88_tc_794 a motion for summary_judgment will be granted if the pleadings answers to interrogatories depositions admissions and any other acceptable materials together with the affidavits or declarations if any show that there is no genuine dispute as to any material fact and that a decision may be rendered as a matter of law rule b the moving party has the burden of showing the absence of a genuine issue as to any material fact e g 134_tc_13 for these purposes the party opposing the motion is to be afforded the benefit of all reasonable doubt and the material submitted by both sides must be viewed in the light most favorable to the opposing party that is all doubts as to the existence of an issue of material fact must be resolved against the movant e g 398_us_144 636_f2d_1141 n 7th cir 98_tc_383 background respondent asks for summary_judgment in his favor because the only issue raised in the petition is a challenge to the amounts of petitioner's underlying tax liabilities for the years in issue and respondent argues it is precluded from challenging those liabilities because with respect to those years it received a statutory_notice_of_deficiency deficiency_notice see sec_6330 respondent supports the motion with the declaration of settlement officer gail dickerson who by the declaration states that a deficiency_notice with respect to those years was both mailed and delivered to petitioner at its last_known_address with additional copies mailed to john a gotti and kim m albanese a k a kim m gotti ms gotti mr gotti it appears from the declaration was at that time an officer of petitioner petitioner assigns error to the determination and in support of its assignment avers in part that it had no prior opportunity to dispute its underlying liability because when the deficiency_notice was mailed mr gotti was incarcerated in solitary confinement with limited and restricted access to communications and he did not receive it by the answer respondent admits that mr gotti was incarcerated when the deficiency_notice was mailed he denies for lack of information whether mr gotti was in solitary confinement with restricted access to communications i appeals hearing discussion sec_6320 and sec_6330 provide taxpayers the right to notice and the opportunity for an appeals hearing before the commissioner takes certain steps to collect unpaid taxes at that hearing a taxpayer may raise a challenge to the existence or amount of his underlying tax_liability for any_tax period only if the taxpayer did not receive any statutory_notice_of_deficiency for such tax_liability or did not otherwise have an opportunity to dispute such tax_liability sec_6330 in response to respondent's actions to collect unpaid taxes for the years in issue petitioner requested and was granted an appeals hearing before ms dickerson she did not allow petitioner to challenge its underlying tax_liabilities for those years because she determined it had received a deficiency_notice for those years we have jurisdiction to review appeals' determination not to allow petitioner to raise that challenge see sec_6330 ii respondent's argument respondent argues that the declaration establishes that a deficiency_notice for the years in issue was mailed and delivered to petitioner at its last_known_address with copies mailed to both mr and ms gotti at that address and a copy mailed to mr gotti at the metropolitan detention center brooklyn new york where he was incarcerated in fact a copy of a postal service form_3877 attached to the declaration evidences the mailing to petitioner at what we presume to be its last_known_address of a deficiency_notice for the years in issue and a copy of a postal service track confirm statement confirms its subsequent delivery to that address the postal service form_3877 also evidences the mailing to the gottis of six notices of claim disallowance not notices of deficiency for and but not with two of them for and addressed to mr gotti at the detention center and the rest addressed to one or the other of the gottis at the presumed last_known_address there is no evidence that any of the notices of claim disallowance were delivered respondent argues absent direct evidence that the taxpayer actually received the notice_of_deficiency or refused its delivery respondent must rely on the presumptions of official regularity and delivery to meet its burden_of_proof see 114_tc_604 bailey v commissioner tcmemo_2005_241 iii mailbox rule if we are to grant the motion respondent's burden is to show that there is no genuine dispute as to any material fact and that a decision may be rendered as a matter of law whether petitioner a corporation received the deficiency_notice so as to deprive it of the right to raise a challenge to its underlying tax_liabilities at its appeals hearing raises both a question of law what constitutes receipt by a corporation for purposes of sec_6330 and having answered that a question of material fact ie whether it received the notice respondent does not explicitly address the first question ie what for purposes of sec_6330 constitutes receipt by a corporation apparently believing that one of the notices reached the right recipient to satisfy his burden he evokes what in essence is the common_law mailbox rule ie that proof that a letter properly directed was placed in a post office creates a presumption that it reached its destination in usual time and was actually received by the person to whom it was addressed 285_us_427 see also 490_f3d_928 fed cir am jur 2d evidence sec_273 mailbox r ule we have said respondent is entitled to rely upon presumptions of official regularity and delivery where the record reflects proper mailing of the statutory_notice_of_deficiency powers v commissioner tcmemo_2009_229 wl at those presumptions do not establish conclusively that the mailed item arrived but merely create an inference that if challenged raises an issue of fact as to whether the item was actually received see rios f 3d pincite am jur 2d evidence sec_273 see also conn v commissioner tcmemo_2008_186 if the presumption is raised and the taxpayer does not rebut the presumption the court may find that the taxpayer received the notice_of_deficiency iv receipt of the deficiency_notice as to the six notices of claim disallowance mailed to the gottis we need reach neither the question of what constitutes receipt by a corporation nor the question of whether in the face of petitioner's failure to respond to the motion its averments admitted by respondent are a sufficient challenge to deprive respondent of the inference from the mailbox rule that those notices were received by the addressees that is because the notices are described on the postal service form_3877 as notices of claim disallowance so that even if we presume the gottis received them and one or the other of the gottis to be a proper recipient for petitioner there is still a dispute as to the material fact of whether what was received was a copy of the deficiency_notice with respect to the deficiency_notice that he claims was mailed to petitioner respondent can rely on the postal service form_3877 and the postal service track confirm statement to show that the deficiency_notice addressed to petitioner was delivered to what we assume to be its last_known_address and the inference to be drawn from the mailbox rule is that the notice addressed to petitioner was received by it but petitioner is a corporation an artificial person and the question remains whether for petitioner to be precluded by sec_6330 from raising a challenge to its underlying tax_liability someone an individual employed by or acting for petitioner must have received the deficiency_notice in time for it to have acted on it the mailbox rule does not answer that question and sec_6330 does not amplify the receipt requirement sec_301 e q a-e2 proced admin regs however states that for purposes of sec_6330 receipt of a statutory_notice_of_deficiency means receipt in time to petition the tax_court for a redetermination of the deficiency determined in the notice_of_deficiency the regulation suggests and we have held that sec_6330 contemplates actual receipt by the taxpayer kuykendall v commissioner 129_tc_77 moreover the legislative_history of sec_6330 evidences that congress did indeed have in mind the taxpayer's actual receipt of a deficiency_notice see h_r conf rept no pincite 1998_3_cb_747 the validity of the tax_liability can be challenged only if the taxpayer did not actually receive the statutory_notice_of_deficiency if we assume that the term receipt in sec_6330 means actual receipt so as to accord the taxpayer a meaningful and not just a hypothetical opportunity to challenge the commissioner's determination_of_a_deficiency then timely receipt on behalf of a corporation by someone an individual authorized to act for the corporation would seem to be required before the corporation is precluded from raising a challenge to its underlying tax_liability at its appeals hearing indeed respondent may agree with that proposition since he relies on the claim that he issued jag's notice_of_deficiency to john gotti at the jail in which he was incarcerated to support his claim that p ursuant to sec_6330 jag is precluded from challenging the underlying liability in this proceeding both our own analysis and respondent's position with respect to the adequacy of receipt of the deficiency_notice by mr gotti suggest that there is an unresolved question of law as to whether a corporate taxpayer has actually 1h r conf rept no 1998_3_cb_747 is the conference committee report that accompanied h_r 105th cong 2d sess enacted as the internal_revenue_service restructuring and reform act of rra pub_l_no 112_stat_685 rra sec_3401 sec_112 stat pincite added sec_6330 received a deficiency_notice for purposes of sec_6330 if it can show that the notice was not timely received by an individual authorized to act for the corporation and while the inference of receipt to be drawn from the mailbox rule may if unrebutted be sufficient to carry respondent's burden of showing receipt by petitioner of the deficiency_notice we do have the fact admitted by respondent that mr gotti was incarcerated when the notice was mailed he is an officer of petitioner and we assume that he could have acted for petitioner petitioner did not respond to the motion and has not established that mr gotti lacked timely knowledge of the notice and was therefore precluded from acting on it and there was no one else knowledgeable of the notice and able to act on it while for those reasons we might conclude that petitioner has failed to rebut the inference to be drawn from the mailbox rule and thus has failed to show a dispute as to a material issue of fact given the uncertainty as to the relevance of receipt by someone authorized to act for the corporation we are hesitant to and 2although she signed the petition we are uncertain as to ms gotti's status as an owner officer employee or otherwise with respect to petitioner and as to her whereabouts when the deficiency_notice was delivered in passing we note that web-accessible records of the state of new york department of state division of corporations state records ucc contain a record for a j a g brokerage corp nassau county new york but state that the corporation has no registered agent see http www dos ny gov corps bus_entity_search html last visited date will not grant the motion if the case proceeds to trial the parties can assist us in resolving the uncertainties v conclusion for the reasons stated an appropriate order will be issued denying the motion


significant index no dollar_figure tax_exempt_and_government_entities_division department of the treasury internal_revenue_service washington d c jan this is in response to the request dated date for a ruling under sec_412 of the internal_revenue_code the code’ facts the fund is a collectively bargained multiemployer defined benefit pension_plan the plan_year of the fund ends january the fund’s most recent favorable determination_letter was issued by the internal_revenue_service on date each participating employer contributes amounts to the fund in accordance with the terms of the collective bargaining agreement it has negotiated with its union local or in accordance with the terms of another written_agreement which has been deemed acceptable by the trustees of the fund contributions are made on behalf of employees and are due for each hour for which an employee is entitled to compensation from a participating employer projections by the fund’s actuary show that the fund is likely to incur a minimum_funding deficiency by the plan_year beginning date because amounts contributed to the fund by participating employers are determined by collective bargaining agreements with union locals the trustees of the fund have no direct control_over amounts contributed to the fund furthermore because under the terms of the fund a participant’s monthly benefit entitlement is determined in part by the amount of contributions made to the fund on behalf of the participant increases in employer_contribution rates would in any event only partially ameliorate the fund’s projected funding deficiencies in light of the above you have requested a ruling that amounts paid to the fund b articipating employers in the six-month period on through ll - may be treated as contributions received for the plan_year ending january he in accordance with sec_412 of the code law sec_404 of the code provides that for purposes of paragraph and of that section a taxpayer shall be deemed to have made a payment on the last day of such taxable_year if the payment is on account of such taxable_year and is made not later than the time prescribed by law for filing the return for that taxable_year including extensions thereof sec_412 of the code provides that for purposes of that section --- a defined benefit plans other than multiemployer plans in the case of a defined_benefit_plan other than a multiemployer_plan any contributions for a plan_year made by an employer during the period ---- i ii beginning on the day after the last day of such plan_year and ending on the day which is months after the close of the plan_year shall be deemed to have been made on such last day b other plans in the case of a plan not described in subparagraph a any contributions for a plan_year made by an employer after the last day of such plan_year but not later than two and one-half months after such day shall be deemed to have been made on such last day for purposes of that paragraph such two and one-half month period may be extended for not more than six months under regulations prescribed by the secretary sec_11_412_c_-12 of the regulations provides that for purposes of sec_412 a contribution for a plan_year to which sec_412 applies that is made not more than eight and one-half months after the end of such plan_year shall be deemed to have been made on the last day of such year sec_11_412_c_-12 of the regulations provides that the rules of that section relating to the time a contribution to a plan is deemed made for purposes of the minimum_funding_standard under sec_412 are independent from the rules contained in sec_404 relating to the time a contribution to a plan is deemed made for purposes of claiming a deduction for such contribution under sec_404 analysis sec_412 of the code and sec_11_412_c_-12 of the regulations provide that for purposes of sec_412 contributions for a plan_year made within an eight and one-half month grace period after the end of such plan_year shail be deemed to have been made on the last day of such year this request concerns the meaning of the phrase for a plan_year in the context of a multiemployer pension_plan specific guidance has not been issued interpreting the meaning of the phrase for a plan year’ in the context of a multiemployer pension_plan and whether this language limits a plan to receipt of contributions within this post-plan year period only if those contributions -are due for work performed during the plan_year sec_412 provides in relevant part any contributions for a plan_year made by an employer after the last day of such plan_year but not later than eight and one-half months after such last day shall be deemed to have been made on such last day the most natural reading of the phrase for a plan_year is that it means for the plan_year that has just ended the phrases such plan_year and such last day support this view and would seem to refer back to the plan_year just ended and not any plan_year that the taxpayer might want to designate thus contributions received during the sec_412 grace period must be due for work performed during the plan_year that has just ended in order to be credited to that year ‘as support for its position the fund cites the legislative_history of sec_412 of the code and specifically references the joint explanatory statement of the committee of conference_report report the report provides as follows the conference substitute clarifies the intent of both the house bill and the senate amendment that contributions made after the close of a plan_year may relate back to that plan_year for the purposes of the minimum_funding standards under the conference substitute the contributions may relate back to the plan_year if it is made within months after the close of that plan_year plus any extension granted by the internal_revenue_service up to an additional months for a maximum of months after the end of the year h_r conf_rep no 93d cong 2d sess c b pincite emphasis added contrary to the assertion by the fund the report does not specifically indicate that a plan can use the grace period as the fund seeks in its request in our view the report indicates that the important factor is when the work is performed which gives rise to the contribution obligation and not solely when the plan receives the contributions while it is evident from regulation sec_11_412_c_-12 that the month grace period is independent of the tax deduction rules for post year-end contributions the word independent does not mean inconsistent cases involving multiemployer plans and the phrase on account of in sec_404 of the code make clear that contributions made after the end of the plan_year for services performed after the end of the plan_year cannot be deducted in the prior taxable_year see 107_tc_1 affd 153_f3d_964 cir cert_denied 523_us_1111 employer contributions to multiemployer collectively bargained plans that were paid after the end of the taxable_year and were based on employee hours worked after the end of the taxable_year could not be considered as paid on account of that taxable_year and 108_tc_178 aff'd 170_f3d_1267 cir cert_denied 528_us_875 if contributions attributable to more than months of service could be in addition the court in american stores further reasoned that under sec_413 the calculation of the maximum deduction limits for a multiemployer_plan employed an approach which required use of an estimate based on the manner in which actual employer contributions for such plan_year are determined d pincite- assigned to any year the employer chose the court found it would be impossible for plan administrators to make a meaningful determination of anticipated contributions thereby making sec_412 unworkable as such the court held that american stores’ argument flies in the face of the entire purpose for the grace period that is to facilitate the calculation of deductible contributions d pincite in a collectively bargained finally the plain meaning of the phrase for a plan_year is that a contribution is paid for a plan_year only if there is a causal connection between an event occurring in that year and the payment of the contribution multiemployer_plan the causal connection is the performance of services under a collective bargaining agreement requiring a specific contribution for each hour or other unit of service worked under the contract in such a pian contributions are generally due on a monthly basis in the month immediately following the month when the work is performed this process is generally performed on a contribution remittance report which the employers complete and lists the names of and hours worked by each employee and is sent to the plan along with the payment of the total required_contribution the plan monitors the dates of receipt of the monthly contributions and can assess interest on delinquent accounts year cannot be longer than months contributions made for work performed after the end of a plan_year cannot be for a plan_year contributions are not made by the end of a plan_year then any shortfall can be paid thus a collectively within the month period following the end of the plan_year bargained multiemployer_plan can use contributions made in the grace period following the end of its plan_year for funding purposes but only to the extent those contributions are for work performed in the plan_year if however full months of because a plan i ll be treated as contributions for hc that contributions received during the in the instant case the fund is requesting period or the plan_year ended contributions received during the period from wme can not be for the plan_year ended connection between an event occurring in the plan_year ended and the contribution participating employers in the period from through not be treated as contributions received for the plan_year ended may _ except to the extent that such contributions were for work performed in the plan_year ended however for the reasons stated above through aa accordingly it is ruled that amounts paid to the fund b unless there is a causal 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 a copy of this letter is being furnished to your authorized representative pursuant to a power_of_attorney form on file lf you have any questions on this ruling letter please contact sincerely pn fe james e holland jr manager employee_plans technical


internal_revenue_service department of the treasury number release date index number washington dc person to contact telephone number refer reply to cc psi br 1-plr-118628-00 date oct legend x d1 state this letter responds to the ruling_request dated date that you submitted on behalf of x and which requests relief under sec_1362 of the internal_revenue_code facts x was incorporated on d1 under the laws of state x intended to be treated as an s_corporation for federal_income_tax purposes effective on d1 but the s election was not timely filed law and analysis sec_1362 provides that a small_business_corporation may elect to be an s_corporation sec_1362 provides the rule on when an s election will be effective if an s election is made within the first two and one-half months of a corporation’s taxable_year then the corporation will be treated as an s_corporation for the year in which the election is made if the election is made after the first two and one-half months of a corporation’s taxable_year then the corporation will not be treated as an s_corporation until the taxable_year after the year in which the s election is made sec_1362 provides that if no election is made pursuant to sec_1362 or if made the election is made after the date prescribed for making such an election and the secretary determines there was reasonable_cause for the failure to timely make the election then the secretary may treat such an election as timely made for such taxable_year and effective as of the first day of that tax_year x did not file a timely election to be treated as an s_corporation under sec_1362 plr-118628-00 effective on d1 x has however established reasonable_cause for not making a timely election and is entitled to relief under sec_1362 conclusion based solely on the facts submitted and representations made and provided that x otherwise qualifies as a subchapter_s_corporation we conclude that x will be recognized as an s_corporation effective d1 within days from the date of this letter x should submit a properly completed form_2553 with a copy of this letter attached to the relevant service_center except as specifically set forth above no opinion is expressed as to the federal tax consequences of the transaction described above under any other provision of the internal_revenue_code this ruling is directed only to the taxpayer who requested it sec_6110 of the code provides that it may not be used or cited as precedent pursuant to the power_of_attorney on file with this office a copy of this letter is being sent to the taxpayer sincerely yours dianna k miosi chief branch associate chief_counsel passthroughs special industries 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 telephone number refer reply to cc psi 2-plr-137098-01 date date legend x a b d1 d2 year dear this responds to your representative’s letter dated date submitted on behalf of x requesting a ruling under sec_1362 of the internal_revenue_code the information submitted states that x was incorporated on d1 of year a and b the shareholders of x on d1 intended x to be an s_corporation effective for the year taxable_year this intent is evidenced by affidavit from x’s attorney x’s attorney has also submitted a letter the attorney sent to x on the day after x incorporated regarding the need to file the s election however a form_2553 election by a small_business_corporation was not timely filed for x’s year taxable_year sec_1362 provides that if -- a an election under sec_1362 is made for any taxable_year after the date prescribed by sec_1362 for making such election for such taxable_year or no such election is made for any taxable_year and b the secretary determines that there was reasonable_cause for the failure to timely make such election the secretary may treat such an election as timely made for such taxable_year based solely on the facts and the representations submitted we conclude that x has established reasonable_cause for failing to make a timely election to be an s plr-137098-01 corporation for x’s year taxable_year accordingly provided that x makes an election to be an s_corporation by filing a completed form_2553 with the appropriate service_center effective for its year taxable_year within days following the date of this letter then such election will be treated as timely made for x’s year taxable_year a copy of this letter should be attached to the form_2553 except as specifically set forth above no opinion is expressed concerning the federal tax consequences of the facts described above under any other provision of the code including whether x was or is a small_business_corporation under sec_1361 this ruling is directed only to the taxpayer who requested 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 forwarded to x sincerely yours matthew lay senior technician reviewer branch associate chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes


department of the treasury internal_revenue_service te_ge eo examinations commerce street mc 4920dal dallas tx tax_exempt_and_government_entities_division release number release date uil code date date taxpayer_identification_number person to contact employee identification_number employee telephone number phone fax certified mail - return receipt requested dear this is a final adverse determination_letter as to your exempt status under sec_501 of the internal_revenue_code the code our favorable determination_letter to you dated june 20xx is hereby revoked and you are no longer exempt under sec_501 of the code effective january 20xx organizations described in sec_501 of the code and exempt from tax under sec_501 of the code must be both organized and operated exclusively for exempt purposes you have failed to produce documents or otherwise establish that you are operated exclusively for exempt purposes and that no part of your net_earnings inures to the benefit of private shareholders or individuals you failed to respond to repeated reasonable requests to allow the internal_revenue_service to examine your records regarding your receipts expenditures or activities as required by sec_6001 and sec_6033 of the code sec_1_6033-2 and revrul_59_95 1959_1_cb_627 contributions to your organization are no longer deductible under sec_170 of the code you are required to file federal_income_tax returns on form_1120 these returns should be filed with the appropriate service_center for the tax_year ending december 20xx and for all tax years thereafter in accordance with the instructions of the return processing of income_tax returns and assessments of any taxes due will not be delayed should a petition for declaratory_judgment be filed under sec_7428 of the internal_revenue_code if you decide to contest this determination you may file an action for declaratory_judgment under the provisions of sec_7428 of the code in one of the following three venues united_states tax_court the united_states court of federal claims or the united_states district_court for the district of columbia a petition or complaint in one of these three courts must be filed before the 91st day after the date this determination was mailed to you if you wish to seek review of our determination please contact the clerk of the respective court for rules and the appropriate forms regarding filing petitions for declaratory_judgment by referring to the enclosed publication please note that the united_states tax_court is the only one of these courts where a declaratory_judgment action can be pursued without the services of a lawyer you may write to the courts at the following addresses united_states tax_court second street nw washington dc us court of federal claims madison place nw washington dc u s district_court for the district of columbia constitution ave n w washington dc the taxpayer_advocate_service tas is an independent organization within the irs that can help protect your taxpayer rights tas can offer you help if your tax problem is causing a hardship or you’ve tried but haven’t been able to resolve your problem with the irs if you qualify for tas assistance which is always free tas will do everything possible to help you visit taxpayeradvocate irs gov or call if you have any questions please contact the person whose name and telephone number are shown in the heading of this letter sincerely yours maria hooke director exempt_organizations examinations for enclosures publication department of the treasury fay internal_revenue_service irs tax_exempt_and_government_entities_division exempt_organizations examinations 25th st rm mail stop ogden ut date date taxpayer_identification_number form_990 tax_year s ended december 20xx person to contact id number contact numbers toll free long distance fax manager’s name id number manager’s contact number response due_date certified mail - return receipt requested dear why you are receiving this letter we propose to revoke your status as an organization described in sec_501 of the internal_revenue_code code enclosed is our report of examination explaining the proposed action what you need to do if you agree if you agree with our proposal please sign the enclosed form_6018 consent to proposed action - sec_7428 and return it to the contact person at the address listed above unless you have already provided us a signed form we'll issue a final revocation letter determining that you aren’t an organization described in sec_501 after we issue the final revocation letter we'll announce that your organization is no longer eligible for contributions deductible under sec_170 of the code if we don’t hear from you if you don’t respond to this proposal within calendar days from the date of this letter we’ll issue a final revocation letter failing to respond to this proposal will adversely impact your legal standing to seek a declaratory_judgment because you failed to exhaust your administrative remedies effect of revocation status if you receive a final revocation letter you'll be required to file federal_income_tax returns for the tax_year s shown above as well as for subsequent tax years what you need to do if you disagree with the proposed revocation if you disagree with our proposed revocation you may request a meeting or telephone conference with the supervisor of the irs contact identified in the heading of this letter you may also file a protest with the irs appeals_office by submitting a written request to the contact person at the address listed above within calendar days from the date of this letter the appeals_office is independent of the exempt_organizations division and resolves most disputes informally letter catalog number 34809f for your protest to be valid it must contain certain specific information including a statement of the facts the applicable law and arguments in support of your position for specific information needed for a valid protest please refer to page one of the enclosed publication how to appeal an irs decision on tax-exempt status and page six of the enclosed publication the examination process publication also includes information on your rights as a taxpayer and the irs collection process please note that fast track mediation referred to in publication generally doesn’t apply after we issue this letter you also may request that we refer this matter for technical_advice as explained in publication please contact the individual identified on the first page of this letter if you are considering requesting technical_advice if we issue a determination_letter to you based on a technical_advice_memorandum issued by the exempt_organizations rulings and agreements office no further irs administrative appeal will be available to you contacting the taxpayer_advocate office is a taxpayer right you have the right to contact the office_of_the_taxpayer_advocate their assistance isn’t a substitute for established irs procedures such as the formal appeals process the taxpayer_advocate can't reverse a legally correct_tax determination or extend the time you have fixed by law to file a petition in a united_states court they can however see that a tax matter that hasn’t been resolved through normal channels gets prompt and proper handling you may call toll free and ask for taxpayer_advocate assistance if you prefer you may contact your local taxpayer_advocate at internal_revenue_service office_of_the_taxpayer_advocate phone number for additional information if you have any questions please call the contact person at the telephone number shown in the heading of this letter if you write please provide a telephone number and the most convenient time to call if we need to contact you thank you for your cooperation sincerely margaret von lienen director exempt_organizations examinations enclosures report of examination form_6018 publication publication letter catalog number 34809f ora 886a department of the ‘treasury - internal_revenue_service name of taxpayer explanation of items schedule no or exhibit year period ended december 20xx date of notice date issues whether the organization continues to qualify for exemption from federal_income_tax under sec_501 of the internal_revenue_code facts _ applied for tax-exempt status by filing the form_1023 on april 20xx and was granted tax-exempt status as a c on june 20xx with an effective date of april 20xx an organization exempt under c needs to be organized and operated exclusively for religious charitable scientific testing for public safety literary or educational_purposes and to foster national and amatuer sports competition was selected for audit to ensure that the activities and operations align with their approved exempt status failed to respond to the internal_revenue_service attempts to obtain information to perform an audit of form_990 for the tax_year december 20xx has not filed a form_990 series return for the tax years december 20xx through december 20xx tax_year the form_1023 application list the phone number of xxx-xxx-xxxx for the president of per the state of web-site copy attached from state web-site lists the organization as not in good standing e correspondence for the audit was as follows o o letter rev with attachments was mailed to the organization on january 20xx with a response date of february 20xx this letter was not return by the post office as being undeliverable letter 3844-a with attachments was mailed certified to the organization president on february 20xx with a response date of march 20xx article number postal service usps tracking this was returned on march 20xx pincite pm as unclaimed max hold time expired this letter was received back at the internal_revenue_service on april 20xx per the united_states form 886-a rev department of the treasury - internal_revenue_service page -1- form 886a department of the ‘l'reasury - internal_revenue_service name of taxpayer explanation of items schedule no or exhibit year period ended december 20xx o letter 3844-a with attachments was mailed certified to the secretary a respond date of may 20xx article number per form_1023 application on april 20x with per usps tracking this was unclaimed max hold time expired and returned to the internal_revenue_service on may 20xx pincite am this letter was received back at the internal_revenue_service on may 20xx o letter 3844-a with attachments was mailed to the organization president on may 20xx with a respond date of june 20xx this letter was not return by the post office as being undeliverable e telephone contact for the audit was as follows o o o o march 20xx pm mst called the phone number listed on the form_1023 application_for the president of xxx-xxx-xxxx and received vms lefta message for an officer of the organization to return my phone call may 20xx through external research located a different phone number for the president of xxx-xxx-xxxx when calling this phone number it is for a fax machine june 20xx pm mst called the phone number listed on the form_1023 application_for the president of xxx-xxx-xxx and received vms lefta message for the president to return my phone call july 20xx pm mst tried calling xxx-xxx-xxxx instead of the fax machine answering the phone rang ten times without it answering law internal_revenue_code irc sec_501 of the code provides that an organization organized and operated exclusively for charitable or educational_purposes is exempt from federal_income_tax provided no part of its net_earnings inures to the benefit of any private_shareholder_or_individual sec_511 of the internal_revenue_code imposes a tax at corporate rates under sec_11 on the unrelated_business_taxable_income of certain tax-exempt organizations sec_6001 of the code provides that every person liable for any_tax imposed by this title or for the collection thereof shall keep such records render such statements make such returns and comply with such rules and regulations as the secretary may from time to form 886-a crev department of the treasury - internal_revenue_service page -2- fomn 886a department of the treasury - internal_revenue_service name of taxpayer explanation of items schedule no or exhibit year period ended december 20xx time prescribe whenever in the judgment of the secretary it is necessary he may require any person by notice served upon such person or by regulations to make such returns render such statements or keep such records as the secretary deems sufficient to show whether or not such person is liable for tax under this title sec_6033 of the code provides except as provided in sec_6033 every organization exempt from tax under sec_501 shall file an annual return stating specifically the items of gross_income receipts and disbursements and such other information for the purposes of carrying out the internal revenue laws as the secretary may by forms or regulations prescribe and keep such records render under oath such statements make such other returns and comply with such rules and regulations as the secretary may from time to time prescribe treasury regulations regulation c -1 in order to be exempt under sec_501 the organization must be both organized and operated exclusively for one or more of the purposes specified in the section religious charitable scientific testing for public safety literary or educational regulation sec_1_501_c_3_-1 of the regulations states that in order to be exempt as an organization described in sec_501 an organization must be both organized and operated exclusively for one or more of the purposes specified in such section if an organization fails to meet either the organizational_test or the operational_test it is not exempt regulation c -1 c of the regulations provides that an organization will not be regarded as operated exclusively for one or more exempt purposes described in sec_501 of the code if more than an insubstantial part of its activities is not in furtherance of a c purpose accordingly the organization does not qualify for exemption under sec_501 of the code regulation sec_1_6001-1 of the code provides that such permanent books_and_records as are required by paragraph a of this section with respect to the tax imposed by sec_511 on unrelated_business_income of certain exempt_organizations every organization exempt from tax under sec_501 shall keep such permanent books of account or records including inventories as are sufficient to show specifically the items of gross_income receipts and disbursements such organizations shall also keep such books_and_records as are required to substantiate the information required by sec_6033 see sec_6033 and sec_1_6033-1 through regulation sec_1_6001-1 of the code provides that the books_or_records required by this section shall be kept at all time available for inspection by authorized internal revenue officers or employees and shall be retained as long as the contents thereof may be material in the administration of any internal revenue law form 886-a crev department of the treasury - internal_revenue_service page -3- form 886a department of the treasury - internal_revenue_service name of taxpayer explanation of items schedule no or exhibit year period ended december 20xx regulation sec_1_6033-1 of the regulations provides that every organization which has established its right to exemption from tax whether or not it is required to file an annual return of information shall submit such additional information as may be required by the district_director for the purpose of enabling him to inquire further into its exempt status and to administer the provisions of subchapter_f sec_501 and the following chapter of the code and sec_6033 regulation sec_1_61-1 of the regulations provides that gross_income means all income from whatever source derived unless excluded by law gross_income includes income realized in any form whether in money property or services income may be realized therefore in the form of services meals accommodations stock or other_property as well as in cash revrul_59_95 1959_1_cb_627 concerns an exempt_organization that was requested to produce a financial statement and statement of its operations for a certain year however its records were so incomplete that the organization was unable to furnish such statements the service held that the failure or inability to file the required information_return or otherwise to comply with the provisions of sec_6033 of the code and the regulations which implement it may result in the termination of the exempt status of an organization previously held exempt on the grounds that the organization has not established that it is observing the conditions required for the continuation of exempt status the organization has failed to respond to all attempts to contact them organizations position governments position based on the above facts the organization did not respond to verify that they are organized and operated exclusively for one or more of the purposes specified in sec_501 if an organization fails to meet either the organizational_test or the operational_test it is not exempt in accordance with the above-cited provisions of the code and regulations under sec_6001 and sec_6033 organizations recognized as exempt from federal_income_tax must meet certain reporting requirements these requirements relate to the filing of a complete and accurate annual information and other required federal tax forms and the retention of records sufficient to determine whether such entity is operated for the purposes for which it was granted tax-exempt status and to determine its liability for any unrelated_business_income_tax sec_1_6033-1 of the regulations specifically state that exempt_organizations shall submit additional information for the purpose on enabling the internal revenue form 886-a crev department of the treasury - internal_revenue_service page -4- form 886a department of the treasury - internal_revenue_service name of taxpayer explanation of items schedule no or exhibit year period ended december 20xx service to inquire further into its exempt status using the rationale that was developed in revrul_59_95 the organization’s failure to provide requested information should result in the termination of exempt status conclusion based on the foregoing reasons the organization does not qualify for exemption under sec_501 and its tax exempt status should be revoked it is the irs's position that the organization failed to meet the reporting requirements under sec_6001 and sec_6033 to be recognized as exempt from federal_income_tax under c of the internal_revenue_code accordingly the organization's exempt status is revoked effective january 20xx form_1120 returns should be filed for the tax periods after january 20xx form 886-a rev department of the treasury - internal_revenue_service page -5-