internal_revenue_service number release date index number 54f -------------------------- ------------------------------------------- --------------------------------------- ---------------------------- ----------------------------------- legend 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 fip b05 plr-108519-14 date april district ------------------------------------------------------------------------------ -------------------------------------------- state city school ------ --------------------- -------------------------------------------------------------- -------------------------------------------------------------------------------------- ------------------------------------------------------------------------------- bonds ---------------------------------------------------- ---------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------- date date date dear --------------- -------------------- -------------------- --------------------------- this is in response to your request under sec_54a of the internal_revenue_code for an extension of the expenditure period for the available project proceeds of qualified_tax credit bonds facts and representations plr-108519-14 you make the following factual representations district is a public school district and political_subdivision of state district issued the bonds on date and designated the bonds as qualified_school construction bonds within the meaning of sec_54f all available project proceeds of the bonds were to be spent on constructing rehabilitating and repairing school the project and were expected to be spent before date the original three-year expenditure period for the bonds under sec_54a will expire on date the original expenditure period the project entailed construction of a new gymnasium and classroom wing for school b completely rehabilitating school’s original building demolishing an unneeded previous addition to school and acquiring real_estate adjacent to school for use as parking space and an outdoor play area school is an historic three-story public school_facility which is approximately years old and located in city as of date district did expect that all of the available project proceeds of the bonds would be spent on the project by the expiration date of the original expenditure period district is unable to expend all of the available project proceeds by the expiration date of the original expenditure period because several unexpected events have caused unanticipated delays in the programming and design of the project and in the acquisition construction rehabilitation and repair of the project the programming and design phase of the project was unexpectedly increased from to months because of project alterations made by each of the governing authorities of the two city historic districts which school borders these alterations were made over the course of several meetings by the authorities and increased the time it took to design the project the programming and design phase of the project was also unexpectedly lengthened because the magnitude of damage caused by a fire which had occurred prior to the bonds being issued was greater than anticipated and required district to develop more extensive rehabilitation and repair plans than it had originally thought necessary the acquisition construction rehabilitation and repair phase of the project was delayed by several unexpected events first city was late in issuing a building permit which caused project construction delays by pushing the construction of the building envelope and site development for school into a winter season with above average snowfall and uncharacteristically cold temperatures second construction of a new addition to school required that the foundation of the addition and the foundation of school tie-in together when the existing foundation of school was exposed it was discovered to have deteriorated more than expected and was unusable in some areas rehabilitation of this unanticipated condition caused additional project construction delays district expects to expend the remaining available project proceeds of the bonds by date district submitted this request for a ruling prior to date plr-108519-14 law and analysis sec_54a provides that a qualified_school_construction_bond is treated as a qualified_tax_credit_bond for purposes of sec_54a sec_54a provides in part that to the extent that less than percent of the available project proceeds of the issue are expended by the close of the expenditure period for or more qualified purposes the issuer shall redeem all of the nonqualified bonds within days after the end of such period sec_54a provides that for purposes of this subpart the term expenditure period means with respect to any issue the 3-year period beginning on the date_of_issuance such term shall include any extension of such period under clause iii sec_54a provides that upon submission of a request prior to the expiration of the expenditure period determined without regard to any extension under this clause the secretary may extend such period if the issuer establishes that the failure to expend the proceeds within the original expenditure period is due to reasonable_cause and the expenditures_for qualified purposes will continue to proceed with due diligence sec_54a c iv provides that for purposes of this paragraph in the case of a qualified_zone_academy_bond a qualified purpose means a purpose specified in sec_54e sec_54a of the code defines available project proceeds to mean a the excess of i the proceeds from the sale of an issue over ii the issuance costs financed by the issue to the extent that such costs do not exceed percent of such proceeds and b the proceeds from any investment of the excess described in subparagraph a the project was identified prior to the issuance of the bonds and district reasonably expected to spend all of its allocable available project proceeds within the three-year period the expected failure to spend all the available project proceeds of the bonds by the expiration of the three-year period on date has been caused by events that were not reasonably expected at the time the bonds were issued and were beyond the control of district however district to the extent possible considering the described unexpected external events that resulted in unforeseen delays has and will continue to exercise due diligence in spending the remaining available project proceeds on the project district expects to spend all available project proceeds of the bonds not later than date plr-108519-14 conclusion under the facts and circumstances of this case we conclude that district’s expected failure to expend the available project proceeds of the bonds by date is due to reasonable_cause and that district’s continued expenditure of the proceeds for qualified purposes will proceed with due diligence therefore district is granted an extension of the original expenditure period with respect to the bonds until date except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any transaction or item discussed or referenced in this letter this ruling is directed only to the taxpayer who requested it sec_6110 provides that it may not be used or cited as precedent in accordance with a power_of_attorney on file with this office a copy of this letter is being sent to district’s authorized representative the ruling contained in this letter is based upon information and representations submitted by district and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the materials submitted in support of the request for a ruling it is subject_to verification upon examination sincerely associate chief_counsel financial institutions products s by _________________________ timothy l jones senior counsel branch


number release date id office uilc cca-111811-10 from -------------------------- sent thursday date am to -------------------------- cc subject restitution --------- attached is a brief summary outline of the restitution legislation i used for my presentation let me know if you have any questions -------------------------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------------------------------- ---------------- attachment restitution the firearms excise_tax improvement act of was signed into law on date and became effective immediately the act amends sec_6201 assessment authority to allow the irs to assess and collect restitution ordered by the court for failure to pay any_tax imposed under title_26 in the same manner as if such amount were such tax our interpretation is that the assessed amount is limited to losses attributable to title_26 violations and does not include title tax-related charges the irs may now assess and collect the amount of court ordered restitution without going through the civil assessment process further the act restricts the defendant from challenging the assessment related to the order of restitution since the assessment is limited to the amount ordered as restitution the amount of restitution calculated becomes more important and should identify each tax_year and the specific sum that applies to each tax_year it would appear that the act does not prevent the irs from assessing a civil tax in excess of the restitution amount under the normal assessment procedures the general 10-year statute_of_limitations for collection applies to any_tax liability assessed under sec_6201 the irs may also file suit under sec_6502 to reduce the assessment to judgment before the end of the 10-year period to avail itself of 20-year judgment lien sb_se technical services will be tasked with making the assessments a cross functional team has been formed to develop new procedures after a restitution assessment is made one of the issues to be addressed is what government agency will have primary responsibility to insure that restitution is collected working group the issue of restitution in criminal tax cases was addressed by an irs-doj working group in the group was tasked with addressing the concern that many defendants despite being convicted of tax crimes were escaping all responsibility for the payment of taxes associated with their offenses of conviction one of the most significant problems identified by the group was the service’s lack of a unified process regarding the collection monitoring and processing of a restitution payment to a taxpayer’s account this was caused by the service’s inability to treat the restitution amount as an assessed tax federal courts lack the power to impose restitution as an independent part of a sentence without a statutory grant of authority two statutes confer on courts the power to order restitution as an independent element of the sentence usc 3663a offenses under title_26 are not explicitly covered by usc 3663a even if an offense is not covered by usc 3663a a court may order restitution as a condition of probation or as a condition of supervised release another option for restitution is pursuant to a plea agreement a court may order restitution beyond the loss suffered from the offense of conviction if the parties agree ------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------------- --------------------------- -------------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------- the usam contains restitution plea language that all ausa’s should be familiar with points to consider important to consider restitution in plea agreements with assessment on books much easier to track - will not result in improper refunds like sometimes happened in the past restitution limited to title_26 taxes tax amounts should be calculated with better accuracy amount year


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 plr-128553-09 date november --------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------ legend trustors original trust trust trust d trust e trust f trust g trustee successor trustee a b c d e f g h i j k l m court court settlement agreement --------------------------------------------------------- ---------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------- --------------------------- -------- --------------------------------------------------------------------------------------- -------------------------------------------------------------------------------- ------------------------------------------------------------------------------------ --------------------------------------------------------------------------------- ---------------------------- -------------- ----------------------------- ---------------------------- ------------------------------ --------------------------- ---------------------- -------------------------- ------------------------ ----------------------------- ----------------------------- --------------------- ---------------------- ------------------------------ ------------------------- ----------------------------------------------------------- ------------------------------------------------------ -------------------------------------------------------------- plr-128553-09 state date date year year state statute state statute ------------ --------------------------- ---------------- ------- ------- ----------------------------------------- ---------------------------------------------- dear ------------------- this letter responds to your submission dated date requesting rulings on the income gift and generation-skipping_transfer_tax consequences of the proposed division of a_trust the facts submitted and the representations made are as follows on date in year which is prior to date trustors created an irrevocable_trust original trust for the benefit of the issue of a b and c ie their grandchildren and grandchildren’s issue a b and c are trustors’ children and are each referred to as the primary descendant on date pursuant to a settlement agreement court ordered original trust severed into three separate and equal trusts a_trust for the benefit of the issue of a a_trust for the benefit of the issue of b and a_trust for the benefit of the issue of c the trust created for the benefit of the issue of a_trust is the subject of this ruling date is prior to date trustee is the corporate trustee and currently the sole trustee of trust trust’s terms are identical to the terms of original trust except that where original trust refers to the issue of primary descendant each reference means solely the issue of a and the lineal_descendants of such issue the trustee of original trust received a ruling from the internal_revenue_service service concluding that the date division would not cause original trust or trust to lose its status as exempt from the generation-skipping_transfer_tax and that distributions from either trust would not be subject_to the generation-skipping_transfer_tax a has four children d e f and g and six grandchildren h i j k l and m trustors are deceased a is alive the pertinent terms of original trust and trust are as follows section ii requires the trustee to distribute trust income at least annually to the issue of the primary descendant provided however the trustee may accumulate trust income if it determines it is in the best interests of the beneficiaries after giving full consideration plr-128553-09 to the capital_gain throwback_rules contained in sec_669 of the internal_revenue_code as then in effect after the death of the primary descendant and all of his or her lineal_descendants the trustee must distribute income to trustors’ lineal_descendants in such proportions as determined by trustee in its sole discretion the trustee also has discretion to distribute principal to the primary decedent’s issue and upon the death of the primary descendant’s issue to the lineal_descendants of trustors pursuant to section iii trust unless terminated sooner will terminate immediately prior to the expiration of twenty-one years from and after the death of the last survivor of trustors and the issue of trustors’ parents living on date upon termination the trustee shall distribute the principal in equal proportions outright and free of trust to the persons then entitled to receive the net_income thereof or if no such persons exist then to trustor’s heirs section vi subsection b provides that trust is irrevocable and prohibits any portion of the trust principal or income to revert to trustors or trustors’ estates section vii subsection i provides that the corporate trustee may be removed by a majority vote of the individual trustees and the corporate trustee may resign by serving notice to a majority of the individual trustees if the corporate trustee ceases to be a trustee a successor corporate trustee must be named section vii subsection g states that trust is a contract under state law the assets of trust consist of cash marketable_securities a limited_partnership_interest and real_property when trust was created upon the division of original trust d e f and g requested trustee create four separate sub-accounts for each of the siblings and their respective descendants so that the assets other than the real_property could be separately managed accordingly since year except for the management of the real_property interests held by trust trustee has kept separate sub-accounts for each family line since trust’s inception in year a dispute arose among d e f and g regarding the administration of trust trustee petitioned court for instructions on whether state law authorizes trustee to divide trust to create a separate share for e and her lineal_descendants d f and g filed a complaint with court seeking to remove trustee as trustee of trust to end the litigation the parties entered into settlement agreement under the terms of settlement agreement trust will be divided into four separate trusts trust d a_trust for the benefit of d and her lineal_descendants trust e a_trust for the benefit of e and her lineal_descendants trust f a_trust for the benefit of f and her lineal_descendants and trust g a_trust for the benefit of g and his lineal_descendants collectively the separate trusts each separate trust has identical terms as trust except that where trust refers to the issue of the primary descendant and such issue’s lineal plr-128553-09 descendants as beneficiaries such reference shall mean solely the particular family line for whom the separate trust is established each trust will receive a non-pro rata equal share of trust assets consisting of the assets held in that family member’s sub-account and one-fourth of all other assets except real_property not held in a sub-account trustee will partition the real_property pursuant to the parties’ agreement trust e will receive a fee simple interest that has an estimated value equal to one-fourth of the value of all of the real_property owned by trust and trusts d f and g will hold three-fourths of the value of all of the real_property owned by trust as tenants-in-common any outstanding line of credit from trustee’s institution will be satisfied by trust prior to the division any other debts of trust will be apportioned amongst separate trusts equally settlement agreement will be approved upon receipt of a favorable ruling from the service and the filing of an amended petition in court trustee will continue as trustee of trust e and successor trustee will serve as the corporate trustee and sole trustee of trusts d f and g state statute authorizes a trustee of a state trust to combine or divide a_trust provided that the trustee gives notice to the qualified beneficiaries and if the result does not impair rights of any beneficiary or adversely affect achievement of the purposes of the trust under state statute when distributing trust property or terminating or dividing a_trust a trustee has a power to make distributions in divided or undivided interests allocate particular assets in proportionate or disproportionate shares value the trust property for those purposes and adjust for resulting differences in valuation trustee represents that no additions have been made to the corpus of original trust or trust after date trustee successor trustee and the beneficiaries of trust d e f g h i j k l and m request the following rulings the proposed modification and division of trust into separate trusts constituting four separate and equal shares of trust the non-pro rata transfer of assets from trust to each such separate trust and the change_of trustees with respect to any such separate trust will not constitute an addition to or a modification of trust or any of the four separate trusts that would cause trust or any separate trust to lose wholly or partially its exempt status under sec_2601 and will not subject distributions from trust or any of the separate trusts to the generation-skipping_transfer_tax furthermore each separate trust will constitute a separate trust for purposes of determining the application of any generation-skipping_transfer_tax subsequent to the division of trust plr-128553-09 the proposed non-pro rata distribution of the assets of trust to the four separate trusts on an equal basis will not result in the realization of gain_or_loss to trust or to any separate trust or any beneficiary thereof under sec_61 or sec_1001 the proposed division of trust and non-pro rata distributions of assets to such separate trusts will not result in a transfer subject_to gift_tax under sec_2501 by trust or any of trust’s beneficiaries the basis of each asset received by each separate trust from trust will be the same as the basis which that asset maintained when held by the trust pursuant to sec_1015 the holding_period for each asset received by each separate trust from trust will include the same holding_period for that asset as held by trust according to sec_1223 each of the four separate trusts will constitute a separate trust for purposes of sec_643 ruling sec_2601 of the internal_revenue_code code imposes a tax on every generation- skipping transfer gst a gst is defined under sec_2611 as a taxable_distribution a taxable_termination and a direct_skip under b a of the tax_reform_act_of_1986 and sec_26_2601-1 of the generation-skipping_transfer_tax regulations the gst tax provisions do not apply to any gst_trust as defined in sec_2652 that was irrevocable on date but only to the extent that the transfer is not made out of corpus added to the trust after date or out of income attributable to corpus so added sec_26_2601-1 provides rules for determining when a modification judicial construction settlement agreement or trustee action with respect to a_trust that is exempt from the gst tax under sec_26_2601-1 b or b will not cause the trust to lose its exempt status these rules are applicable only for purposes of determining whether an exempt trust retains its exempt status for gst tax purposes they do not apply in determining for example whether the transaction results in a gift subject_to gift_tax or may cause the trust to be included in the gross_estate of a beneficiary or may result in the realization of capital_gain for purposes of sec_1001 under sec_26_2601-1 a modification of the governing instrument of an exempt trust including a trustee distribution settlement or construction that does not satisfy paragraph b i a b or c by judicial reformation or nonjudicial reformation that is valid under applicable state law will not cause an exempt trust to be subject_to the provisions of chapter if the modification does not shift a beneficial_interest in the trust to any beneficiary who occupies a lower generation as defined in sec_2651 than the plr-128553-09 person or persons who held the beneficial_interest prior to the modification and the modification does not extend the time for vesting of any beneficial_interest in the trust beyond the period provided for in the original trust a modification of an exempt trust will result in a shift in beneficial_interest to a lower generation beneficiary if the modification can result in either an increase in the amount of a gst or the creation of a new gst a modification that is administrative in nature that only indirectly increases the amount transferred for example by lowering administrative costs or income taxes will not be considered to shift a beneficial_interest in the trust see sec_26 b i e example in this case original trust was irrevocable on date the service ruled that the division of original trust did not cause original trust or trust or distributions from either to be subject_to gst tax it has been represented that there have been no additions made to either original trust or trust after date in the instant case trustee has authority under state law to divide trust into separate trusts trustee has discretion to make non-pro rata distributions to the beneficiaries and trust provides for the resignation of trustees and appointment of successor trustees to end litigation the parties executed settlement agreement in which trust will be divided into separate trusts trusts d e f and g and assets will be allocated equally in a non-pro rata fashion to each separate trust further successor trustee will serve as trustee of trusts d f and g the division of trust into separate trusts will not shift a beneficial_interest in the separate trusts to any beneficiary who occupies a lower generation as defined in sec_2651 than the person who held the beneficial_interest prior to the division it will also not postpone or suspend the vesting absolute ownership or power of alienation of an interest in property for a period measured from the date of creation of the trust extending beyond the life of any issue of trustors in being at the date of creation of original trust plus a period of years accordingly based on the facts submitted and representations made we rule that the proposed modification and division of trust into separate trusts and the non-pro rata transfer of assets from trust to each such separate trust will not constitute an addition to or a modification of trust or any of the four separate trusts that would cause trust or any separate trust to lose wholly or partially its exempt status under sec_2601 and will not subject distributions from trust or any of the separate trusts to the gst tax the change_of corporate trustee for trusts d f and g is administrative in nature and is not considered to shift a beneficial_interest in trust accordingly based upon the facts submitted and the representations made we rule that the change_of corporate trustee will not constitute an addition to or a modification of trust or any of the separate trusts that would cause trust or any separate trust to lose wholly or partially its exempt status under sec_2601 and will not subject distributions from trust or any of the separate trusts to the gst tax furthermore based on the facts provided and the representations made we rule that plr-128553-09 the four separate trusts will constitute a separate trust for the purposes of determining the application of any gst tax subsequent to the division of trust ruling sec_61 defines gross_income as all income from whatever source derived under sec_61 gross_income includes g ains derived from dealings in property sec_1001 provides that the gain from the sale_or_other_disposition of property is the excess of the amount_realized over the adjusted_basis provided in sec_1011 for determining gain and the loss is the excess of the adjusted_basis provided in sec_1011 for determining loss over the amount_realized under sec_1001 the entire amount of gain_or_loss must be recognized except as otherwise provided sec_1_1001-1 of the income_tax regulations provides that except as otherwise provided in subtitle a of the code the gain_or_loss realized from the exchange of property for other_property differing materially either in_kind or in extent is treated as income or as loss sustained under sec_1_1001-1 the severance of a_trust occurring on or after date is not an exchange of property for other_property differing materially either in_kind or in extent if i an applicable_state_statute or the governing instrument authorizes or directs the trustee to sever the trust and ii any non-pro rata funding of the separate trusts resulting from the severance whether mandatory or in the discretion of the trustee is authorized by an applicable_state_statute or the governing instrument in the present case trust will be severed into four separate trusts on a non-pro rata basis the operating provisions of the separate trusts are the same as those of trust the proposed severance of trust is authorized under state law original trust and trust contain no provision contrary to the state law therefore the proposed severance is consistent with the criterion set forth in sec_1_1001-1 for an exchange of property for property not materially different in_kind or in extent under state law in terminating or dividing a_trust a trustee may make non-pro rata distributions in addition under the terms of original trust and trust the trustees are authorized to distribute trust principal or income on a non-pro rata basis the proposed non-pro rata severance of trust is authorized both under state law and under the terms of the trust accordingly the non-pro rata funding of separate trusts is consistent with the criterion set forth in sec_1_1001-1 for an exchange of property for property not materially different in_kind or in extent the severance of a_trust occurring on or after date is not an exchange of property for other_property differing materially in_kind or in extent if the severance plr-128553-09 satisfies the criteria set forth in sec_1_1001-1 the proposed severance of trust satisfies those criteria accordingly based on the facts provided and the representations made we rule that the severance does not constitute an exchange of property for other_property differing materially in_kind or in extent under sec_61 and sec_1001 ruling sec_2501 imposes a tax for each calendar_year on the transfer of property by gift during such calendar_year by an individual resident or nonresident sec_2511 provides that subject_to certain limitations the gift_tax applies whether the transfer is in trust or otherwise direct or indirect and whether the property transferred is real or personal tangible or intangible sec_2512 provides that if a gift is made in property the value thereof at the date of the gift will be considered the amount_of_the_gift sec_2512 states that where property is transferred for less than adequate_and_full_consideration in money or money’s worth the amount by which the value of the property exceeds the value of the consideration received shall be deemed a gift based on the facts submitted and the representations made the beneficial interests of the trust beneficiaries will not change as a result of the division of trust as described above accordingly based upon the facts provided and the representations made we rule that the division of trust into separate trusts will not cause trust or any beneficiary of trust to have made a taxable gift_for federal gift_tax purposes under sec_2501 ruling sec_1015 states that the basis in property acquired by a transfer in trust is the same as it would be in the hands of the grantor with adjustments for gain and loss recognized sec_1_1015-2 provides that in the case of property acquired after date by a transfer in trust other than a transfer in trust by gift bequest or devise the basis_of_property so acquired is the same as it would be in the hands of the grantor increased by the amount of gain or decreased in the amount of loss recognized to the grantor under the law applicable to the year in which the transfer was made sec_1_1015-2 applies the uniform basis principles in sec_1_1015-1 for determining basis_of_property where more than one person acquires an interest in property by transfer in trust under sec_1_1015-1 property acquired by gift has a single uniform basis although more than one person may acquire an interest in the property the uniform basis of the property remains fixed subject_to proper adjustment for items under sec_1016 and sec_1017 plr-128553-09 in this case neither sec_1001 nor sec_61 applies to the proposed transaction thus based upon the facts provided and the representations made we rule that the basis of each asset received by each separate trust will be the same as the basis of the assets in trust ruling under sec_1223 the taxpayer's holding_period for property however it is acquired includes the period for which the property was held by any other person if for the purpose of determining gain_or_loss from a sale_or_exchange the property has the same basis in whole or in part in his hands as it would have in the hands of the other person under sec_1015 the basis in each asset is the same in the hands of each separate trust as it is in the hands of trust accordingly based upon the facts provided and the representations made we rule that under sec_1223 the holding_period for each asset received by each separate trust from trust will include the period that the asset was held by trust ruling sec_643 provides that under regulations prescribed by the secretary two or more trusts shall be treated as one trust if such trusts have substantially the same grantor or grantors and substantially the same primary beneficiary or beneficiaries and the principal purpose of such trusts is the avoidance of the tax_imposed_by_chapter_1 of the code section b of the tax_reform_act_of_1986 provides that in the case of a_trust which was irrevocable on date sec_643 shall apply only to that portion of the trust which is attributable to a contribution to corpus after date sec_643 provides that in the case of any distribution_of_property other than cash to which an election under sec_643 applies i sec_643 does not apply ii gain_or_loss is recognized by the trust in the same manner as if such property has been sold to the distributee at its fair_market_value and iii the amount taken into account under sec_661 and sec_662 shall be the fair_market_value of such property sec_643 provides that an election under sec_643 applies to all distributions made by the trust during a taxable_year and is made on the return of the trust for such taxable_year sec_661 provides that in any taxable_year a deduction is allowed in computing the taxable_income of a_trust other than a_trust to which subpart b applies for the sum of the amount of income for such taxable_year required to be distributed currently and plr-128553-09 any other_amounts_properly_paid_or_credited_or_required_to_be_distributed for such taxable_year but such deduction shall not exceed the distributable_net_income dni of the estate_or_trust sec_1_661_a_-2 of the income_tax regulations provides that gain_or_loss is realized by the trust or estate or the other beneficiaries by reason of a distribution_of_property in_kind if the distribution is in satisfaction of a right to receive a distribution of a specific dollar amount of specific property other than that distributed or of income as defined under sec_643 and the applicable regulations if income is required to be distributed currently based on the facts and representations submitted we conclude that as long as the four resulting trusts created by the division of trust are each separately managed and administered they will be treated as separate trusts for federal_income_tax purposes based solely on the facts submitted and the representations made we conclude that the division will not be viewed as a distribution or termination under sec_661 nor as a distribution for purposes of sec_1_661_a_-2 and therefore will not result in the realization by trust or separate trusts or by any beneficiary of trust or separate trusts of any income gain_or_loss furthermore we conclude that trust’s distribution of assets to four separate trusts occurring as part of the proposed division will not cause trust or its beneficiaries to realize gain_or_loss provided that trust does not make an election under sec_643 except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter this ruling is directed only to the taxpayers requesting it sec_6110 of the code provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative the rulings contained in this letter are based upon information and representations submitted by the taxpayers and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the material plr-128553-09 submitted in support of the request for rulings it is subject_to verification on examination sincerely lorraine e gardner senior counsel branch passthroughs special industries enclosures copy for sec_6110 purposes


internal_revenue_service p o box cincinnati oh release number release date date date department of the treasury employer_identification_number contact person - 1d number contact telephone number legend il dollar_figure - r high school dear we have considered your request for advance approval of your grant-making program under sec_4945 of the internal_revenue_code dated date our records indicate that you were recognized as exempt from federal_income_tax under sec_501 of the code in our letter dated date you were previously classified as a supporting_organization until recently when you requested classification as a private_foundation effective date as such we determined you were classified as a private_foundation as defined in sec_509 your letter dated date indicates that you will provide scholarships you have provided scholarships for the last years of your operations due to sec_1241 of the pension_protection_act of you recently converted to a private_foundation and requested an advance approval for your grant-making program your purpose is to award scholarships to high school students attending r these grants provide additional funding to help students with tuition related costs at a post-secondary school scholarships are advertised to all available students eligible to apply at r the criteria to determine eligibility for the scholarships are e e the applicant must attend r the individual must be enrolled at a post-secondary school to receive an award recipients are selected based on the eligibility criteria listed above in their scholarship request the applicant must detail their financial need s a t scores community service activities gpa and class rank annual scholarships will be awarded based on the applicant's academic standing and financial need potential recipients must submit a scholarship application form and provide supporting documentation to be considered for a grant a scholarship selection committee will first review applications to determine whether the applicant meets the grant criteria and make decisions for awarding scholarships as part of the program relatives of members of the selection committee will abstain from voting on related_party scholarship applications two annual scholarships will be awarded primarily based on merit with a secondary focus on financial need criteria will be weighted and for academic and financial need respectively the grant recipient must meet the following requirements in the first year of the grant in order to receive funding from you e applicant must maintain a cumulative grade point average of at least dollar_figure on a scale of dollar_figure up to in order to seek renewal of the grant the recipient must meet the following requirements in order to continue receiving funding from you e applicant must maintain a cumulative grade point average of at least dollar_figure on a scale of dollar_figure up to you maintain record case histories of all grants and the payments from you are made directly to the school in which the recipient is enrolled as part of the program the student is required each semester to submit to you proof of enrollment and academic transcripts in the event that the recipient is not in good academic standing the student will lose the scholarship sec_4945 and b of the code impose certain excise_taxes on taxable_expenditures made by a private_foundation sec_4945 of the code provides that the term taxable_expenditure means any amount_paid or incurred by a private_foundation as a grant to an individual for travel study or other similar purposes by such individual unless such grant satisfies the requirements of subsection g sec_4945 of the code provides that sec_4945 shall not apply to individual grants awarded on an objective and nondiscriminatory basis pursuant to a procedure approved in advance if it is demonstrated that the grant constitutes a scholarship or fellowship_grant which is subject_to the provisions of sec_117 and is to be used for study at an educational_organization described in sec_170 the grant constitutes a prize or award which is subject_to the provisions of sec_74 if the recipient of such prize or award is selected from the general_public or the purpose of the grant is to achieve a specific objective produce a report or similar product or improve or enhance a literary artistic musical scientific teaching or other similar capacity skill or talent of the grantee sec_53_4945-4 of the regulations provides that to secure approval a private_foundation must demonstrate that i its grant procedure includes an objective and nondiscriminatory selection process ii such procedure is reasonably calculated to result in performance by grantees of the activities that the grants are intended to finance and iii the foundation plans to obtain reports to determine whether the grantees performed activities that the grants are intended to finance based on the information submitted and assuming your award programs will be conducted as proposed with a view to provide objectivity and nondiscrimination in making the awards we have determined that your procedures for granting the awards comply with the requirements contained in sec_4945 of the code and that awards granted in accordance with such procedures will not constitute taxable_expenditures within the meaning of sec_4945 in addition we have determined that awards made under your procedures are excludable from the gross_income of the recipients subject_to the limitations provided by sec_117 of the code this determination is conditioned on the understanding that there will be no material_change in the facts upon which it is based it is further conditioned on the premise that no grants will be awarded to foundation managers or members of the selection committee or for a purpose that is inconsistent with the purpose described in sec_170 of the code the approval of your award program procedures herein constitutes a one-time approval of your system standards and procedures designed to result in awards which meet the requirements of sec_4945 of the code this determination only covers the grant programs described above thus approval shall apply to subsequent award programs only as long as the standards and procedures under which they are conducted do not differ materially from those described in your request any funds you distribute to individuals must be made on a true charitable basis in furtherance of the purposes for which you are organized therefore you should maintain adequate_records and case histories so that any or all award distributions can be substantiated upon request by the internal_revenue_service this determination is directed only to the organization that requested it sec_6110 of the code provides that it may not be used or cited as a precedent you must report any future changes in your grant making procedures please keep a copy of this letter in your permanent records if you have any questions please contact the person whose name and telephone number are shown above sincerely yours lois lerner director exempt_organizations enclosure notice


internal_revenue_service number release date index number 6050p ----------------------------------------------- ----------------------------------------- -------------------------- -------------------------------------- ------------------------------------------ - 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 pa apjp b01 plr-139502-05 date date ---------------------------------------------- re --------------------------------------------------------------------------- re --------------------------------------------------------------------------- legend company -------------------------------------------------- year year dear -------------- this letter responds to a letter dated date and a supplemental letter dated date submitted by company’s authorized representative on its behalf requesting certain rulings under sec_6050p of the internal_revenue_code code ------- ------- facts company was incorporated in year company purchases manages and liquidates consumer accounts_receivable company purchases large portfolios of consumer accounts_receivable from credit card issuers and other consumer debt issuers that have charged-off the accounts after unsuccessful attempts to collect company manages the collection on these accounts primarily through collection agencies and law firms if a debtor makes payments on an account the account may remain on company’s books for many years if a debtor does not make payments on an account company may offer to settle the account with the debtor for less than the face value of the account company may authorize a collection agency acting on its behalf to settle an account and write-off the balance company may sell account portfolios to other third party plr-139502-05 purchasers of debt the activities of purchasing collecting and selling consumer accounts_receivable represent percent of company’s business rulings requested company is an organization with a significant trade_or_business of lending money for purposes of sec_6050p of the code and sec_1_6050p-2 of the income_tax regulations regulations company is an applicable_entity for purposes of sec_6050p of the code and is subject_to the information reporting requirements for discharges of indebtedness in sec_6050p and sec_1_6050p-1 of the regulations law and analysis sec_6050p of the code provides that any applicable_entity that discharges indebtedness of any person during a calendar_year must file an information_return reporting the discharge sec_6050p provides that an applicable_entity includes an applicable_financial_entity sec_6050p defines an applicable_financial_entity to include an organization with a significant trade_or_business of lending money sec_1_6050p-2 of the regulations provides that lending money is a significant trade_or_business for purposes of sec_6050p of the code if the organization lends money on a regular and continuous basis during the calendar_year sec_1_6050p-2 provides that lending money includes acquiring an indebtedness sec_1_6050p-2 provides that gross_income from lending money includes income from interest gains from the sale of indebtedness and penalties and fees with respect to the indebtedness sec_1_6050p-2 of the regulations provides three safe harbors in which an organization will not be treated as having a significant trade_or_business of lending money in general an organization will satisfy one of the safe harbors if the organization was not required to report in the preceding year and the organization’s gross_income from lending money in its most recent test year is both less than dollar_figure million and less than percent of its gross_income for that test year the organization was required to report in the preceding year and the organization’s gross_income from lending money in its three most recent test years is both less than dollar_figure million and less than percent of its gross_income for that test year or the organization does not have a test year for the applicable calendar_year sec_1_6050p-2 provides that for any calendar_year a test year is a taxable_year of the organization that ends before july of the previous calendar_year based on the facts submitted and the representations made company fails to satisfy any of the safe harbors in sec_1_6050p-2 of the regulations because company was formed in year company has a test year for year and will continue to have a plr-139502-05 test year for each subsequent calendar_year that it remains in existence company represents that percent of its gross_income derives from its business of purchasing collecting and selling consumer accounts_receivable because company’s principal business is acquiring indebtedness and company does not satisfy any of the safe harbors in sec_1_6050p-2 company is an organization with a significant trade_or_business of lending money for purposes of sec_6050p of the code and the regulations company is therefore an applicable_entity for purposes of sec_6050p and is subject_to the information reporting requirements of sec_6050p and the regulations conclusions company is an organization with a significant trade_or_business of lending money for purposes of sec_6050p of the code and sec_1_6050p-2 of the regulations company is an applicable_entity for purposes of sec_6050p of the code and is subject_to the information reporting requirements for discharges of indebtedness in sec_6050p and sec_1_6050p-1 of the regulations except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter this ruling is directed only to the taxpayer requesting it sec_6110 of the code provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative plr-139502-05 the rulings contained in this letter are based upon information submitted and representations made by the taxpayer and submitted under penalty of perjury while this office has not verified any of the material submitted in support of the request for rulings it may be subject_to verification on examination sincerely yours donna welch senior counsel administrative provisions judicial practice procedure administration enclosures copy of this letter copy for sec_6110 purposes cc ---------------------------- --------------------------------------- ----------------------- -----------------------------


internal_revenue_service number release date index number ------------------------------ ---------------------------- ------------------------------- ------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ----------------------- id no ------------- telephone number --------------------- refer reply to cc psi b01 plr-112168-05 date date --------- -------------------- --------------------- ------------------------------ --------------------------------------- legend x -------------------------------------------------- state a b_trust -------------------------------------------------- d1 d2 d3 d4 dear -------------- requesting inadvertent termination relief under sec_1362 of the internal_revenue_code this responds to a letter dated date submitted on behalf of x -------------------------- ------------------------- ---------------------- ------- the laws of state x elected to be an s_corporation effective on d2 according to the information submitted x was incorporated on d1 pursuant to facts prior to d3 a a shareholder of x died and a’s shares of x stock were plr-112168-05 transferred to a’s estate on d3 a’s estate distributed the x stock to trust it was intended that trust be treated as a qualified_subchapter_s_trust qsst as defined in sec_1361 however due to an oversight b the beneficiary of trust did not make a timely qsst election under sec_1361 thereby terminating x’s s_corporation_election on d3 in d4 x’s counsel discovered that b had not made a qsst election for trust subsequently x submitted this ruling_request for inadvertent termination relief under sec_1362 x represents that the transfer of stock to trust and the subsequent failure_to_file the qsst election were not motivated by tax_avoidance or retroactive tax planning furthermore x and its shareholders represent that from d3 until the present x b and the other shareholders have all filed or will file returns consistent with x’s status as an s_corporation x and its shareholders have agreed to make any adjustments that the commissioner may require consistent wit the treatment of x as an s_corporation law and analysis sec_1361 provides that a_trust all of which is treated under subpart sec_1361 provides that the term s_corporation means with respect to any taxable_year a small_business_corporation for which an election under sec_1362 is in effect for such year sec_1361 provides in part that the term small_business_corporation means a domestic_corporation which is not an ineligible_corporation and which does not have as a shareholder a person other than an estate a_trust described in sec_1361 or an organization described in sec_1362 who is not an individual e of part i of subchapter_j of chapter as owned by an individual who is a citizen or resident_of_the_united_states may be a subchapter_s_corporation shareholder beneficiary makes an election under sec_1361 will be treated as a_trust described in sec_1362 and the qsst’s beneficiary will be treated as the owner for purposes of sec_678 of that portion of the qsst’s s_corporation stock to which the election under sec_1361 applies sec_1361 provides that the term qsst means a_trust a the terms of which require that i during the life of the current income_beneficiary there shall be only income_beneficiary ii any corpus distributed during the life of the current income_beneficiary may be distributed only to such beneficiary iii the income_interest of the current income_beneficiary in the trust shall terminate on the earlier of such beneficiary’s sec_1361 provides that in the case of a qsst with respect to which a d provides that an election under sec_1362 shall be terminated plr-112168-05 death or the termination of the trust and iv upon the termination of the trust during the life of the current income_beneficiary the trust shall distribute all of its assets to such beneficiary and b all of the income within the meaning of sec_643 of which is distributed or required to be distributed currently to individual who is a citizen or resident_of_the_united_states under sec_1361 a beneficiary of a qsst or his legal_representative may elect to have sec_1361 apply under d d an election under sec_1361 will be effective up to days and months before the date of the election whenever at any time on or after the 1st day of the 1st taxable for which the corporation is an s_corporation such corporation ceases to be a small_business_corporation because of a late qsst election the corporation may request inadvertent termination relief under sec_1362 by any corporation was terminated under sec_1362 the secretary determines that the circumstances resulting in such termination were inadvertent no later than a reasonable period of time after discovery of the circumstances resulting in such termination steps were taken so that the corporation for which the termination occurred is a small_business_corporation and the corporation for which the termination occurred and each person who was a shareholder in such corporation at any time during the period specified pursuant to sec_1362 agrees to make such adjustments consistent with the treatment of such corporation as an s_corporation as the case may be as may be required by the secretary with respect to such period then notwithstanding the circumstances resulting in such termination such corporation shall be treated as an s_corporation during the period specified by the secretary sec_1_1361-1 provides that if a corporation’s s election terminates sec_1362 provides in relevant part that if an election under sec_1362 conclusion based solely upon the facts presented and the representations made we conclude that x’s s_corporation_election terminated on d3 because b failed to make a timely qsst election under sec_1361 we also conclude that the termination was inadvertent within the meaning of sec_1362 therefore under sec_1362 x will be treated as an s_corporation from d3 and thereafter assuming x’s s_corporation_election is valid and is not otherwise terminated under sec_1362 however this ruling is contingent upon b filing a qsst election with an effective date of d3 with the appropriate service_center within days of the date of this ruling a copy of this letter must be attached to the qsst election federal tax consequences of the facts described above under any other provision of the except as specifically set fort above no opinion is expressed concerning the this ruling is directed only to the taxpayer who requested it sec_6110 plr-112168-05 code specifically no opinion is expressed on whether x’s original election to be an s_corporation was a valid election under sec_1362 or whether trust is a qsst within the meaning of sec_1361 provides that it may not be used or cited as precedent letter to x’s authorized representative s dianna k miosi under the power_of_attorney on file with this office we are sending a copy of this sincerely dianna k miosi chief branch office of the associate chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes cc


internal_revenue_service department of the treasury number release date index numbers washington dc person to contact telephone number refer reply to cc corp br4 plr-104400-00 date date distributing controlled controlled sub sub sub sub fsub fsub fsub fsub fsub fsub business x activity x1 activity x2 year year year year year a b consultant date date date date date country country country country country country country a b c d e f this letter responds to your date request for rulings on certain federal_income_tax consequences of a proposed and partially completed transaction the information submitted in that letter and in later correspondence is summarized below the rulings in this letter are based on facts and representations submitted by the taxpayer and accompanied by a penalties of perjury statement executed by an appropriate party this office has not verified any of the materials submitted in support of the ruling_request verification of the facts information and other data in this ruling letter may be required as part of the audit process summary of facts publicly traded distributing is the common parent of a corporate group whose includible affiliates join in filing a consolidated_return the distributing group conducts business x which consists of activity x1 and activity x2 based on filings with the securities_and_exchange_commission distributing believes that shareholders a and b both of whom are investment advisors are the only shareholders who own five percent or more of the outstanding distributing stock distributing began activity x1 in year and activity x2 in year later in year distributing transferred activity x2 to newly formed sub in year distributing acquired controlled sub a developer of products related to activity x2 acquisition shortly after acquisition sub merged into controlled sub merger also in year distributing formed wholly owned sub to develop and market activity x2 for the in year distributing acquired controlled in a transaction the taxpayer represents qualified as a reorganization under both sec_368 and sec_368 and a e of the internal_revenue_code acquisition controlled develops and markets products related to activity x2 on date sub merged into distributing merger and soon after date distributing contributed part of the sub assets to newly formed sub the retransfer after these transactions and before the transactions described below distributing wholly owned controlled controlled sub and sub in addition controlled sub wholly owned fsub country fsub country fsub country fsub country and fsub country fsub has a branch office in country and recently closed a branch office in country distributing and controlled have issued and expect to continue issuing stock_options as compensation the compensatory options in addition distributing has issued convertible subordinated notes due in year the conversion feature of the notes may require distributing to retain shares of controlled stock if distributing’s stock trades at a discount to the value of its interest in controlled if days before the distribution described below distributing’s stock trades at a discount to the value of its interest in controlled distributing will delay the distribution until such time as no retention of controlled stock is necessary distributing has submitted financial information indicating that activity x1 as conducted by distributing and activity x2 as conducted by controlled each has had gross_receipts and operating_expenses representing the active_conduct_of_a_trade_or_business for each of the past five years the operation of activity x1 and activity x2 within the same affiliated_group creates management systemic and other problems that prevent these corporations from realizing their full potential detailed and reasoned affidavits have been submitted by executives of distributing and controlled together with a letter and other information from consultant that describe the situation in specific terms consultant has advised distributing that separating these activities by distributing the stock of controlled to the distributing shareholders the separation would resolve these problems further controlled needs additional capital to pursue certain growth opportunities available to its activity x2 the opportunities that distributing is unwilling to authorize or provide while controlled remains an affiliate consultant has advised distributing in a detailed and reasoned letter that the separation would allow controlled to raise significantly more capital in a public offering of the controlled stock the transaction to accomplish the separation distributing has proposed and partially under- taken the following series of steps collectively the transaction i on date distributing transferred to controlled sub an option to acquire all the stock of unrelated fsub country the option transfer shortly thereafter controlled sub exercised the option and issued notes to the fsub shareholders in exchange for their fsub stock the exchange one of the notes was later converted into a percent of controlled’s stock the conversion ii on date a to obtain the capital needed to fund the opportunities controlled sold b percent of its stock less than percent to the general_public the offering b distributing granted controlled licenses to use certain of its technology in activity x2 the licenses c distributing transferred its controlled sub stock to controlled in constructive exchange for additional controlled stock the contribution iii on date controlled transferred c dollars to distributing in satisfaction of a pre-existing debt owed to distributing iv on date distributing will distribute its controlled stock pro_rata to the distributing shareholders the distribution but will not issue fractional shares instead the distribution agent will aggregate and sell on the open market all fractional shares and distribute the proceeds to those shareholders otherwise entitled to fractional shares in connection with the transaction distributing and controlled have entered into a shared services agreement a tax_sharing_agreement and a separation agreement in addition controlled has adopted various employee benefit plans similar to the existing employee benefit plans of distributing representations distributing has made the following representations regarding the transaction a no part of the consideration distributed by distributing will be received by a shareholder as a creditor employee or in any capacity other than that of a shareholder of distributing b the five years of financial information submitted on behalf of distributing for activity x1 and controlled for activity x2 represents each corporation’s present operations and there have been no substantial operational changes to these corporations since the date of the last submitted financial statements c immediately after the distribution the gross assets of the trade_or_business relied on by distributing to satisfy the active_trade_or_business_requirement of sec_355 activity x1 will have a fair_market_value equal to at least five percent of the total fair_market_value of distributing’s gross assets d immediately after the distribution the gross assets of the trade_or_business relied on by controlled to satisfy the active_trade_or_business_requirement of sec_355 activity x2 will have a fair_market_value equal to at least five percent of the total fair_market_value of controlled’s gross assets e following the distribution distributing and controlled each will continue the active_conduct of its business independently and with its own employees except for the sharing of certain administrative services for a limited period f the distribution will i enhance the success of activity x1 and activity x2 by resolving certain problems associated with operating the two activities within the same corporate group and ii allow controlled to pursue the opportunities with capital generated by the public offering of its stock the distribution is motivated in whole or substantial part by these corporate business purposes and other business reasons g no liabilities will be assumed within the meaning of sec_357 by controlled in the transaction h neither distributing nor controlled is an investment_company as defined in sec_368 and iv i there is no plan or intention by either distributing or controlled directly or through any subsidiary_corporation to purchase any of its outstanding_stock after the transaction other than through stock purchases meeting the requirements of sec_4 b of revproc_96_30 1996_1_cb_696 j there is no plan or intention to liquidate either distributing or controlled to merge either corporation with any other corporation or to sell or otherwise dispose_of the assets of either corporation after the transaction except in the ordinary course of business and except for distributing’s transfer of d percent of its activity x1 assets to wholly owned sub k there is no plan or intention by either distributing or controlled directly or through any subsidiary_corporation to dispose_of any of its stock after the distribution except that distributing may use e percent of its stock and controlled may use f percent of its stock to acquire unrelated corporations in the two-year period following the distribution l there is no plan or intention by a or b and the management of distributing to its best knowledge is not aware of any plan or intention on the part of any other shareholder or security holder of distributing to sell exchange transfer by gift or otherwise dispose_of any stock in or securities of either distributing or controlled after the transaction m immediately before the distribution items of income gain loss deduction and credit will be taken into account as required by the applicable intercompany_transaction regulations see sec_1_1502-13 and sec_1 of the income_tax regulations as in effect before the publication of t d 1995_2_cb_147 and as currently in effect sec_1_1502-13 as published by t d further any excess_loss_account distributing may have in controlled stock will be included in income immediately before the distribution to the extent required by applicable regulations see sec_1_1502-19 n for purposes of sec_355 immediately after the distribution no person determined after applying sec_355 will hold stock possessing percent or more of the total combined voting power of all classes of distributing stock entitled to vote or percent or more of the total value of shares of all classes of distributing stock that was acquired by purchase as defined in sec_355 and during the five-year period determined after applying sec_355 ending on the date of the distribution o for purposes of sec_355 immediately after the distribution no person determined after applying sec_355 will hold stock possessing percent or more of the total combined voting power of all classes of controlled stock entitled to vote or percent or more of the total value of shares of all classes of controlled stock that was either i acquired by purchase as defined in sec_355 and during the five- year period determined after applying sec_355 ending on the date of the distribution or ii attributable to distributions on distributing stock that was acquired by purchase as defined in sec_355 and during the five-year period determined after applying sec_355 ending on the date of the distribution p the distribution is not part of a plan or series of related transactions within the meaning of sec_355 pursuant to which one or more persons will acquire directly or indirectly stock possessing percent or more of the combined voting power of all classes of stock of either distributing or controlled entitled to vote or stock possessing percent or more of the total value of all classes of stock of either distributing or controlled q no debt will exist between distributing and controlled at the time of or after the distribution other than debt that may arise after the distribution as trade accounts_payable created in the ordinary course of business debt created by the sharing of certain technology and debt on potential claims under the separation agreement and the tax_sharing_agreement none of this debt will constitute stock_or_securities for sec_355 purposes r payments made in connection with any continuing transactions between distributing and controlled will be for fair_market_value based on terms and conditions arrived at by the parties bargaining at arm’s length s the payment of cash in lieu of fractional shares of controlled stock is solely for the purpose of avoiding the expense and inconvenience to controlled of issuing fractional shares and does not represent separately bargained for consideration the total cash consideration to be paid to the distributing shareholders in lieu of fractional shares will not exceed one percent of the total consideration issued in the transaction the fractional share interests will be aggregated and no distributing shareholder will receive cash in an amount equal to or greater than the value of one full share of controlled stock t the compensatory options issued or to be issued by distributing or controlled i contain or will contain customary terms and conditions ii were or will be granted in_connection_with_the_performance_of_services for distributing or controlled or a person related to the grantor under sec_355 iii were not and will not be excessive by reference to the services performed iv will not be transferable within the meaning of sec_1_83-3 immediately after the distribution or within six months thereafter and v will not have a readily_ascertainable_fair_market_value as defined in sec_1_83-7 immediately after the distribution and within six months thereafter u neither a nor b is or will become a director of either distributing or controlled and neither is or will be involved in the day-to-day management of either distributing or controlled v no gain_or_loss was recognized on any aspect of acquisition that caused a shift of controlled stock ownership from a shareholder of controlled to distributing or any member of the distributing affiliated_group w the distribution will occur no later than the later of six months after the offering or three months after receipt of this private_letter_ruling x neither distributing nor controlled has been or will be a united_states_real_property_holding_corporation usrphc as defined in sec_897 at any time during the five-year period ending on the date of the distribution and neither distributing nor controlled will be a usrphc immediately after the distribution y fsub fsub fsub fsub fsub and fsub are corporations within the meaning of sec_7701 z fsub fsub fsub fsub fsub and fsub are controlled_foreign_corporations cfc’s as defined in sec_957 and they will continue to be cfc’s after the distribution aa fsub fsub fsub fsub fsub and fsub are not passive foreign investment companies as defined in sec_1297 bb no united_states_person who is currently a member of the distributing group will transfer property directly or indirectly to a foreign_corporation in connection with the transaction cc no united_states_person who is currently a member of the distributing group will transfer intangible_property within the meaning of sec_367 to a foreign_corporation in connection with the transaction dd the distributing group has no members that are subject_to tax under sec_882 and sec_884 rulings based solely on the facts submitted and representations made we rule as follows on the transaction the contribution followed by the distribution will be a reorganization under sec_368 distributing and controlled each will be a_party_to_a_reorganization under sec_368 no gain_or_loss will be recognized by distributing on the contribution sec_361 and sec_357 no gain_or_loss will be recognized by controlled on the contribution sec_1032 the basis of each asset received by controlled in the contribution will equal the basis of that asset in the hands of distributing immediately before the contribution sec_362 the holding_period of each asset received by controlled in the contribution will include the period during which distributing held that asset sec_1223 no gain_or_loss will be recognized by and no amount will otherwise be included in the income of the distributing shareholders upon their receipt of controlled stock in the distribution sec_355 sec_355 will not treat as other_property any part of the controlled stock considered constructively issued by controlled to distributing in exchange for the licenses the aggregate basis of the distributing stock and the controlled stock in the hands of each distributing shareholder including any fractional share interest to which the shareholder may be entitled will equal the aggregate basis of the distributing stock held by that shareholder immediately before the distribution allocated between the distributing stock and the controlled stock in proportion to the fair_market_value of each in accordance with sec_1_358-2 sec_358 b and c the holding_period of the controlled stock received by each distributing shareholder in the distribution will include the holding_period of the distributing stock on which the distribution is made provided the distributing stock is held as a capital_asset on the date of the distribution sec_1223 and b no gain_or_loss will be recognized by distributing on the distribution sec_361 and sec_355 earnings_and_profits will be allocated between distributing and controlled in accordance with sec_312 sec_1_312-10 and sec_1_1502-33 the payment of cash if any in lieu of fractional shares of controlled stock will be treated for federal_income_tax purposes as if the fractional shares had been distributed as part of the distribution and then had been sold by the holders accordingly a shareholder will recognize gain_or_loss equal to the difference between the cash received and the basis of the fractional share as determined in ruling above sec_1001 if the controlled stock is held by the shareholder as a capital_asset the gain_or_loss will be subject_to the provisions and limitations of subchapter_p of chapter of the code sec_1221 and sec_1222 payments made by distributing to controlled or by controlled to distributing under the tax_sharing_agreement regarding tax_liabilities that i have arisen or will arise for a taxable_period ending on or before the distribution or for a taxable_period beginning before and ending after the distribution and ii do not become fixed or ascertainable until after the distribution will be treated as occurring immediately before the distribution cf 344_us_6 tax character of later transaction will derive from earlier related transaction revrul_83_73 c b following the distribution controlled and its direct and indirect subsidiaries that are includible corporations under sec_1504 and satisfy the ownership requirements of sec_1504 will be an affiliated_group_of_corporations entitled to file consolidated federal_income_tax returns with controlled as the common parent caveats no opinion is expressed about the tax treatment of the transaction under other provisions of the code or regulations or the tax treatment of any conditions existing at the time of or effects resulting from the transaction that are not specifically covered by the above rulings specifically no opinion is expressed concerning the federal_income_tax effects of i acquisition acquisition merger merger the retransfer the option transfer the exchange or the conversion and ii distributing’s grant of the licenses to controlled including whether the licenses are assets see revrul_69_156 c b further no opinion is expressed regarding whether any or all of the above- referenced foreign_corporations are passive foreign investment companies within the meaning of sec_1297 and the regulations to be promulgated thereunder if it is determined that any or all of the above-referenced foreign_corporations are passive foreign_corporations no opinion is expressed with respect to the application of sec_1291 through to the transaction in particular in a transaction in which gain is not otherwise recognized regulations under sec_1291 may require gain recognition notwithstanding any other provision of the code temporary or final regulations pertaining to one or more issues addressed in this ruling letter have yet to be adopted therefore this letter may be revoked or modified by the issuance of such temporary or final regulations or a notice with respect to their future issuance see section dollar_figure of revproc_2000_1 2001_1_irb_4 which discusses the revocation and modification of ruling letters however when the criteria in section dollar_figure of revproc_2000_1 are satisfied a ruling will not be revoked or modified retroactively except in rare or unusual circumstances procedural statements this ruling letter is directed only to the taxpayer who requested it sec_6110 provides that it may not be used or cited as precedent each taxpayer affected by the transaction should attach a copy of this ruling letter to its his or her federal_income_tax return for the taxable_year in which the transaction is completed pursuant to a power_of_attorney on file in this office a copy of this letter is being sent to your authorized representative sincerely associate chief_counsel corporate by wayne t murray senior technician reviewer branch


internal_revenue_service number release date index number --------------------------------------- -------------------------------------------- ------------------------------------ ---------------------------------------- --------------------------------- legend department of the treasury washington dc third party communication none date of communication not applicable_person to contact -------------- id no ---------------- telephone number -------------------- refer reply to cc psi b01 plr-111081-14 date date x ----------------------------------------- ------------------------------------------------------------------------------ d --------------------- state -------- dear ------------- this responds to a letter signed date submitted on behalf of x requesting relief under sec_1362 of the internal_revenue_code facts according to the information submitted x was incorporated on d under the laws of state x intended to be treated as an s_corporation for federal tax purposes effective d but the proper 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 sec_1362 provides that 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 plr-111081-14 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 election as timely made for such taxable_year and effective as of the first day of that year x did not file a timely election to be treated as an s_corporation under sec_1362 effective d 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 d if within days from the date of this letter x submits a properly completed form_2553 election by a small_business_corporation with a copy of this letter attached to the appropriate service_center except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter specifically no opinion is expressed or implied concerning whether x otherwise qualifies as an s_corporation for federal tax purposes 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 the taxpayer’s authorized representative sincerely laura c fields laura c fields senior technician reviewer branch office of the associate chief_counsel passthroughs special industries enclosures copy of this letter copy of this letter for sec_6110 purposes cc


t c memo united_states tax_court samuel s lee petitioner v commissioner of internal revenue respondent docket no 2635-o1l filed date samuel s lee pro_se thomas r mackinson for respondent memorandum findings_of_fact and opinion laro judge petitioner petitioned the court under sec_6330 to review respondent’s determination as to a proposed levy to collect federal income taxes for and we ' section references are to applicable versions of the internal_revenue_code - decide herein whether respondent may proceed with the proposed levy we hold he may findings_of_fact most facts were stipulated we incorporate by this reference the parties’ stipulation of facts and the accompanying exhibits we find those facts accordingly petitioner resided in california when the petition commencing this proceeding was filed petitioner failed to file timely and federal_income_tax returns respondent prepared substitute returns for those years and on date assessed tax additions to tax and interest on date petitioner and his wife filed joint and federal_income_tax returns contemporaneously therewith they also filed a joint federal_income_tax return claiming a refund of dollar_figure for federal_income_tax withheld by one or more employers respondent accepted all three returns and abated the prior assessments for and on date the commissioner mailed a letter to petitioner and his wife requesting documentation such as a form_w-2 wage and tax statement or a copy of an earnings statement with year-to-date totals that would support their claim that they had federal income taxes withheld for on date the commissioner delivered to petitioner and his wife a similar request for that documentation the commissioner never received that documentation from either petitioner or his wife on date the commissioner acknowledged that petitioner and his wife had overpaid their tax by dollar_figure and credited that amount to their tax the record does not indicate the source of the dollar_figure petitioner continues to claim in this proceeding that his overpayment was dollar_figure - - on date respondent mailed to petitioner notices of deficiency for and the deficiencies were attributable to respondent’s determination that petitioner owed self-employment_tax on the income reported on his returns as to the notice determined that petitioner was liable for a dollar_figure deficiency in income_tax and a dollar_figure addition_to_tax under sec_665l1l a as to the notice determined that petitioner was liable for a dollar_figure deficiency in income_tax and a dollar_figure addition_to_tax under sec_6651l a petitioner received both notices of deficiency but he did not petition the court in response to either notice on date respondent issued to petitioner a notice_of_intent_to_levy and notice of your right to a hearing for taxable years and on or about date petitioner reguested such a hearing and the hearing was held on date during the hearing the appeals officer concluded that petitioner had reasonable_cause for failing to file timely his and returns and agreed to abate the related additions to tax under sec_6651 petitioner also argued during the hearing that his liability for and should be offset by the refund claimed on his return the appeals officer refused to consider this argument on date respondent issued a notice_of_determination to petitioner for and which abated the - additions to tax and sustained the proposed levy to collect the remainder of liability opinion in a proceeding commenced under sec_6330 the court applies a de novo standard to redetermine a taxpayer’s underlying tax_liability when and if at issue and an abuse_of_discretion standard to review certain other administrative determinations of the commissioner 114_tc_604 sec_6330 b provides that a taxpayer’s underlying tax_liability may only be at issue if he or she did not receive any statutory_notice_of_deficiency for such tax_liability or did not otherwise have an opportunity to dispute such tax_liability here petitioner received notices of deficiency for and and had opportunity to dispute his liability for those years his underlying tax_liability is therefore not in issue petitioner’s sole argument in this proceeding concerns his right to offset his tax and interest liability for those years with his claimed refund for by way of an order dated date we dismissed petitioner’s allegations with respect to as the credit or refund of any federal_income_tax withheld by his or his wife’s employer for would be time barred under sec_6511 b a as applicable herein petitioner’s credit or refund of tax paid for is limited to the portion of that tax - - paid within the 3-year period immediately preceding the filing of his federal_income_tax return under sec_6513 any federal income taxes withheld by petitioner or his wife’s employer for are considered paid to the commissioner by petitioner or his wife on date see also 116_tc_60 given that petitioner advances no other allegation of error as to respondent’s determination and that the record does not otherwise disprove the determination we sustain respondent’s determination that he may proceed with the proposed levy decision will be entered for respondent


depordment of the trease titternal revenue seauice washi neston d c lay ea a 2vu0ngz5 u8 mar uniform issue list t ep ra t3 legend taxpayer a plan x amount a amount b amount c bank p dear this is in response to letters dated date date date and date submitted on your behalf by your authorized representative in which you request a waiver of the 60-day rollover requirement contained in sec_402 of the internal_revenue_code the code the following facts and representations have been submitted under penaity of perjury in support of the ruling requested taxpayer a age represents that plan x issued her a total_distribution of her account balance in plan x totaling amount c taxpayer a asserts that her failure to accomplish a rollover within the 60-day period prescribed by sec_408 was due to a medical_condition which left her confused and impaired her ability to handle her financial affairs taxpayer a further represents that the funds in question have not been used for any other purpose in early date taxpayer a received a check for amount b amount c less federal withholding of amount a representing the entire proceeds of her account in pian x on date shortly after the expiration of the 60-day deadline taxpayer a deposited amount b into a rollover ira at bank p based on the facts and representations you request that the service waive the 60-day rollover requirement with respect to the distribution of amount d because the failure to waive such requirement would be a hardship and against equity or good conscience with respect to your request to waive to day rollover requirement sec_402 of the code provides that except as otherwise provided in sec_402 any amount distributed out of an employees’ trust described in sec_401 a that is exempt from tax under sec_501 shall be taxable to the distributee in the taxable_year of the distributee in which distributed in the manner provided under sec_72 of the code relating to annuities sec_402 of the code provides rules governing rollovers of amounts from exempt trusts to eligible retirement plans including iras code sec_402 provides that except as provided in subparagraph b paragraph which excludes rolled over amounts from gross_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 sec_402 of the code provides that the secretary may waive the 60-day requirement under sec_402 of the code where the failure to waive such requirement would be against equity or good conscience including casualty disaster or other events beyond the reasonable control of the individual subject_to such requirement only distributions that occurred after date are eligible for the waiver under sec_402 of the code sec_401 a a of the code provides that a_trust shall not constitute a qualified_trust under this section unless the plan of which such trust is a part provides that if the distributee of any eligible rollover distribution- i elects to have such distribution paid directly to an eligible_retirement_plan and ii specifies the eligible_retirement_plan to which such distribution is to be paid in such form and at such time as the plan_administrator may prescribe such distribution shall be made in the form of a direct trustee-to-trustee transfer to the eligible_retirement_plan so specified sec_401 a e of the code provides that for purposes of code sec_401 a the term eligible_retirement_plan has the meaning given such term by sec_402 with an exception not pertinent to this ruling_request thus a direct transfer defined in code sec_401 may be made into an ira sec_1 a -1 of the income_tax regulations question and answer-5 provides in relevant part that a direct_rollover described in code sec_401 a is a distribution and rollover of the eligible_rollover_distribution and not a transfer of assets and liabilities thus for example the consent and requirements of code sec_90 a a and apply to transactions described in code sec_401 revproc_2003_16 r b date provides that in determining whether to grant a waiver of the 60-day rollover requirement pursuant to sec_402 the service will consider all relevant facts and circumstances including errors committed by a financial_institution inability to complete a rollover due to death disability hospitalization incarceration restrictions imposed by a foreign_country or postal error the use of the amount distributed for example in the case of payment by check whether the check was cashed and the time elapsed since the distribution occurred the information presented and documentation submitted by taxpayer a is consistent with her assertion that her failure to timely accomplish a rollover of amount b was due to medical conditions beyond her control which resulted in mental impairment when taxpayer a was able to realize the 60-day rollover time period had passed she immediately took steps to complete the rollover which she had originally intended to complete thus based on the above pursuant to code sec_402 the service hereby waives the 60-day rollover period found in code sec_402 as a result the service will treat taxpayer a's date rollover_contribution of amount b into -her ira as a valid rollover within the meaning of code sec_402 in addition pursuant to code sec_402 the service hereby waives the day rollover period found in code sec_402 with respect to amount a therefore pursuant to this ruling letter taxpayer a is granted a period of days measured from the date of the issuance of this letter_ruling to make a rollover_contribution of an amount equal to amount a to another ira or iras described in code sec_408 provided all other requirements of code sec_408 except the 60-day requirement are met with respect to such ira contribution the contribution will be considered a rollover_contribution within the meaning of code sec_408 this ruling does not authorize the rollover of amounts that are required to be distributed by sec_401 of the code no opinion is expressed as to the tax treatment of the transaction described herein under the provisions of any other section of either the code or regulations which may be applicable thereto this letter is directed only to the taxpayer who requested it sec_6110 of the code provides that it may not be used or cited as precedent - a copy of this letter has been sent to your authorized representative in accordance with a power_of_attorney on file in this office if you wish to inquire about this ruling please contact - i please address all correspondence to se t ep ra t3 d at sincerely yours anon employee_plans technical group stan manager enclosures deleted copy of letter_ruling notice of intention to disclose