tkokpcn cid 6cz cid dollar_figurewnngvkp number 4gngcug cid cvg cid cid cid cid cid cid cid cid cid cid cid grctvogpv cid qh cid 6tgcuwt cid pvgtpcn cid 4gxgpwg cid 5gtxkeg uiln rtkn cid cid cid cid cid cid cid cid cid cid 1hhkeg cid qh cid jkgh cid qwpugn tkokpcn cid 6cz cid kxkukqp 6jku cid dwnngvkp cid ku cid hqt cid kphqtocvkqpcn cid rwtrqugu cid cid v cid ku cid pqv cid c cid fktgevkxg cid cid cid cid cid supreme court cases terry stop not justified when based solely on anonymous tip that a person is carrying a gun in florida v j l 120_sct_1375 an anonymous caller reported a young black male standing at a particular bus stop and wearing a plaid shirt was carrying a gun officers went to the bus stop and saw three black males j l was wearing a plaid shirt but the officers did not observe a gun or any suspicious behavior apart from the tip they had no reason to suspect any of the three of illegal conduct one officer frisked j l and seized a gun from his pocket j l was charged with a firearms violation under state law the trial_court granted his motion to suppress the gun as the fruit of an unlawful search the intermediate appellate court reversed but the supreme court of florida quashed that decision and held the search invalid under the fourth_amendment upon a grant of certiorari the supreme court unanimously held an anonymous tip that a person is carrying a gun is not without more sufficient to justify a police officer’s stop and frisk of that person in its seminal stop and frisk decision 392_us_1 the court held where a police officer observes unusual conduct which leads him reasonably to conclude in light of his experience that criminal activity may be afoot and the persons with whom he is dealing may be armed and presently dangerous where in the course of investigating this behavior he identifies himself as a policeman and makes reasonable inquiries and where nothing in the initial stages of the encounter serves to dispel his reasonable fear for his own or others’ safety he is entitled for the protection of himself and others to conduct a carefully limited search of the outer clothing of such persons in an attempt to discover weapons which might be cid used to assault him here the officers’ suspicion that j l was carrying a weapon arose not from their own observations but solely from a call made from an unknown location by an unknown caller the court found the tip clearly lacked sufficient indicia of reliability to provide reasonable suspicion to make a terry stop it provided no predictive information and therefore left the police without means to test the informant’s knowledge or credibility see 496_us_325 the court explained reasonable suspicion requires a tip to be reliable in its assertion of illegality not just in its tendency to identify a determinate person the court declined to adopt the argument that the standard terry analysis should be modified to license a firearm exception under which a tip alleging an illegal gun would justify a stop and frisk even if the accusation would fail standard pre-search reliability testing the facts of this case did not require the court to speculate about the circumstances under which the danger alleged in an anonymous tip might be so great -- eg a report of a person carrying a bomb -- as to justify a search even without a showing of reliability title_26 and title_26 related cases retroactive application of gaudin barred on collateral review in 205_f3d_519 2nd cir mandanici was convicted in of making false statements when he applied for federal rent subsidy benefits from the department of housing and urban development in violation of u s c sec_1001 pursuant to then current second circuit law the trial judge made a finding of materiality with respect to mandanici’s statements employing a preponderance_of_the_evidence standard in date the supreme court ruled if materiality is an element of an offense under sec_1001 a finding of materiality must be made beyond a reasonable doubt by a jury see 515_us_506 in 68_f3d_1468 2nd cir the second circuit followed gaudin holding materiality is an element of any and all charges under sec_1001 see id pincite arguing the holding of gaudin should be applied retroactively mandanici filed a petition for a writ of error coram nobis to vacate and expunge his conviction the district_court denied the petition relying on the second circuit’s prior decision in 127_f3d_237 2nd cir where it concluded gaudin does not apply retroactively on collateral review on appeal the second circuit pointed out that in bilzerian it had examined the retroactivity of gaudin and ali with respect to habeas corpus relief there the court held that pursuant to the framework established by the supreme court in 489_us_288 the holding in gaudin was a new rule_of constitutional criminal procedure which did not qualify for retroactive application_for it did not fall within one of the two narrow exceptions annunciated by the supreme court in teague according to teague new rules of constitutional criminal procedure do not apply retroactively unless they place an entire category of primary conduct beyond the reach of the criminal_law or prohibit imposition of a certain type of punishment for a class of defendants because of their status or offense or are new watershed rules of criminal procedure that are necessary to the fundamental fairness of the criminal proceeding 497_us_227 conceding the first teague exception was inapplicable to his case mandanici urged the court to find the new gaudin rule necessary to the fundamental fairness of criminal proceedings and thus falling within the second teague exception acknowledging that teague applies to petitions for habeas corpus the court stated by analogy it also applies to coram nobis petitions see 107_f3d_831 11th cir additionally the court recognized the second teague exception was arguably applicable in the present case for the gaudin rule promotes accuracy and fairness factors held sufficient in 900_f2d_601 2nd cir to qualify as a new rule for the second exception more recently however the supreme court underscored the narrowness of the second teague exception by invoking the sweeping rule_of 372_us_335 as an example of the type of rule that fits within the exception o’dell v cid cid cid cid cid cid netherland 521_us_151 unlike gideon which established the affirmative right to counsel in all felony cases gaudin’s requirement that materiality be proved beyond a reasonable doubt for conviction under sec_1001 is a narrow right that affects only a limited class of cases thus it has none of the primacy and centrality of the rule adopted in gideon nor does it measure up to the watershed standard accordingly the court held the rule does not apply retroactively on collateral review and mandanici could not challenge his conviction on the basis of any such error filing_status is a material matter for sec_7206 convictions in united_states v scarberry no u s app lexis 10th cir date scarberry was the proprietor of a small return preparation business she filed a joint_return with her husband claiming business_losses associated with his part time employment for a carpet installation business which he did not own additionally she filed a second joint_return with another man and she prepared a individual_income_tax_return for a client falsely claiming a farm loss on the basis of these returns scarberry was convicted inter alia of violating sec_7206 scarberry appealed her conviction arguing the married_filing_jointly filing_status she falsely claimed was not material as a matter of law falsity as to a material matter is one of the elements of a sec_7206 conviction for information to be material 127_f3d_969 10th cir requires the information to be necessary to the correct determination of tax_liability the tenth circuit found the revenue_agent had specifically testified filing_status affects tax_rates dependency status of children and computation of the earned_income_credit since filing_status is thus necessary to the correct determination of tax_liability scarberry’s false claim of married_filing_jointly was material cash on hand must be established with reasonable certainty in 204_f3d_1024 10th cir mr and ms mounkes owned and operated a resale business incorporated under subchapter_c to avoid bank reporting requirements they requested purchasers of items costing over dollar_figure to pay them in several checks rather than one check they then deposited some of the checks into their personal accounts and failed to report these checks on either their corporate or personal tax returns also the mounkes made large cash expenditures they were convicted of tax_evasion in violation of sec_7201 on appeal the mounkes argued evidence of cash on hand used as a starting point to derive unreported taxable_income and ultimately to prove the tax_liability element of sec_7201 was insufficient to support a guilty verdict the tenth circuit relied on 11_f3d_40 5th cir which required the government to establish a defendant’s pre-income cash on hand with reasonable certainty but not a mathematical exactitude applying conaway to the agent’s testimony she had explained cash on-hand to the mounkes and they had submitted a written_statement of cash on hand to her which matched the figures reported on their corporate tax returns the tenth circuit held the court could determine the mounkes’ cash on hand with reasonable certainty obviousness of scheme does not render scheme immaterial in united_states v cordero no u s app lexi sec_810 2nd cir date cordero filed false claims for tax refunds with attached tax protest brochures and he was convicted of violating u s c cordero appealed arguing the included tax protest brochures made his scheme obvious hence his false claims for tax returns were immaterial the second circuit relying on 175_f3d_429 6th cir held obviousness as a defense against materiality would render the taxpayer with an ill- gotten refund if his scheme worked yet allow him to claim immateriality if he got caught rejecting obviousness as a defense against materiality the second circuit held cordero’s false claims for tax returns were material since failure to report substantial amounts of income is material as a matter of law the second circuit did note the question of whether 515_us_506 applies to prosecutions under u s c has yet to be decided in the second circuit and other circuits are split on the issue the second circuit however did not reach the issue of the applicability of gaudin since the district_court instructed the jury on materiality and left that issue for the jury to decide government paid informant does not violate the anti-gratuity statute in 203_f3d_305 4th cir anty moved prior to trial pursuant to u s c c the anti-gratuity statute to suppress the testimony of jerome a paid informant she argued the government violated the cid cid cid cid cid cid statute which prohibits offering unlawful inducements to a witness by impermissibly paying jerome for his testimony the district_court allowed jerome to testify but stated it would revisit the issue if anty were convicted upon anty’s conviction the district_court granted her motion for a mistrial ruling the payment to jerome violated c and his testimony must be suppressed on the government’s appeal the fourth circuit concluded c does not prohibit the government from using the testimony of a paid informant the court in deciding an issue of first impression and following the holding in 195_f3d_192 4th cir held t o interpret c to preclude the payment of money to informants to assist in investigating and prosecuting crimes by giving truthful testimony would not only long-standing prerogative ’ to do so as established by statute and recognized practice it would also work an obvious absurdity in implicitly repealing numerous statutes that authorize the payment of expenses fees and rewards to witnesses u s app lexis at quoting richardson f 3d pincite the government of ‘rob its moreover anty did not argue jerome’s testimony was false rather she argued his testimony should have been excluded solely because he received payment for his assistance including his testimony at trial because the court failed to find a violation of c it did not reach the question of whether the appropriate sanction for such a violation was the exclusion of the testimony at trial search and seizure government employer’s warrantless search and seizure of employee’s computer does not violate the fourth_amendment in 206_f3d_392 4th cir simons was convicted for receiving and possessing materials constituting and containing child pornography in violation of u s c 2252a a a and a b simons was employed as an electronic engineer at the foreign bureau of information sciences fbis a division of the central intelligence agency he was provided with a private office and a computer with internet access in june fbis instituted a policy regarding internet access by its employees whereby use of the internet was to be for official government business only additionally fbis placed all employees on notice that their internet access would be monitored and subject_to periodic audits and inspections in date while conducting an inspection for inappropriate use of computer resources fbis discovered simons had accessed a large number of pornographic websites downloading multiple pornographic files onto his computer’s hard drive from a neutral workstation fbis then copied all of the files contained on the hard drive of simons’ computer next after consultation with the cia oig an fbis employee entered simons’ office removed the hard drive from his computer and replaced it with a copy subsequently the government executed two search warrants for simons’ office the first which occurred outside the presence of simons in date resulted in copies being made of all computer related items in his office however no copy of the warrant or list of items seized was left behind the next search occurred in date with simons present original evidence was seized and removed from the office and a copy of the warrant and an inventory of the items seized was properly left behind simons’ motion to suppress the evidence seized from his office was denied on appeal the fourth circuit first concluded the remote searches of simons’ computer did not violate his fourth_amendment rights the court determined simons lacked a legitimate expectation of privacy in the files he downloaded from the internet because fbis’s internet policy clearly stated it would audit inspect or monitor employees’ use of the internet including all file transfers web-sites visited and e-mail messages the court opined regardless of whether simons subjectively believed that the files he transferred from the internet were private such a belief was not objectively reasonable after fbis notified him that it would be overseeing his internet use next the court determined simons’ fourth_amendment rights were not violated by the warrantless entry into his office by an fbis employee and the subsequent seizure of his computer’s hard drive finding simons to possess a legitimate expectation of privacy in his office the court was compelled to consider whether one of the specifically established and well-delineated exceptions to the warrant requirement was applicable one exception to the warrant requirement arises when the requirement is rendered impracticable by a special needs beyond the normal need for law enforcement 515_us_646 moreover the supreme court has held a government employer’s interest in the efficient and proper operation of the workplace may justify warrantless work related searches 480_us_709 in particular when a government employer conducts a search pursuant to an investigation of work related misconduct the fourth_amendment will be satisfied if the search is reasonable in its inception and its scope id pincite here at the inception of the search fbis had reasonable grounds for cid cid cid cid cid cid suspecting simons’ hard drive would yield evidence of misconduct the search was permissible in scope for the measure adopted entering simons’ office was reasonably related to the objective of the search retrieval of the hard drive finally the court rejected simons’ challenge to the validity of the august search warrant on the basis that by failing to leave behind a copy of the warrant and an inventory of the items seized the government violated fed r crim p d the search constitutionally unreasonable the court however did remand the issue of whether rule d was intentionally or deliberately disregarded rendering thus evidence expert testimony admissible to show witness bias in 203_f3d_1160 9th cir hankey was convicted of distributing and conspiring to possess with intent to distribute pcp at trial hankey’s co-defendant testified hankey was not involved in the transactions to impeach the co-defendant’s testimony the government presented the testimony of a police expert on street gangs over objection the district_court admitted this testimony the police gang expert testified gang members who testify against one of their own are customarily beaten or killed by other members of their gang hankey appealed his conviction on several grounds with regard to the district court’s evidentiary ruling admitting the expert testimony hankey contended the court failed to perform its gate keeping obligations under 509_us_579 and 526_us_137 directing trial judges to consider such factors as peer review and error rates when making determinations as to the admissibility of expert scientific testimony under fed r evid the ninth circuit explained the factors for evaluating scientific evidence set out in daubert are not exhaustive and that kumho makes clear that trial judges are to be given wide discretion not only in deciding whether to admit the testimony but also as to how to test its reliability the court emphasized the trial judge in this case conducted extensive voir dire to assess the basis for the expert testimony and the relevance and reliability the expert’s testimony although the expert relied on his street intelligence gained over a year career to support his testimony the court found this experience was the only way to obtain information about street gangs moreover the duabert factors raised by hankey - peer review publication potential error rates - simply were not applicable to this type of testimony because the reliability of the testimony depends on the knowledge and experience of the expert rather than on the methodology or theory behind it the court also found the officer’s gang experiences were current and thus reliable and relevant the court therefore concluded the district_court did not abuse its discretion in admitting the testimony of the police gang expert privileges attorney-client_privilege does not protect identity of client if client has already divulged confidential communications in in re grand jury subpoena 204_f3d_516 4th cir the fourth circuit held compelling a lawyer to reveal the identity of a client during a grand jury proceeding does not violate the attorney-client_privilege even though disclosure might link the client to confidential communications its conclusion on the fact the communications at issue had already been divulged by the client when he authorized his lawyer to reveal them in a letter written to prevent civil litigation the court based a federal grand jury in the district of maryland was investigating allegations that forrester street s w a residential property located in washington d c was an open air drug market in the d c council enacted laws which permit community groups to file civil lawsuits against owners of properties used for drug dealing the bellview improvement council inc bic retained a law firm to help stop drug activity pincite forrester street in date counsel for bic wrote a letter to daniel quispehuman the owner of record for the property demanding all drug activity to stop after receiving no response bic’s counsel wrote another letter on date threatening civil litigation he received a letter on date from mark rochon an attorney claiming to represent an anonymous client who was in the process of re- titling forrester street and dealing with the concerns expressed in bic’s letters rochon declined to disclose the identity of his client but did state it was not quispehuman in date rochon was served with a grand jury subpoena seeking his testimony regarding forrester street and his client’s interest in the property as well as his client’s identity arguing disclosure of his client’s identity would reveal his cid cid cid cid cid cid client’s purposes and motives for hiring him and therefore reveal confidential communications protected by the attorney-client_privilege rochon moved to quash the subpoena he submitted a declaration in support of his motion stating the client retained him in connection with certain issues related to the property the client requested his identity not be disclosed and that rochon had not revealed the client’s identity to any third parties adopting rochon’s arguments the client moved to intervene and quash the grand jury subpoena as well the district_court granted the client’s motion to intervene but denied the motions to quash in rejecting rochon’s and the client’s arguments the fourth circuit stated we have consistently held that a client’s identity is privileged only if disclosure would in essence reveal a confidential communication see e g 174_f3d_394 4th cir in re grand jury matter 926_f2d_348 4th cir ordinarily the identity of the client the amount of the fee the identification of payment by case file name and the general purpose of the work performed are usually not protected from disclosure by the attorney-client_privilege chaudhry f 3d pincite because such information does not reveal confidential communications between the attorney and the client the court did acknowledged it had recognized a narrow exception to the general_rule in nlrb v henry 349_f2d_900 4th cir where the court stated the privilege may extend to a client’s identity where so much of the actual communication has already been disclosed that naming the client amounts to disclosure of a confidential communication however in henry unlike the present situation neither the client nor the attorney voluntarily disclosed the client’s confidential interests it was a third party here the court stressed the client’s attorney made an authorized disclosure of the client’s motives and purposes in seeking legal representation in the date the communications ceased to be confidential when the letter was sent simply put we do not recognize an exception that protects the client’s identity because the client has authorized the disclosure of information that he could have kept confidential to bic’s counsel letter forfeiture notice of forfeiture must be addressed and sent directly to inmate at his place of confinement in 202_f3d_664 3rd cir the third circuit held when a person is in the government’s custody and detained at a place of its choosing due process requires that notice of a pending administrative forfeiture proceeding must be mailed to the detainee at his or her place of confinement in date the drug enforcement administration dea arrested mcglory for inter alia conspiracy to possess heroin with the intent to distribute incident to his arrest the dea seized various items of mcglory’s property including cash cellular phones and luggage a jury convicted mcglory on all charges and he was subsequently sentenced in to life imprisonment from the time of his arrest until sentencing mcglory remained in the custody of the united_states marshals service housed in various pretrial detention facilities before mcglory’s criminal trial began the dea initiated administrative forfeiture proceedings with respect to the property it had seized when mcglory was arrested the dea provided notice of the administrative proceedings by three methods publishing notice in a newspaper of general circulation sending notice by certified mail to mcglory’s last_known_address and sending notice by certified mail return receipt requested addressed to mcglory to or in the care of the united_states marshals service pittsburgh pennsylvania after his property was forfeited mcglory filed a motion for return of property pursuant to fed r crim p e claiming he failed to receive adequate notice of the forfeiture proceedings the district_court denied the motion on appeal mcglory argued in order to satisfy constitutional requirements the dea was required to address the certified mail containing the notice of forfeiture directly to him at the detention facility where the government was confining him in contrast the government argued due process was satisfied by sending the notices to the marshals service because under the service’s standard policy any correspondence addressed to a person in custody was forwarded to the intended recipient at his place of confinement by first class mail postage prepaid the statute governing administrative forfeitures requires in addition to notice by publication written notice to each party who appears to have an interest in the seized article evaluating this standard in light of the supreme court’s rulings in 409_us_38 and 339_us_306 the third circuit determined in order to give notice that meets the requirement of due process the agency responsible for sending notice must at least in the first instance address and direct notice to the detainee at his place of confinement in mullane the supreme court declared the means employed to provide notice must be such as one desirous of actually informing the absentee might reasonable adopt to accomplish it u s pincite moreover robinson stands for the proposition that a state cannot satisfy its due process obligation to a prisoner in its own custody by sending notice of forfeiture to the cid cid cid cid cid cid prisoner’s last_known_address the third circuit interpreted this to mean notice to a person whose name and address are known or easily ascertainable such as in the case of mcglory must be provided in a manner which has practical use to the person the court stated o ne who was ‘desirous of actually informing’ mcglory would have taken the time to ascertain the easily ascertainable fact of his whereabouts and would at the least have directed the notices to him at that address finally the court rejected the government’s argument that because pretrial detainees are frequently moved between detention facilities the most efficient and reasonable manner to send notice to mcglory was via the marshals service the court opined this only duplicated the number of agencies handling the mail increased the possibility of error and doubled the time until mcglory’s receipt of the notice the district court’s holding was reversed and the matter was remanded sentencing consideration of criminal conduct unrelated to offense of conviction is permissible in determining whether to apply acceptance of responsibility adjustment in 204_f3d_1021 10th cir prince was indicted on one count of bank robbery in violation of u s c a he entered into an agreement with the government to plead guilty in return for the government’s agreement not to oppose a three level sentence reduction for acceptance of responsibility and to take no position on the sentence to be imposed while in custody awaiting sentencing the government received an f b i report indicating prince had stabbed another prisoner the government forwarded this report to the probation officer who included the information in his pre-sentence investigation report the district_court declined to apply the three level reduction for acceptance of responsibility on appeal prince argued the government violated the plea agreement by forwarding the f b i report to the probation officer the tenth circuit relying on 928_f2d_356 10th cir rejected prince’s argument the tenth circuit found prosecutors have an ethical duty to inform the court of conduct relevant to sentencing the tenth circuit held the government did not violate the plea agreement by informing the probation officer of post-plea agreement criminal conduct prince also argued even if the government did not violate court ordered restitution not offset for assets forfeited to government in 204_f3d_536 4th cir the fourth circuit affirmed the criminal judgment against alalade ordering him to pay restitution in the amount of dollar_figure the full amount of the victims’ losses alalade plead guilty to fraudulently obtaining dollar_figure from financial institutions in a credit card fraud scheme as part of his plea bargain he agreed not to contest the forfeiture of approximately dollar_figure worth of fraudulently obtained property seized by the government alalade appealed the district court’s restitution order challenging the court’s refusal to reduce the total amount of restitution by the value of the items the government seized from him and retained in administrative forfeiture the fourth circuit held the district_court lacked discretion under the plain language of the mandatory victims restitution act mvra to order restitution in an amount less than the full amount of each victim financial institution’s loss by allowing an offset for the value of fraudulently obtained property the government seized from alalade and retained for forfeiture the court reasoned if the mvra prohibits district courts from reducing the amount of restitution by the amount of third party compensation received by a victim prior to entry of the district court’s order of restitution it would be nonsensical for the district_court to have discretion to reduce the amount of restitution by the value of property seized from alalade and retained by the government in administrative forfeiture the court also noted congress deleted the language of the predecessor to the mvra the victim and witness protection act of which afforded the district_court discretion in cases such as this to consider any factor it deemed appropriate in determining the amount of restitution to be ordered and replaced it with language requiring the district_court to order restitution in the full amount of the loss to each victim as determined by the district_court the plea agreement when it disclosed the information in the f b i report the district_court should not have considered this information since it was unrelated to the criminal conduct for which he was convicted the tenth circuit rejected prince’s argument finding the notes explaining the adjustment for acceptance of responsibility pursuant to u s s g sec_3e1 a do not qualify application to permit consideration only of criminal conduct of the same nature as the offense of conviction further the majority of circuit courts which have addressed the issue have held sentencing courts are entitled to consider all criminal conduct regardless of relation to the offense of conviction since the district_court was correct in considering the information in the f b i report and since prince offered no evidence against the accuracy of the report the district court’s decision not to grant the adjustment was affirmed obstruction adjustment affirmed based on court’s express dunnigan findings in 204_f3d_1024 10th cir as factually set forth on page of this bulletin mr and ms mounkes were convicted of violating u s c sec_7201 the sentencing court applied the adjustment for obstruction of justice predicated on perjury provided by u s s g sec_3c1 to enhance mr mounkes’ sentence mr mounkes appealed his sentence arguing the court did not comply with 507_us_87 which requires a finding the defendant has given false testimony concerning a material matter with willful intent to provide false testimony or with 189_f3d_1201 10th cir which qualified dunnigan by requiring the court to make a specific finding the defendant perjured himself identifying the testimony at issue the tenth circuit examining the record found the sentencing court had cited two examples of mr mounkes’ testimony which contradicted the testimony of other witnesses the sentencing court also found this cited testimony material since it concerned affirmative acts of evasion though the sentencing court was not explicit as to the reasons it found the testimony willful the tenth circuit deferred to its express finding of wilfulness since the sentencing court was in the best position to observe mr mounkes’ testimony and since the record revealed it did not misunderstand the dunnigan requirements the tenth circuit affirmed the sentencing court’s enhancement of mr mounkes’ sentence cid cid cid cid cid cid criminal tax bulletin table of cases april supreme court cases florida v j l 120_sct_1375 title_26 and title_26 related cases 205_f3d_519 2nd cir united_states v scarberry no u s app lexis 10th cir date 204_f3d_1024 10th cir united_states v cordero no u s app lexi sec_810 2nd cir date 203_f3d_305 4th cir search and seizure 206_f3d_392 4th cir evidence 203_f3d_1160 9th cir privileges in re grand jury subpoena 204_f3d_516 4th cir forfeiture 202_f3d_664 3rd cir sentencing 204_f3d_1021 10th cir 204_f3d_1024 10th cir united_states v alalade f 3d 4th cir department of the treasury internal_revenue_service document rev catalog number 24304b cid cid cid cid cid cid


department of the treasury internal_revenue_service washington d c tax_exempt_and_government_entities_division mar uniform issue list tep ra‘ ts legend decedent a_trust c sub-trust d sub-trust e sub-sub-trust f sub-sub-trustg state f date m date n date p dateq - plan x administrator s dear this is in response to your request for a private_letter_ruling submitted by your authorized representative by letter dated date concerning the proper rollover treatment of a distribution from decedent a’s retirement_plan plan x under sec_457 of the internal_revenue_code code correspondence dated date and date supplemented the request page your authorized representative has submitted the following facts and representations decedent a and you were married on date q all-times up to the time of decedent a's death _ and continued to be married at decedent a was born on date n and died on date m you were born on date p and were alive as of the date of this request decedent a participated in plan x plan x is a tax exempt employee_benefit_plan described under sec_457 of the code plan x is administered by administrator s it has been represented that as of the date of this ruling_request no distributions have been made from plan x with respect to decedent a’s interest therein it has also been represented that you have requested administrator s to make a single sum distribution of decedent a's plan x assets to spousal_rollover individual_retirement_account ira set up and maintained in your name but administrator s as plan x administrator will only make a distribution from plan x to trust c the beneficiary designated on the beneficiary designation form you desire to have all assets in plan x distributed to a spousal_rollover ira in a tax free transaction decedent a and you established trust c a joint revocable_trust trust c is an a b_trust which provides for the establishment of several sub-trusts on the death of the first spouse it has been represented that trust c and all sub-trusts created thereunder are valid under state f law decedent a named trust c as the beneficiary of her interest in plan x you consented to this designation article v paragraph b of trust c provides that if decedent a were to predecease you the trustee of trust c was to divide the trust estate into two sub- trusts sub- trust d and sub-trust e after decedent a's death you became the sole surviving settlor of trust c and pursuant to article vii paragraph a of trust c became the sole trustee thereof you continue to serve as the sole trustee of all the assets in trust c thus by reason of the death of decedent a you as sole surviving trustee have complete dominion and contro over the assets of trust c and of sub-trust d into which the plan x assets have been allocated sub-trust d is to consist of the surviving settlor's separate_property and his share of the community_property including community_property received by the trustee from insurance pension plans and other sources upon or because of the deceased settlor's death it has been represented that the surviving settlor's share of the community_property shall be satisfied by allocating to sub-trust d residential properties or tangible properties selected by the surviving settlor and otherwise by division and allocation pursuant to the trustee's powers additionally article v paragraph b a of trust c provides that if you survive decedent a by at least days the minimum additional_amount necessary as a marital_deduction to page reduce or eliminate estate_taxes are to be allocated to sub-trust d you have survived decedent a by more than days the remaining trust c property shall be allocated to sub-trust e which shall be divided into sub-sub-trust f and sub- sub-trust g you the surviving_spouse as sole trustee of trust c after decedent a’s death and pursuant to the terms of trust c allocated all proceeds of decedent a’s interest in plan x to sub-trust d - sub-trust e to fully fund sub-sub-trust f and sub-sub-trust g it is represented that you allocated sufficient other assets to under article v paragraph b a of trust c you as trustee thereof shall pay to or apply for your the surviving settlor's benefit the net_income of sub-trust d in annual or more frequent installments and as much of the principal as the trustee considers necessary for the surviving settlor's health support comfort enjoyment and general welfare considering his or her accustomed standard of living and other _ resources available for these purposes in short you as sole beneficiary and sole trustee have sole dominion and control of sub-trust d - article vi paragraph b of trust c provides in short that as sole surviving settlor you can revoke sub-trust d in its entirety at any time if sub-trust d is revoked the trustee shall promptly deliver to the surviving settlor all or the designated portion of the assets and also account for the trustee's acts since the preceding accounting thus you can revoke sub-trust d at any time and receive a distribution of all of the assets in sub-trust d under article viii paragraph z of trust c the trustee thereof shall have the power to divide allocate and distribute the trust estate in undivided interests or in_kind or partly in money and partly in_kind at valuations determined by the trustee and to sell property to make divisions or distributions the trustee shall not be obligated to make pro_rata divisions or allocations or to distribute the same assets to beneficiaries if the assets allocated or distributed have equivalent or proportionate fair_market_value additionally article vill paragraph s provides that the trustee shall have the power to take any_action and to make any election to minimize the tax_liabilities of this trust and its beneficiaries to allocate the benefits among the beneficiaries and to make adjustments to compensate for the consequences of any_tax elections investment or decision that the trustee believes has had the effect of directly or indirectly preferring one beneficiary or group of beneficiaries over others the probate code of state f power to effect distribution_of_property and money in divided or undivided interests and to adjust resulting differences in valuation a distribution_in_kind may be made pro_rata or non-pro rata and may be made pursuant to any written_agreement providing for a non pro_rata division of the aggregate value of the community provides that the trustee has the property assets or quasi-community_property assets page as noted above no distribution of any monies from plan x has been made to date you contemplate taking a single sum distribution from plan x and depositing it into a checking account under the name of trust c the named beneficiary next you as sole trustee of trust c will then write a check made payable to sub-trust d for the full amount of such distribution subsequently you as sole trustee of sub-trust d will terminate said sub-trust after which you will write a check from said sub-trust d to your ira account all of such checks will be written and deposited within days from the date of the receipt of the initial single sum distribution check from plan x thus the final deposit to the spousal_rollover ira will take place before the expiration of the day period as measured from the date of the initial receipt of the plan x distribution by the trustee of trust c base on the foregoing you request a ruling that the single sum distribution of the plan x assets to trust c with the subsequent distribution of such proceeds initially to sub-trust d and a final contribution of such proceeds to your spousal_rollover ira account is a tax free spousal_rollover with respect to your ruling_request sec_457 of the code provides the rules governing deferred_compensation plans of state and local governments and tax- exempt_organizations sec_457 of the code provides in relevant part that in the case of an eligible_retirement_plan established and maintained by an employer described in sec_457 if any portion of the balance_to_the_credit of an employee in such plan is paid to such employee in an eligible_rollover_distribution within the meaning of sec_402 and the employee transfers any portion of the property such employee receives in such distribution to an eligible_retirement_plan described in sec_402 then such distribution to the extent so transferred shall not be includible in gross_income for the taxable_year in which paid sec_402 of the code defines the term eligible_rollover_distribution as any distribution to an employee of all or any portion of the balance_to_the_credit of the employee in a qualified_trust except for certain exceptions none of which are applicable hereto sec_402 of the code in relevant part defines eligible_retirement_plan as i an individual_retirement_account described in sec_408 ii an individual_retirement_annuity described in sec_408 other than an endowment_contract iii a sec_401 qualified_retirement_plan and iv an annuity plan described in code sec_403 sec_402 of the code provides generally that the exclusion from income shall not apply to any transfer of a distribution made after the 60th day following the day on which the distributee received the property distributed page sec_402 of the code states that a transfer to an eligible_retirement_plan described in i or ii of subparagraph b resulting in any portion of a distribution being excluded from gross_income under paragraph shall be treated as a rollover_contribution described in code sec_408 sec_402 of the code provides generally that if a distribution attributable to an employee is paid to the spouse of the employee after the employee's death sec_402 will apply to such distribution in the same manner as if the spouse were the employee sec_1_402_c_-2 of the income_tax regulations question and answer provides generally that if a distribution attributable to an employee is paid to the employee's surviving_spouse sec_402 applies to the distribution in the same manner as if the spouse were the employee with respect to your ruling_request generally if either a decedent's plan or ira proceeds pass through a third party eg a_trust and then are distributed to the decedent's surviving_spouse said spouse will be treated as acquiring them from the third party and not from the decedent thus generally said surviving_spouse will not be eligible to roll over either the qualified_plan or the ira proceeds into his her ira however in the present case state f law and the provisions of trust c give you as sole trustee of trust c and sub-trust d created under its terms authority to determine which trust c assets may be allocated to sub-trust d and how much of the assets you may pay to yourself as sole beneficiary of sub-trust d consistent with such grant of authority you as trustee of trust c and of sub-trust d intend to request a distribution of decedent a’s plan x balance be made to trust c then allocate the amounts distributed to sub-trust d then terminate said sub-trust d and then pay yourself as beneficiary of sub-trust d the full amount distributed from plan x upon receipt you as beneficiary intend to accomplish a timely rollover of the distribution into an ira that will be set up in your name under this set of circumstances all action taken with respect to both the plan x distribution and the subsequent rollover into an ira will be in accordance with the laws of state f and the terms of trust c and will be accomplished by you either as trustee of trust c and the sub-trusts created under its terms or as the beneficiary of sub-trust d under this set of circumstances we will not apply the general_rule set forth above therefore we conclude that the distribution to you from plan x through sub-trust d of trust c and subsequent rollover into an ira set up and maintained in your name will constitute a valid rollover as long as the rollover is timely accomplished furthermore if the plan x distribution is timely rolled over into an ira no part of such distribution will be included in your gross_income in the year of distribution and year of rollover page this ruling is directed only to the taxpayer who requested it sec_61 k of the code provides that it may not be used or cited by others as precedent a copy of this letter is being sent to your authorized representative in accordance with a power_of_attorney on file in this office if you have any questions please call rerekrrereekrererere id baie alalaiaial at kkk _kkkk sincerely yours flo frances v sloan manager employee_plans technical group not a toll free number enclosures notice of intention to disclose deleted copy of ruling cc


internal_revenue_service number info release date uilc ----------------------------- ---------------------- -------------------------------- department of the treasury washington dc person to contact ------------------------------- telephone number --------------------- refer reply to cc psi 1-genin-150282-03 date oct we are responding to your letter dated date on behalf of taxpayer taxpayer ---------------- dear --------------- requesting relief in order to establish as the effective taxable_year for its s_corporation_election automatic late s_corporation relief is unavailable under revproc_97_48 because taxpayer’s and returns were not timely filed although we are unable to respond to your request as submitted this letter provides information relating to your request announcement copy enclosed provides guidance on seeking relief for late s_corporation elections generally to request relief for a late s_corporation_election you must request a private_letter_ruling from the national_office the information forwarded to our office is insufficient for us to process a private_letter_ruling request the procedures for requesting a private_letter_ruling are set forth in revproc_2003_1 copy enclosed in addition taxpayers must submit a user_fee along with their ruling_request the standard user_fee for a private_letter_ruling is dollar_figure however taxpayers with gross_income of less than dollar_figure million on their tax_return for the most recent 12-month taxable_year qualify for a reduced user_fee in the amount of dollar_figure if you qualify for the reduced fee you must include a statement claiming that your gross_income for the last 12-month taxable_year was less than one million dollars if you decide to submit a formal request for a private_letter_ruling please follow the sample format provided in appendix b of revproc_2003_1 your request should include all required procedural statements a check for the user_fee and any documents that substantiate your intent to be an s_corporation from inception please refer your request to our office by adding the following to the address attn cc pa t p o box ben franklin station washington dc direct to cc psi room incidentally the irs has developed two compact discs to help educate small_business owners on their tax responsibilities introduction to federal taxes for small_business self-employed and a virtual small_business workshop these items are free and can be ordered by calling the irs also makes information available to small_business taxpayers online at www irs gov businesses small index please keep this letter with your tax records and feel free to provide a copy of it to your authorized representative we hope that the above information proves helpful s dianna k miosi enclosures dianna k miosi chief branch associate chief_counsel passthroughs and special industries announcement revproc_2003_1 sincerely yours


t c summary opinion united_states tax_court george lawrence starke petitioner v commissioner of internal revenue respondent docket no 6151-13s filed date george lawrence starke pro_se william j gregg john d ellis and bartholomew cirenza for respondent summary opinion buch judge this case was heard pursuant to sec_7463 of the internal_revenue_code in effect when the petition was filed under sec_7463 the 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 continued decision to be entered in this case is not reviewable by any other court and this opinion may not be treated as precedent for any other case the issues before the court are whether george starke received nonemployee compensation in and whether he is liable for an accuracy- related penalty under sec_6662 because any amount mr starke may have received as nonemployee compensation was taxable in a prior year we hold that mr starke is not liable for the deficiency determined by respondent or the accuracy-related_penalty under sec_6662 background during the 1970s and 1980s mr starke was an offensive lineman in the national football league most notably with the washington redskins after retiring from football mr starke opened a car dealership in maryland while running his car dealership mr starke observed that there was a shortage of qualified_service technicians in the greater washington d c area he also perceived that there was a problem with violence and poverty in the area to address these problems mr starke established a school that would teach people in the community to become automotive service technicians continued court rules_of_practice and procedure in the late 1990s mr starke sold his car dealership and cofounded the excel institute excel a nonprofit corporation excel provided a two-year program that taught basic reading writing and arithmetic in addition to providing job counseling and technical training the program was available free of charge to any persons who wanted to participate so long as they committed to the attendance requirements initially excel did not have any outside funding and mr starke taught many of the classes and largely funded it himself after mr starke’s original board chair passed away jack lyon joined excel as chair eventually mr lyon took over the day-to-day management of excel which created tension between him and mr starke as difficulties between mr starke and mr lyon grew mr starke’s responsibilities shifted away from management and more into fundraising in the late 2000s mr starke learned of an investigation into excel’s fiscal management citing ethical concerns mr starke stopped fundraising for excel during mr starke’s employment at excel he was paid a salary plus a housing allowance mr starke also had access to an american express card for excel mr starke used the american express card for both personal and excel- related expenses but he did not consistently provide receipts to excel showing his expenses according to one of excel’s accountants during the year in issue if an employee made a purchase on one of excel’s credit cards and the employee could not show that it was an expense benefiting excel excel would treat the expense as an advance or prepaid_expense on the employee’s behalf excel’s general ledgers from to show various entries labeled advances or prepaid expenses that are attributable to mr starke all of mr starke’s advances and prepaid expenses occurred between and in contrast the only entries from to are payroll deductions for mr starke that offset the previous advances and prepaid expenses mr starke testified that he did not know why the amounts were being deducted but he assumed it was related to taxes or healthcare expenses respondent introduced a letter from excel’s accountant to mr lyon establishing a repayment plan including payroll deductions to recoup salary advances to george starke that have accumulated over the years mr starke stated that he never received a copy of this letter mr starke’s employment with excel ended in subsequently excel mailed mr starke a form 1099-misc miscellaneous income reflecting dollar_figure according to excel’ sec_2010 general ledger this amount represented advances and prepaid expenses that mr starke had not repaid when he left excel mr starke received the form 1099-misc but did not include the amount in his income when he filed hi sec_2010 form_1040 u s individual_income_tax_return the internal_revenue_service examined mr starke’ sec_2010 return on date the irs issued a notice_of_deficiency to mr starke adjusting his income to include the amount from the form 1099-misc as nonemployee compensation and determining an accuracy-related_penalty under sec_6662 mr starke while residing in the district of columbia timely petitioned discussion the commissioner’s determinations in the notice_of_deficiency are generally presumed correct and taxpayers bear the burden of proving otherwise several other rules can affect the burden of production and the burden_of_proof for example in an unreported income case such as this the commissioner generally must make some minimal evidentiary showing which he has done for the presumption of correctness to attach and where there is a reasonable dispute with respect to an item reported on an information_return the commissioner has the burden of producing reasonable and probative information which he has done even then the burden may shift to the commissioner under sec_7491 if the taxpayer introduces credible_evidence regarding the issue has rule a 290_us_111 see dunne v commissioner tcmemo_2008_63 sec_6201 complied with the necessary substantiation requirements has maintained all records and has cooperated with reasonable requests for witnesses information documents meetings and interviews there is insufficient information in the record to conclude that the burden should shift under sec_7491 and mr starke does not argue that the burden should shift accordingly the burden remains on him but ultimately the burden is immaterial in this case because we decide this case on the preponderance_of_the_evidence sec_61 defines gross_income as all income from whatever source derived income can include the forgiveness of indebtedness or compensation_for services in some instances compensation can be advanced with services to be performed later the distinction is an important one an advance on services to be performed in the future is taxed at the time of the advance in contrast income from the discharge_of_indebtedness is taxed at the time it becomes clear that a debt will never have to be paid whether an amount is an advance or a loan turns on the question of whether a debtor-creditor relationship was established at the time the funds were disbursed sec_61 55_tc_85 88_tc_435 in the case of a loan which is not included in income at the time the funds are disbursed the parties agree that the amount will be repaid and the debtor-creditor relationship is established at the outset however an advance that is considered compensation_for services albeit services to be rendered in the future constitutes taxable_income in the year it is received we determine whether a bona_fide debtor-creditor relationship exists by examining all of the pertinent facts and a n essential element is whether there exists a good-faith intent on the part of the recipient of the funds to make repayment and a good-faith intent on the part of the person advancing the funds to enforce repayment here respondent argues the payments are advances and not loans we agree that the payments are not loans because we find no evidence that mr starke intended to repay them at the time the payments were made although mr starke incurred payroll deductions by excel he testified that he did not know why the amounts were being deducted further there is no evidence of loan documents or any other document signed by mr starke and a member of excel memorializing a 461_us_300 beaver v commissioner t c pincite beaver v commissioner t c pincite 54_tc_905 loan agreement even the letter from excel’s accountants that set forth a repayment plan makes clear that excel and its accountants did not consider the payments to be loans instead characterizing them as advances because we agree that the payments were not loans we would ordinarily look to whether the payments are considered advances however whether the payments are advances is irrelevant in this case because all of the items recorded by excel as advances or prepaid expenses were recorded for years that are not before the court according to excel’s general ledgers all of the payments were made before because advances are taxable for the year in which they are paid any advance would have been taxable for years that are not before us therefore respondent’s adjustments based on the form 1099-misc which includes amounts attributable only to potential advances are disallowed because none of the amounts are taxable for because of this holding mr starke is also not liable for the accuracy-related_penalty under sec_6662 to reflect the foregoing decision will be entered for petitioner