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 tege eoeg eo3 plr-124355-16 date date ty -------------------------------------------------------------------- legend founder intermediary llc state x waste dear ---------------- ------------------------------- --------------------------------------------------------------------------- ---------------------------------------------------------------- ------------ ----- -------- this letter responds to the letter dated date in which foundation requested rulings under sec_4941 and sec_4942 of the internal_revenue_code facts foundation is a nonprofit corporation recognized as an organization described in sec_501 that is a private_foundation under sec_509 foundation’s directors are founder his wife and their attorney the granddaughter disqualified_person of founder and his wife formed intermediary which has been recognized as an organization described in sec_501 that is not a private_foundation under sec_509 disqualified_person is represented to have the vested power to cause intermediary to make expenditures and prevent intermediary from making expenditures disqualified_person owns substantially_all of the interests in llc a limited_liability_company taxed as a partnership disqualified_person and llc are disqualified persons with respect to foundation within the meaning of sec_4946 plr-124355-16 foundation proposes to make a grant to intermediary foundation states that intermediary will use the proposed grant funds to purchase x waste recycling collection containers that intermediary will place in various locations across state foundation also states that intermediary periodically will collect waste from the recycling collection containers and transfer it to llc after which llc will recycle the waste and seek to profit from its sales of the recycled waste in the ordinary course of llc’s business the proposed grant is unrestricted however and does not require intermediary to transfer any waste to llc and another unrelated entity could purchase the waste and process it rather than llc during the teleconference conducted on date we asked whether llc will pay anything for any waste that it receives from intermediary counsel for foundation said that he did not know the answer and would have to inquire counsel never supplied an answer accordingly for purposes of the request for rulings we assume that llc will pay nothing for any waste that intermediary transfers to llc in addition foundation represented that disqualified_person will cause intermediary to use the full amount of foundation’s proposed grant no later than the end of intermediary’s taxable_year after the taxable_year of receipt to purchase containers to collect waste for recycling and provide to foundation adequate_records or other_sufficient_evidence showing that such purchases were made and that they would be treated under sec_53_4942_a_-3 as a distribution out of corpus if intermediary were a private_foundation that is not an operating_foundation in a manner that is compliant with the reporting requirements of sec_4942 rulings requested law and analysis sec_4942 ruling requested foundation’s proposed grant to intermediary will constitute a qualifying_distribution under sec_4942 and sec_4942 and sec_53_4942_a_-3 provide in part that the term qualifying_distribution means any amount_paid to accomplish one or more purposes described in sec_170 or b other than any contribution to an organization controlled directly or indirectly by the foundation or disqualified persons with respect to the foundation except as provided in sec_4942 sec_170 lists the following purposes religious charitable scientific literary or educational_purposes or to foster national or international amateur sports competition but only if no part of its activities involve the provision of athletic_facilities or equipment or for the prevention of cruelty to children or animals these purposes are the same as the purposes listed in sec_501 thus a grant by a private_foundation to another organization described in sec_501 ordinarily is an amount_paid to accomplish a purpose described in sec_170 and may be considered to be a qualifying_distribution sec_4942 provides in part that the term qualifying_distribution includes a contribution to another charitable_organization controlled directly or indirectly by the transferor foundation or one or more disqualified persons with respect to the transferor if plr-124355-16 two requirements are satisfied the first such requirement is that the transferee organization must satisfy certain pass-through requirements see sec_4942 the second requirement is that the transferor must obtain adequate_records or other_sufficient_evidence from the transferee organization showing that the required pass-through requirements were satisfied see sec_4942 generally preserving the environment can further a charitable purpose see revrul_76_204 1976_1_cb_152 preserving the natural environment furthers an exempt_purpose revrul_80_278 1980_2_cb_175 litigation to preserve the environment furthers an exempt_purpose revrul_80_279 1980_2_cb_176 legal research concerning resolving international environmental disputes and participating in environmental dispute resolution furthers an exempt_purpose but see revrul_78_384 1978_2_cb_174 preservation of land without any distinctive ecological significance does not further exempt purposes recycling waste materials to prevent pollution also can further a sec_170 exempt_purpose in revrul_72_560 1972_2_cb_248 the irs held that recycling waste materials was an essential element in the organization's efforts to combat environmental deterioration because it prevents the pollution of the environment caused by the usual disposition of these materials likewise purchasing and using containers to collect waste for recycling can help prevent pollution by diverting the waste from disposal in landfills and thereby further an exempt_purpose see also sec_53_4944-3 example collecting recyclable solid_waste materials and delivering those materials to recycling centers that are inaccessible to a majority of the population significantly furthers the accomplishment of the private_foundation investor’s exempt_activities as stated above intermediary will use the proposed grant to purchase waste collection containers place them around state in various locations and periodically collect for recycling the waste that would otherwise be discarded in landfills accordingly foundation’s grant will be used to further a sec_170 exempt_purpose under sec_4942 however also as stated above sec_4942 and sec_53_4942_a_-3 provide that any contribution to an organization controlled directly or indirectly by disqualified persons with respect to the transferor foundation will not be considered to be a qualifying_distribution unless the requirements of sec_4942 are satisfied as explained in more detail above sec_4942 provides in part that the term qualifying_distribution includes a contribution to another charitable_organization controlled directly or indirectly by one or more disqualified persons with respect to the transferor only if the transferee organization satisfies certain pass-through requirements and the transferor obtains in a timely manner adequate_records or other_sufficient_evidence from the transferee organization showing that the required pass- through distributions were made plr-124355-16 sec_53_4942_a_-3 provides that an organization is a controlled organization if one or more disqualified persons with respect to a granting private_foundation can require the grantee to make an expenditure or prevent it from making an expenditure regardless of the method by which the control is exercised or exercisable intermediary is a controlled organization because disqualified_person can cause or prevent its making expenditures foundation represented that disqualified_person will cause intermediary to use the full amount of foundation’s proposed grant no later than the end of the taxable_year after the taxable_year of receipt to purchase containers to collect waste for recycling foundation also represented that foundation will obtain adequate_records or other_sufficient_evidence from intermediary showing that such purchases were made and that they would be treated under sec_53_4942_a_-3 as a distribution out of corpus if intermediary were a private_foundation that is not an operating_foundation thereby satisfying the sec_4942 pass- through distribution and reporting requirements for a qualifying_distribution to a controlled organization accordingly foundation may count the proposed grant to intermediary as a qualifying_distribution sec_4941 ruling requested intermediary’s use of the proposed grant proceeds will not result in any act of self-dealing under sec_4941 particularly that the proposed grant will not constitute an act of self-dealing because disqualified_person and or llc disqualified persons with respect to foundation may benefit from the availability of increased revenue opportunities arising out of the intermediary recycling program sec_4941 imposes a tax on each act of self-dealing between a disqualified_person and a private_foundation whether direct or indirect sec_4941 defines self- dealing to include the direct or indirect transfer to or use by or for the benefit of a disqualified_person of the income or assets of a private_foundation neither the internal_revenue_code nor the regulations contain a definition of indirect self-dealing rather the regulations define indirect self-dealing by means of express exceptions or exclusions for example sec_53_4941_d_-1 excludes from indirect self-dealing certain transactions between one or more disqualified persons to which a private_foundation is not a party where the private_foundation could itself directly engage in the transaction without committing an act of self-dealing conversely if a private_foundation cannot directly engage in a transaction without committing an act of self-dealing then it cannot indirectly engage in the transaction without committing an act of self-dealing if foundation were to purchase the waste collection containers and collect and transfer the waste to llc which is a disqualified_person with respect to foundation then the transfer of waste by foundation to llc would be a direct act of self-dealing under sec_4941 therefore interposing a public charity intermediary between foundation and llc will not prevent the proposed transfer of waste to llc from constituting an indirect act of self-dealing plr-124355-16 foundation’s representative has argued that the exception from direct or indirect self- dealing under sec_53_4941_d_-2 for benefits that are incidental or tenuous should apply to the proposed transfer of waste to llc examples of incidental or tenuous benefits include the public recognition a person may receive arising from the charitable activities of a private_foundation to which such person is a substantial_contributor the benefit to a substantial_contributor from a public charity’s performing slum revitalization in the same area as the substantial_contributor or naming a public recreation center or public charity after a substantial_contributor see sec_53_4941_d_-2 example and revrul_73_407 1973_2_cb_383 naming a public charity after a substantial_contributor as a condition of a grant is incidental or tenuous non-economic benefits such as public recognition are distinguishable from the economic benefits conferred upon llc when intermediary uses foundation’s grant to collect and transfer waste to llc the authorities holding that specified indirect economic benefits are incidental or tenuous also are distinguishable from foundation’s facts and circumstances in revrul_80_310 1980_2_cb_319 a private_foundation made a grant to a sec_501 public university to establish an engineering program a substantial_contributor encouraged its employees to apply for the program and it recruited graduates of the program the substantial contributor’s employees did not receive any preferential treatment in admissions nor did the substantial_contributor receive any preferential treatment in recruiting competitors likewise benefitted from the program the irs found that the substantial_contributor would receive only an incidental or tenuous benefit from the grant in revrul_85_162 1985_2_cb_275 the irs held that an indirect economic benefit to a disqualified_person was incidental and tenuous where the private_foundation made loans to various independent public_charities for their construction projects in disadvantaged areas the disqualified_person was a bank the public_charities used the loans to purchase certificates of deposit to secure construction financing they were prohibited from purchasing the cds from the disqualified_person bank and were prohibited from obtaining the construction or permanent financing from the disqualified_person bank the terms of the private foundation’s loans barred it or any disqualified_person from participating in the selection of vendors and suppliers however some of the selected vendors had ordinary banking or business relationships with the disqualified_person bank or its affiliates but did not receive any preferential treatment the irs concluded that if any benefit to the disqualified_person bank or some other disqualified_person would result from an ordinary banking and business relation with a contractor subcontractor supplier or an employee of those parties in the described construction projects such benefit would be incidental or tenuous within the contemplation of sec_53_4941_d_-2 plr-124355-16 these authorities do not imply that interposing a public charity controlled by a disqualified_person between a private_foundation and the disqualified_person beneficiary will cause an indirect act of self-dealing to be incidental or tenuous in every case in which a possible indirect act of self-dealing has been found not to constitute self-dealing because the benefit to the disqualified_person was incidental and tenuous the interposed public charity was fully independent of the foundation and its disqualified persons while sec_53_4941_d_-2 does state that a proposed grant to a public charity will not be an act of self-dealing ‘merely’ because one director of the public charity also is a disqualified_person with respect to the grantor private_foundation here disqualified_person is more than merely a director of intermediary in this case disqualified_person has the power to cause intermediary to make expenditures and prevent intermediary from making expenditures accordingly this regulation does not require intermediary’s proposed transfer of waste to llc to be considered incidental or tenuous in both of the revenue rulings discussed above the independent intermediary selected the students vendors and suppliers free of influence by the private_foundation or disqualified persons and the students vendors and suppliers received the primary benefits of the grants in this case a disqualified_person with respect to foundation will cause intermediary to transfer to llc the waste that will be collected by intermediary which will be made possible by the proposed grant from foundation in both of the referenced revenue rulings the primary beneficiaries were independent of the disqualified persons in revrul_80_130 the primary economic beneficiaries were students who learned engineering but were not disqualified persons in revrul_85_162 the primary economic beneficiaries were independent vendors and suppliers that were not disqualified persons in this case llc will be the primary beneficiary and a disqualified_person intermediary’s use of foundation’s proposed grant to acquire the waste recycling collection containers that will be used to collect waste to be transferred to llc would provide benefits described in sec_4941 indirectly to llc that would not be incidental or tenuous rulings sec_4942 foundation’s proposed grant to intermediary will constitute a qualifying_distribution under sec_4942 and sec_4941 intermediary’s proposed transfers of waste to llc to be made possible by intermediary’s use of the proposed grant proceeds will result in indirect acts of self- dealing under sec_4941 plr-124355-16 the rulings contained in this letter are based upon information and representations submitted on behalf of foundation and accompanied by a penalty of perjury statement executed by you as president of foundation while this office has not verified any of the material submitted in support of the request for rulings it is subject_to verification on examination except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter without limiting the generality of the foregoing we express no opinion as to whether intermediary’s proposed transfer of waste to llc constitutes inurement private benefit or an excess_benefit_transaction described in sec_4958 this ruling will be made available for public inspection under sec_6110 after certain deletions of identifying information are made for details see enclosed notice notice of intention to disclose a copy of this ruling showing the deletions that we intend to make on the version that will be made available to the public is attached to notice if you disagree with our proposed deletions you should follow the instructions in notice in accordance with the power_of_attorney on file with this office we are sending a copy of this letter to foundation’s authorized representative this ruling is directed only to the organization that requested it sec_6110 provides that it may not be used or cited by others as precedent if you have any questions about this ruling please contact the person whose name and telephone number are shown in the heading of this letter a copy of this letter must be attached to any information income_tax or other return to which it is relevant alternatively taxpayers filing their returns electronically may satisfy this requirement by attaching a statement to their returns that provides the date and control number of the letter_ruling sincerely david m repass senior technician reviewer branch tax exempt government entities cc


internal_revenue_service significant index no department of the washington dc contact person telephone number in reference to - dai p ra t a1 apr in re this letter constitutes notice that with respect to the above-named defined benefit pension_plan we have granted a conditional waiver of the minimum_funding_standard for the plan_year ending date this conditional waiver for the plan_year ended date has been granted in accordance with sec_412 of the internal_revenue_code and sec_303 of the employee_retirement_income_security_act_of_1974 erisa the waived amount is the contribution which would otherwise be required to reduce the balance in the funding_standard_account to zero as of the end of the plan_year for which this conditional waiver has been granted the company has a calendar_year fiscal_year for the and fiscal years the company had positive working_capital and net_worth for the fiscal_year the company had negative working_capital and net_worth for the and fiscal years the company had negative net_earnings the company is working with an outside consulting service to effect a recovery as a result the company has discontinued collateral lines in order to reduce overhead expense and simplify the management of its operations and focus on its core businesses other measures are being taken as well so that the company anticipates a small profit in and larger profits and positive net_worth and working_capital in subsequent years bho as of date the value of the assets of the plan was equal to of the plan's current_liability because the prospects for recovery are uncertain and because the plan is under-funded we are granting this waiver subject_to the following condition the contributions required to satisfy the minimum_funding_standard for the plan years ending date and are to be timely made as defined in sec_412 of the code without a waiver being granted for such years if this condition is not satisfied the waiver is retroactively null and void you agreed to this condition in a letter dated date your attention is called to sec_412 of the code and sec_304 of erisa which describe the consequences that would result in the event the plan is amended to increase benefits change the rate in the accrual_of_benefits or to change the rate of vesting while any portion of the waived_funding_deficiency remains unamortized please note that any amendment to other retirement plans maintained by the company or to the company’s profit sharing plan to increase the liabilities of those plans would be considered an amendment for purposes of sec_412 of the code and sec_304 of erisa this ruling is directed only to the taxpayer that requested it sec_6110 of the code provides that it may not be used or cited by others as precedent when filing form_5500 for the plan_year ended date the date of this letter should be entered on schedule b actuarial information a copy of this letter is being sent to your authorized representative in accordance with a form_2848 power_of_attorney on file a copy of this letter has also been sent to the manager employee_plans classification in sincerely jor lalor fp james e holland jr manager employee_plans actuarial group tax_exempt_and_government_entities_division 3y


t c memo united_states tax_court william j wells petitioner v commissioner of internal revenue respondent docket no filed date joyce j pearson for petitioner linas n udrys for respondent memorandum opinion nameroff special_trial_judge this case was heard pursuant to the provisions of sec_7443a and rule sec_180 sec_181 and sec_182 respondent determined deficiencies in petitioner’s and federal_income_tax in the amounts of dollar_figure and dollar_figure all section references are to the internal_revenue_code in effect for the years at issue all rule references are to the tax_court rules_of_practice and procedure respectively the sole issue for decision is whether amounts paid as family support pursuant to a state court decree were alimony payments and therefore deductible by petitioner under sec_215 background some of the facts have been stipulated and they are so found the stipulation of facts and the attached exhibits are incorporated herein by this reference at the time he filed his petition petitioner resided in irvine california petitioner and his former wife karen wells ms wells were married on date they have two children from the marriage christopher born date and lindsey born date on date the superior court of california orange county superior court entered a judgment of dissolution of marriage effective date christopher and lindsey resided with ms wells during the years at issue as part of their divorce petitioner and ms wells entered into a marital termination agreement mta on date they retained attorney richard e young mr young to draft and effectuate the mta without contest although ms wells initially approached mr young for assistance with the divorce mr young served as an impartial mediator in negotiating and drafting the mta for both petitioner and ms wells petitioner and ms wells understood that payments to be made under the mta were to provide financial support for ms wells and the children the superior court approved the mta and made it an order of the court the relevant portions of the superior court’s order are recited below child custody and support a spousal support neither party shall pay the other any amount for support however the court will reserve jurisdiction over the right to award spousal support until date at which time the right to grant spousal support for either party shall terminate without further order of the court if you fail to pay any court ordered child_support an assignment of your wages will be obtained without further notice to you c family support order petitioner shall pay to ms wells as and for the family support order sum of dollar_figure per month until the sale of their house one and a half months after the sale of the house the family support order shall increase to the sum of dollar_figure per month payable one-half on the first and one-half of sic the fifteenth day of each month commencing date and continuing thereafter until further order of the court or until the child marries dies is emancipated reaches or reaches and is not a full-time high school student residing with a parent whichever first occurs ms wells shall immediately report to petitioner the name address and phone number of her employer and california recognizes three forms of support child spousal and family see cal fam code sec_150 west we note that the cal fam code enacted in and operative from date was derived from the family law provisions of the cal civ code code of civ proc evid code and prob code the relevant portions of the sections cited herein were adopted as the cal fam code without substantial changes her monthly income any increase in income shall be grounds for a reevaluation of petitioner’s obligation for support further the termination of the mutual obligation of spousal support shall be further grounds for reevaluation of the support orders on date petitioner and ms wells through a memorandum of agreement modified the mta the relevant portions of that agreement modified mta are set out below now therefore ms wells and petitioner do hereby agree to modify the marital termination agreement of date to the extent and only to the extent as herein detailed said order shall be modified with respect to paragraph numbered subsection c thereof as follows a petitioner shall pay to ms wells as and for family support order the sum of dollar_figure per month payable in the sum of dollar_figure on the 15th day of each month and dollar_figure on the 1st day of each month commencing date b that portion of paragraph numbered subsection c of the marital termination agreement above referred to and which reflects that one and a half months after the sale of the house the family support order shall increase to the sum of dollar_figure per month is hereby by agreement of the parties declared of no force and effect e ms wells agrees to notify petitioner at the commencement of full-time employment by ms wells and to notify petitioner of the name and address of her employer and her salary structure all at such time as ms wells commences full-time employment petitioner and respondent have stipulated that petitioner had made the payments at issue pursuant to this modified mta they also have stipulated these additional facts during the taxable_year commencing date through date petitioner paid karen wells dollar_figure per month as family support pursuant to the mta as modified commencing date and continuing through all of the taxable_year petitioner paid karen wells dollar_figure per month as family support pursuant to the mta as modified for the month of october petitioner made one payment in the amount of dollar_figure and one payment in the amount of dollar_figure on date petitioner filed a motion in the superior court seeking to reform the modified mta through this motion petitioner moved for that court to properly interpret the meaning and intent of the family support child_support and spousal support paragraphs in the parties sic judgment of dissolution filed date on date the superior court by way of an order made a factual finding that the payments were intended to be as separate allocated sums of child_support and spousal support the superior court however did not specifically delineate the amounts for alimony and child_support during the calendar years and petitioner paid ms wells family support of dollar_figure and dollar_figure respectively on his and federal_income_tax returns petitioner claimed alimony deductions of dollar_figure and dollar_figure respectively which represented approximately percent of petitioner’s total family support payments during each year petitioner derived the above ratio using figures that were reflected in a dissomaster report the dissomaster report indicated that petitioner was to pay family support of dollar_figure per month of which dollar_figure was to be for spousal support and dollar_figure was to be for child_support mr young allegedly relied upon this report when drafting the mta petitioner also claimed dependency_exemption deductions for christopher and lindsey on his and tax returns in the notice_of_deficiency respondent disallowed petitioner’s alimony deductions discussion sec_215 allows a deduction for the payment of alimony during a taxable_year sec_215 defines alimony as payment that is includable in the gross_income of the recipient under sec_71 sec_71 provides a four-step inquiry for determining whether a cash payment is alimony sec_71 provides in general --the term alimony_or_separate_maintenance_payment means any payment in cash if-- a such payment is received by or on behalf of a spouse under_a_divorce_or_separation_instrument b the divorce_or_separation_instrument does not designate such payment as a payment which is not includable in gross_income under this sec_3 a dissomaster is a commercially available computer_program used by family law practitioners to compute support payment amounts based on income and other factors dollar_figure divided by dollar_figure equals approximately percent and not allowable as a deduction under sec_215 c in the case of an individual legally_separated from his spouse under a decree of divorce or of separate_maintenance the payee spouse and the payor spouse are not members of the same household at the time such payment is made and d there is no liability to make any such payment for any period after the death of the payee spouse and there is no liability to make any payment in cash or property as a substitute for such payments after the death of the payee spouse if any portion of the payments made by petitioner fails to meet any one of the four enumerated criteria that portion is not alimony and thus is not deductible by petitioner moreover payments made for child_support are not deductible under sec_215 sec_71 child_support is that part of the payment which the terms of the divorce instrument fixed as payable for the support of the children of the payor spouse sec_71 an amount is treated as fixed under sec_71 if it will be reduced on the happening of a contingency specified in the divorce instrument relating to a child such as attaining a specified age marrying dying leaving school or a similar contingency or at a time which can clearly be associated with a contingency related to the child sec_71 respondent argues that the family support payments made by petitioner fail to qualify as deductible_alimony in making that determination respondent focuses on when the payments at issue were scheduled to terminate first respondent contends that the payments made by petitioner fail to qualify as alimony because the family support payments were not set to terminate upon the death of ms wells as required by sec_71 in addition respondent relying on sec_71 asserts that the payments were nondeductible child_support payments because the modified mta made the cessation of the payments contingent upon events which are associated with petitioner's children petitioner on the other hand argues that the payments at issue were deductible_alimony petitioner asserts that his payments satisfied sec_71 because under california law the obligation for support terminates automatically upon the death of either party or the remarriage of the recipient moreover petitioner contends that his payments met the definition of alimony because the modified mta failed to fix any amount as child_support as required by sec_71 and 366_us_299 evidentiary matters as a preliminary matter we must make rulings on evidentiary matters respondent moved pursuant to rule for the court to exclude all extrinsic evidence including but not limited to the testimony of petitioner and the testimony of mr young which pertains to the intended character and or amount of support payments made by petitioner from evidence respondent also moved to exclude from evidence the date order of the superior court in which the court attempted to clarify the character of the family support payments and the dissomaster report petitioner introduced the above evidence to establish that percent of the family support payments represented alimony respondent objects to the introduction of the evidence relying upon the parol evidence rule and the supreme court's holding in commissioner v lester supra in essence respondent asserts that since the mta clearly characterizes the full amount of the family support payments as child_support pursuant to sec_71 the introduction of extrinsic evidence is inappropriate we reserved a final ruling as to the admissibility of the evidence and tentatively received the evidence offered respondent renewed the objection at trial and again on brief this court has held relying on the holding in lester that parol and other extrinsic evidence is inadmissible to explain the intent motives and conduct of parties where a clear and respondent also objects to the dissomaster report on the basis of relevance asserting that at no time during the relevant period did petitioner pay ms wells dollar_figure per month the amount indicated in the report while it is true that petitioner paid less than dollar_figure per month the objection is overruled as it goes to the weight of the evidence rather than to its admissibility unambiguous written_separation_agreement specifically and unequivocally fixes periodic_payments as child_support 68_tc_249 affd 608_f2d_240 5th cir 46_tc_674 conversely the introduction of extrinsic evidence is permitted in cases where documents contain inconsistencies and or ambiguities the documents before us are riddled with inconsistency and ambiguity for example paragraph 14c lists several contingencies relating to the child this singular reference is perplexing as petitioner and ms wells have two children from their marriage and the document does not reveal whether these contingencies related to one or both of the children the fact that petitioner and ms wells modified the mta adds complexity to our analysis the modified mta states that the mta is modified to the extent and only to the extent as herein detailed in modifying the first sentence of paragraph 14c the modified mta changes the monthly amount of family support and specifically eliminates the portion of the sentence relating to the sale of the house the modified mta however is silent as to the contingencies relating to the child and there appears to be uncertainty as to whether the contingencies were intended to have survived the modification respondent asserts that grummer v commissioner supra is indistinguishable from this case we disagree in grummer this court in excluding extrinsic evidence found that there was no ambiguity in the language of the agreement and that the parties stated with clarity that the periodic_payments were to be treated solely as support for the children id pincite no such clarity however is present in the documents before us accordingly we deny respondent’s motion in limine and overrule all related subsequent objections petitioner on the other hand raises a relevancy objection to the introduction of a minute order of the superior court filed date the order required petitioner to pay ms wells dollar_figure per month as child_support and dollar_figure per month as alimony commencing forthwith from the date the minute order was filed we sustain petitioner’s objection this order modified petitioner’s payments beginning with date and thereafter and has no bearing on petitioner’s payments made during taxable years and the order in stating the court reserves issue of retroactivity as to commencement of support orders implies that its effectiveness is limited to modifying petitioner’s future support obligations only divorce_or_separation_instrument while respondent does not question whether under sec_71 petitioner had made payments pursuant to a divorce_or_separation_instrument we believe that this issue deserves our consideration sec_71 defines the term divorce_or_separation_instrument as follows a a decree of divorce or separate_maintenance or a written instrument incident to such a decree b a written_separation_agreement or c a decree not described in subparagraph a requiring a spouse to make payments for the support or maintenance of the other spouse the term written_separation_agreement is not comprehensively defined by the code the legislative_history or applicable regulations 59_tc_97 we have held however that the existence of a clear written_statement of the terms of support for separated parties is sufficient to satisfy sec_71 id pincite the parties have stipulated that petitioner had made the payments at issue pursuant to the modified mta ordinarily a stipulation of fact is binding on the parties and we are constrained to enforce it rule we may however modify or set_aside a stipulation that is clearly contrary to the facts revealed on the record 93_tc_181 the record plainly demonstrates that the january through date payments were not made pursuant to the modified mta we therefore shall set_aside the above stipulation pertaining to those payments the stipulation relating to the date through date payments however shall not be disturbed in determining whether petitioner’s payments were made pursuant to a written separation instrument we need only look to when the payments were made we consider those payments made pursuant to the mta whether made before or after the superior court adopted the mta as an order of the court and modified mta as having been made pursuant to written separation instruments because those instruments satisfy the requirements stated in sec_71 on the other hand those payments for the january through date period about dollar_figure were not made pursuant to any instrument and therefore do not satisfy the sec_71 requirement termination upon death keeping in mind that petitioner made payments pursuant to two separate instruments ie those made pursuant to the mta and those made pursuant to the modified mta we now must decide whether under sec_71 petitioner’s payments were set to terminate upon the death of ms wells neither the mta nor the modified mta specifically states whether the above was to occur we therefore must look to california law to determine whether a postdeath legal_obligation existed as state law the following discussion pertains only to those payments made for the period beginning with date determines various rights of the parties 81_tc_614 affd without published opinion 829_f2d_39 6th cir california family code section west provides that except as otherwise agreed by the parties in writing the obligation of a party under an order for the support of the other party terminates upon the death of either party or the remarriage of the other party emphasis added under california law an order for spousal support means an order for the support of the spouse based upon the standard of living established during marriage on the other hand child_support once ordered by a court survives the death of the payee custodial_parent and continues as an obligation of the payor noncustodial_parent in re marriage of mccann cal rptr 2d ct app in re marriage of gregory cal rptr ct app the third category family support is an unallocated combination of child_support and spousal support cal fam code secs west petitioner argues that because family support is an unallocated combination of child_support and spousal support he must prevail since spousal support terminates at the death of the payee we believe the converse argument is equally persuasive ie that the payments are not alimony because child_support survives the death of the custodial_parent and we refuse to accept his conclusion upon reviewing the relevant evidence before us we hold that petitioner’s payments under both instruments do not meet the sec_71 requirement contrary to petitioner’s contention california family code section west does not assist him in satisfying that provision while the mta is not a model of clarity we are convinced that the parties intended the payments to terminate on a pro_rata basis as each child marries dies is emancipated reaches or reaches and is not a full-time high school student residing with a parent the reference to the child was merely a scrivener’s error that was not caught by mr young or his clients thus both petitioner and ms wells had otherwise agreed in writing to terminate the family support payments at some point other than the death of the payee spouse in effect they had agreed that the payments were to continue until one or more of the specified events occurred with respect to the children even if ms wells were to die beforehand thus the payments would not terminate on her death turning now to the modified mta it does not make any difference whether we accept respondent’s interpretation of that document ie that paragraph 14c required_payment of dollar_figure per month terminating pro_rata as each child marries dies etc or petitioner’s ie that paragraph 14c required family support payments that were not subject_to any of the above events if we concur with respondent then both petitioner and ms wells had once again otherwise agreed in writing and the result would mirror the above on the other hand even if we were to concur with petitioner’s interpretation of the modified mta he still would not prevail we are unaware of any california statute that terminates family support obligations upon the death of the payee spouse california family code section pertains only to spousal support orders and in our estimation does not address family support payments assuming a worst case scenario ie custodial_parent dies and custody is awarded to someone other than the surviving_spouse we cannot believe that california law would permit the surviving parent to avoid any further support obligations see murphy v commissioner tcmemo_1996_258 accordingly respondent’s determination shall be sustained to reflect the foregoing respondent’s motion in limine will be denied and decision will be entered for respondent a holding in accordance with respondent’s interpretation however would require us to find that petitioner and ms wells continued to ignore the patent ambiguity of the one-child provision


internal_revenue_service p o box cincinnati oh release number release date date date legend x program y organization dear department of the treasury employer_identification_number contact person - id number contact telephone number uil 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 you are recognized as exempt from federal_income_tax under sec_501 of the code and that you are classified as a private_foundation as defined in sec_509 your letter indicates that you will operate a grant-making program called x which is to foster the development of important century skills in students around the world including critical thinking teamwork cross-cultural understanding self-direction communication and technology skills the program is multi-dimensional and fosters learning and cross-cultural understanding for students and educators around the world it includes an online project environment that supports collaborative learning a technology competition that challenges students to solve real-world problems an award-winning library that is a learning resource visited by millions annually and professional development educators a key component to the program is a multi-day event you organize each year to celebrate student achievement and cross-cultural exchange participation in and travel to and from this event are limited to students you choose in an objective and non-discriminatory selection process selection process is an international team competition the teams are made up of one to six students and one teacher-coach the competition challenges students to solve real- world problems by applying their critical thinking communication and technology skills all students and coaches who participate in the competition gain the benefits of educational team competition on a worldwide scale winning participants receive grants of laptops and expenses paid travel to the main event the eligibility criteria for the competition includes these three events - projects digital media and application development each year you may redesign the program however it will seek to engage participants in developing and demonstrating their critical thinking communication and technology skills the age divisions may be adjusted occasionally but each year the competing participants must be enrolled at an eligible_educational_institution in all of the events each student team identifies and defines a problem it intends to solve and produces an entry that presents the problem the team’s solution and the process the team used to develop its solution in the projects event participants produce learning projects in a hosted web environment the digital media event is where the participants use digital media tools to produce an online journal or blog website animation public service announcement photo essay video or a combination of the foregoing the application development event is where the participants develop a web- based application using their choice of programming language from a select list participation in the competition is open to youth worldwide who are enrolled in eligible educational institutions during the competition you do not discriminate however individuals located in countries designated by the united_states office of foreign assets control as a sanctioned nation may not participate there is no minimum age requirement in any event coaches must be at least years of age on the day of the entry submission deadline coaches of teams participating in the projects event must be employees or volunteers of an eligible_educational_institution and not currently students at any school or university coaches of teams participating in digital media and application development events must be employees volunteers or students at an eligible_educational_institution if an individual student chooses to participate in more than one event he or she must work with an entirely different group of students and coach in each event students may submit a maximum of one entry per event in any given year each team may include only one student who is a former winner of the competition each team coach has certain responsibilities students may not receive assistance from coaches family members friends or professionals in the completion of their work all planning research and implementation must be conducted by the student team members only entries that meet all of the requirements described in the competition rules are eligible for selection except for specified formatting requirements the qualification requirements for all three events are identical the entries must not contain any commercial content or personal identifying information the rules prohibit employees of your organization y and its subsidiaries and their immediate_family members from participating in the competition the selection procedures you use involve two phases of judging prior to the first_phase of judging you narrow down entries to entries per event in the first_phase volunteer judges from around the world access entries online and review and score them by event and age group the judges for this phase are selected from applicants who voluntarily apply online they complete an application which includes their job title and description and their years of education experience you will assess each judge application based upon an applicant’s current employment as a teacher or a minimum of five years experience in the field of education proficiency in english and job experience relevant to the competition events judges for this phase must complete an online orientation seminar regarding judging and scoring guidelines each judge scores and ranks a pool of ten entries assigned to them through an online judging system each judge evaluates each entry on a four-level rubric provided by you once the judge determines the entry’s performance level on each skill criterion the judge assigns a single point value to each criterion after judging all ten entries in his or her assigned pool the judge identifies the first second and third ranked entries in his or her pool based on the point scores attributed to each entry these three finalists move forward into the second_phase judging the second_phase judges with specialized experience in educational technology and project-based learning are invited by you to participate in judging the event they will review discuss and score finalists in order to select the competition winners since there is not personal identifying information judges do not know the identity of the individuals who created the entry entries may include an about page in which students may state their first name home_country or city and post a picture this procedure may be modified from time to time you invite the judges to participate based upon their known expertise in the fields of learning and technology the expertise is evaluated based upon potential invitees’ contributions to the field of educational technology membership in domestic and international educational technology associations and familiarity with prior competitions in some cases individuals who have prior experience as a coach are invited to participate as a judge in this phase employees of y are prohibited from being a judge in either phase the scores and ranks provided by the judges in the first_phase are reviewed the top ten entries in each age division in each event move into this phase of judging the judges for this phase meet in person to review discuss and score finalists and select competition winners three judges from the second_phase are assigned to each age division in each event each judge receives online training in the judging and scoring guidelines prior to assessing any entry each judge reviews a pool of ten entries in a given age division and event the same scoring system used in the first_phase are used for this phase in this phase the judges work collaboratively to discuss and debate the merits of each entry the top three entries in each age division in each event are selected by the judges for the second_phase in the event of a judges to reach consensus on the top three entries in each age division and event tie a discussion is facilitated among the each competition event is judged on similar criteria with distinctions relevant to the unique nature of the event they will usually focus on critical thinking communication and technology skills the evaluation guidelines in any year are not published to the participants until the launch of that year’s competition and remain confidential until that time first and second place team members in each age division in each event receive a laptop computer and an expenses paid trip to the live event at the live event students meet together to participate in educational activities around the area of the live event since many teams are composed of students from different nations and widely different backgrounds which provides many participants with the opportunity to meet face-to-face for the first time with teammates they have worked on their event with online you fund the cost of the round trip economy class airfare from the airport nearest the participant’s home to the live event five nights hotel accommodations participation in the live events activities which includes ground transportation to and from the hotel workshops awards ceremony meals during the event and foregoing travel meals_and_lodging for one chaperone per participant and each team’s coach participants are required to submit a report on what they learned from participation in the competition and the live event third place team members each receive a laptop computer but are not eligible to attend the live event in past events there were approximately big_number students on teams who submitted entries for the first and second place teams there were approximately students for all age divisions and the events there were coaches you expect the amounts for the upcoming events to be comparable to the past you also expect to have one first place one second place and one third place team per age group per event the amount of the grant will vary by individual since it is based on the cost of the airfare from the participant’s home to the live event transportation meals food beverages taxes gratuities and insurance the grants may only be used to participate in the live event a participant who is not able to travel during the required dates to attend the live event forfeits the travel portion of the grant the grant does not include additional ground all winning participants who attend the live event are you ensure all grants given are used for the travel and lodging benefits you provide exclusively for participation in the educational conference by imposing certain requirements on the participant winners and coaches by operating the live event as a series of educational activities required to complete affidavits in which they agree to attend all activities on the official agenda for the live event and to check in with the staff at the beginning and end of each day’s activities your staff will check in with each participant at the beginning and end of each day as well as chaperone the conference and related activities in each affidavit each participant agrees to return the case value of the grants received from you in the event any statement or agreement made by the participant is false or misleading all participants must adhere to the rules of the competition which specify that winners and chaperones must travel on dates that permit attendance at the live event this ensures you that winning students and coaches are committed to appropriate participation prior and during the live event at the end of the live educational conference each grantee must provide you with a report describing the grantee’s accomplishments with respect to the grant and accounting for the funds received under the grant these reports are collected at the end of the live educational conference they attended the report will require the grantees to identify themselves and express what they have learned during the conference and to describe at least three things they learned you agree to maintain records that include the following i information used to evaluate the qualification of potential grantees identification of the grantees including any relationship of any grantee to the private_foundation iii the amount and purpose of each grant and iv all grantee reports and other follow-up data obtained in administering the private foundation’s grant program 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 i1 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 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 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 we have not considered whether grants made under your procedures are excludable from the gross_income of recipients under sec_117 of the code 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 we have sent a copy of this letter to your representative as indicated in your power_of_attorney if you have any questions please contact the person whose name and telephone number are shown above sincerely yours lois lerner director exempt_organizations


department of the treasury internal_revenue_service te_ge eo examinations uil tax_exempt_and_government_entities_division release number release date date person to contact identification_number contact telephone number in reply refer to ein last date for filing a petition with the tax_court date certified mail - return receipt requested dear a final adverse determination_letter as this is to your exempt status under sec_501 of the internal_revenue_code your exemption from federal_income_tax under sec_501 c of the code is hereby revoked effective january 20xx our adverse determination was made for the following reasons organizations described in sec_501 and exempt under sec_501 must be organized and operated exclusively for an exempt_purpose you have ceased operating as an exempt_organization and providing any activities of any kind also the meaning of treasury organization regulations sec_1 c -i d you have not established that you have operated exclusively for an exempt_purpose charitable within not a _ig you failed to meet the requrements of sec_501 and sec_1 c -1 d in that you failed to establish that you were operated exclusively for an exempt_purpose contributions to your organization are no longer deductible under sec_170 of the internal_revenue_code you are required to file federal_income_tax returns on form_1120 these returns should be filed with the appropriate service_center for the year ending december 20xx and for all years thereafter uil processing of income_tax returns and assessment of any taxes due will not be delayed should a petition for declaratory_judgment be filed under sec_7428 of the internal_revenue_code if you decide to contest this determination in court you must initiate a suit for declaratory_judgment in the united_states tax_court the united_states claim court or the district_court of the united_states for the district of columbia before the day after the date this determination was mailed to you contact the clerk of the appropriate court for the rules for initiating suits for declaratory_judgment you also have the night to contact the office_of_the_taxpayer_advocate however you should first contact the person whose name and telephone number-are shown above since this person can access your tax information and can help you get answers you can call and ask for taxpayer_advocate assistance or you can contact the taxpayer_advocate from the site where the tax_deficiency was determined by calling or you can contact the taxpayer_advocate nearest you by calling or writing to local taxpayer_advocate taxpayer_advocate assistance cannot be used as a substitute for established irs procedures formal appeals processes etc the taxpayer_advocate is not able to reverse legal or technically correct_tax determinations nor extend the time fixed by law that you have to file a petition in the united_states tax_court the taxpayer_advocate can however see that a tax matter that may not have been resolved through normal channels gets prompt and proper handling we will notify the appropriate state officials of this action as required by sec_6104 of the internal_revenue_code if you have any questions please contact the person whose name and telephone number arc shown in the heading of this letter sincerely yours a aaatte aaueniieg nanette m downing acting director eo examinations department of the treasury internal_revenue_service uil tax exempt and government entities oivision date taxpayer_identification_number form tax_year s ended december x person to contact id number contact numbers telephone - fax certified mail - retum receipt requested - dear we have enclosed a copy of our report of examination explaining why we believe revocation of your exempt status under sec_501 of the intemal revenue code code is necessary if you accept our findings take no further action we will issue a final revocation letter if you do not agree with our proposed revocation you must submit to us a written request for appeals_office consideration within days from the date of this letter to protest our decision your protest should include a statement of the facts the applicable law and arguments in support of your position an appeals officer will review your case the appeals_office is independent of the director eo examinations the appeals_office resolves most disputes informally and promptly the enclosed publication the examination process and publication exempt_organizations appeal procedures for unagreed issues explain how to appeal an intemal revenue service irs decision publication also includes information on your rights as a taxpayer and the irs collection process you may also request that we refer this matter for technical_advice as explained in if we issue a determination_letter to you based on technical_advice no publication further administrative appeal is available to you within the irs regarding the issue that was the subject of the technical_advice letter catalog number 34809f uil if we do not hear from you within days from the date of this letter we will process your case based on the recommendations shown in the report of examination if you do not protest this proposed determination within days from the date of this letter the irs will consider it to be a failure to exhaust your available administrative remedies sec_7428 of the code provides in part a declaratory_judgment or decree under this section shall not be issued in any proceeding unless the tax_court the claims_court or the district_court of the united_states for the district of columbia determines that the organization involved has exhausted its administrative remedies within the internal_revenue_service we will then issue a final revocation letter we will also notify the appropriate state officials of the revocation in accordance with sec_6104 of the code you have the right to contact the office_of_the_taxpayer_advocate taxpayer_advocate assistance is not a substitute for established irs procedures such as the formal appeals process the taxpayer_advocate cannot reverse a legally correct_tax determination or extend the time fixed by law that you have to file a petition in a united_states court the taxpayer_advocate can however see that a tax matter that may not have been resolved through normal channels gets prompt and proper handling you may call toll-free and ask for taxpayer_advocate assistance if you prefer you may contact your local taxpayer_advocate at irs taxpayer_advocate if you have any questions please call the contact person at the telephone number shown in the heading of this letter the most convenient time to call if we need to contact you if you write please provide a telephone number and thank you for your cooperation sincerely nanette m downing acting director eo examinations enclosures publication publication report of examination letter catalog number 34809f schedule number or exhibit en be explanations of items name of taxpayer tax identification_number year period ended 20xx issue the organization dissolved with the state and distributed its assets to organizations that are exempt under sec_501 and other sections is the organization able to terminate with the internal_revenue_service facts s the organization was granted exemption in 20xx under sec_501 c the organization’s primary activity was the conducting of bingo_games for senior citizens this was the organization’s primary and exclusive activity this was brought to the organization’s attention during an audit and they took the steps to willingly dissolve with the state and to terminate with the service the organization distributed its remaining assets to the homeowners_association that its members belong to the local pba to the local volunteer_fire_department to a couple of hospitals and to a first aid squad of the organization’s assets were distributed to organizations that are not exempt under sec_501 and sec_28 of their total assets were distributed to organizations that are exempt under sec_501 the organization’s organizing documents state that upon dissolution that the organization’s assets are to be distributed to organizations exempt under sec_501 the organization reported dollar_figure in revenue and dollar_figure in expenses for the year ended december 20xx this results in a tax owed of dollar_figure since the organization reported a loss of dollar_figure in losses in the year ended 20xx and the nol_carryback would eliminate all of taxes owed in the prior year the agent accepts the signing of the form_6018 with no requirement for the organization to file form_1120 or to pay income taxes on the amounts reported in the year ending december 20xx law internal_revenue_code sec_501 exempts from federal_income_tax corporations and any community chest fund or foundation organized and operated exclusively for religious charitable scientific testing for public safety literary or educational_purposes or to foster national or international amateur sports competition but only if no part of its activities involve the provision of athletic_facilities or equipment or for the prevention of cruelty to children or animals no part of the net_earnings of which inures to the benefit of any private_shareholder_or_individual no substantial part of the activities of which is carrying on propaganda or otherwise attempting to influence legislation except as otherwise provided in subsection h and which does not participate in or intervene in including the publishing or distributing of statements any political campaign on behalf of or in opposition to any candidate for public_office federal regulations sec_1_501_c_3_-1 provides that in order to be exempt as an organization described in sec_501 of the code the organization must be one that is both organized and operated exclusively for one or more of the purposes specified in that section orm 886-a catalog number 20810w page publish no irs pov department of the treasury-internal revenue service a schedule number or exhibit en ee on explanations of items name of taxpayer year period ended 20xx tax identification_number federal regulations sec_1_501_c_3_-1 provides that an organization will not be regarded as operated exclusively for exempt purposes if more than an insubstantial part of its activities is not in furtherance of exempt purposes federal regulations sec_1_501_c_3_-1 provide that an organization is not organized exclusively for one or more exempt purposes unless its assets are dedicated to an exempt_purpose an organization's assets will be considered dedicated to an exempt_purpose for example if upon dissolution such assets would by reason of a provision in the organization's articles or by operation of law be distributed for one or more exempt purposes or to the federal government or to a state_or_local_government for a public purpose or would be distributed by a court to another organization to be used in such manner as in the judgment of the court will best accomplish the general purposes for which the dissolved organization was organized however an organization does not meet the organizational_test if its articles or the law of the state in which it was created provide that its assets would upon dissolution be distributed to its members or shareholders government’s position the organization distributed some of the assets to organizations that are not exempt under sec_501 this is a requirement for all organizations that would like to be exempt under sec_501 the organization failed to meet this requirement that is outlined in their organizing documents and as a result failed to continue to qualify for exemption ‘taxpayer’s position the organization’s officials were not aware that donating the assets to other organizations would have any consequences they were under the impression that they just had to donate the assets to an exempt_organization the organization has ceased operations and will agree to the revocation as a matter of procedure since they have already dissolved with the state conclusion the organization failed to operate in a manner that is required of a 501_c_3_organization when they decided to dissolve when they donated the organization’s remaining assets to organization’s that are not exempt under sec_501 the organization is therefore subject_to revocation and the organization agrees to sign form_6018 to show that they are amenable to revocation since the organization reported a loss of dollar_figure in losses in the year ended 20xx and the nol_carryback would eliminate all of taxes owed in the prior year the agent accepts the signing of the form_6018 with no requirement for the organization to file form_1120 or to pay income taxes on the amounts reported in the year ending december 20xx department of the treasury-intemal revenue service catalog number 20810w form 886-a publish no irs gov page


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 b07 plr-107043-08 date date internal_revenue_service number release date index number --------------------------------- --------------------------------------- ---------------------------------- ty ------- ty ------- legend taxpayer --------------------------------- ------------------------ entities ----------------------- dear ------------ this replies to a letter_ruling request dated date submitted on your behalf by your authorized representative regarding whether you are the proper claimant for a payment of excise_tax under sec_6427 of the internal_revenue_code the code the facts submitted and representations made are as follows taxpayer is in the business of transporting property for hire entities are domestic airlines that specialize in transporting property by air taxpayer has contractual arrangements with the entities the terms of which require the entities to provide the aircraft crew maintenance and insurance necessary for the transportation of taxpayer’s customers’ property taxpayer intends to begin directly purchasing kerosene for use by the entities in the entities’ aircraft when transporting taxpayer’s customers’ property taxpayer will not sell the kerosene to the entities and legal_title will remain with taxpayer none of the parties will treat taxpayer’s provision of kerosene to the entities as a sale from an accounting perspective or otherwise taxpayer requests a ruling that it is the proper claimant to obtain a payment of excise_tax under sec_6427 for the kerosene it will purchase for use by the entities because taxpayer will be the ultimate_purchaser of the kerosene and the kerosene will be used in commercial_aviation plr-107043-08 sec_4081 of the code imposes tax on certain removals entries or sales of taxable_fuel including kerosene sec_4081 provides that the rate_of_tax on kerosene is dollar_figure3 per gallon sec_4081 provides that the tax imposed by sec_4081 is increased by dollar_figure1 per gallon for the leaking_underground_storage_tank_trust_fund lust_tax sec_4081 provides a reduced_rate of dollar_figure3 per gallon for commercial_aviation and dollar_figure8 per gallon for noncommercial_aviation for kerosene that is removed directly into the fuel tank of an aircraft sec_4041 imposes a tax on liquid for use as a fuel other than aviation gasoline a sold by any person to the owner lessee or other operator of an aircraft for use in the aircraft or b used by any person in an aircraft unless there was a taxable sale of the fuel sec_4041 provides that no tax shall be imposed on the sale or use of any liquid for use as a fuel other than aviation gasoline under sec_4041 if tax was imposed on such liquid under sec_4081 other than the tax at the lust financing rate and the tax thereon was not credited or refunded sec_4041 provides that the rate_of_tax imposed under sec_4041 shall be dollar_figure8 per gallon dollar_figure3 pr gallon with respect to any sale or use for commercial_aviation sec_6427 generally provides that if any kerosene on which tax has been imposed by sec_4041 or sec_4081 is used by any person in a nontaxable_use the secretary shall pay without interest to the ultimate_purchaser of such fuel an amount equal to the aggregate amount of tax imposed on such fuel by sec_4041 or sec_4081 as the case may be sec_6427 provides that for purposes of the payment available under sec_6427 the term nontaxable_use means any use exempt from tax imposed by sec_4041 other than by reason of a prior imposition of tax sec_6427 provides that any payment for kerosene used in commercial_aviation as defined in sec_4083 shall not apply to so much of the tax imposed by sec_4041 or sec_4081 as the case may be as is attributable to i the lust_tax of dollar_figure1 per gallon and ii so much of the rate_of_tax specified in sec_4041 or sec_4081 as the case may be as does not exceed dollar_figure3 per gallon in other words the payment under sec_6427 is the difference between the tax imposed and dollar_figure4 cents per gallon sec_4083 defines commercial_aviation as any use of an aircraft for hire in a business of transporting persons or property for compensation or hire by air unless properly allocable to any transportation exempt from the taxes imposed by sec_4261 and sec_4271 by reason of sec_4281 relating to small aircraft on nonestablished lines sec_4282 plr-107043-08 relating to affiliated groups sec_4261 relating to skydiving or sec_4261 relating to seaplanes sec_48_6427-8 of the manufacturers and retailers excise_tax regulations provides as a condition to allowance of a claim under sec_6427 among other things that the claimant bought the kerosene and did not sell it in the united_states sec_48_4081-1 provides in part that the term sale means the transfer of title to or substantial incidents_of_ownership in taxable_fuel other than taxable_fuel in a terminal to the buyer for a consideration which may consist of money services or other_property in this case taxpayer is in the business of transporting property for hire by air and does not fall within any of the exceptions listed in sec_4083 thus taxpayer is engaged in commercial_aviation further taxpayer will not transfer title to or substantial incidents_of_ownership in the kerosene to the entities taxpayer will buy the kerosene for use by the entities in the entities’ aircraft when transporting taxpayer’s customers’ property taxpayer will not resell the kerosene in the united_states therefore taxpayer will be the ultimate_purchaser of the kerosene based on the foregoing taxpayer will be the proper claimant for a payment of excise_tax under sec_6427 for the kerosene it will purchase for use by the entities this ruling is directed only to the taxpayer requesting it sec_6110 provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative the rulings contained in this letter are based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in support of the request for rulings it is subject_to verification on examination sincerely stephanie n bland senior technician reviewer branch passthroughs special industries


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-130854-11 date november legend x --------------------------------------------------- ----------------------------------------- a -------------------------- ----------------------------------------------------- state date ------------- ----------------------- dear -------------------- this letter responds to your letter dated date requesting relief under sec_1362 of the internal_revenue_code regarding x’s late s_corporation_election the information submitted states that x was incorporated on date under the laws of state a the sole shareholder of x intended for x to be an s_corporation for federal tax purposes effective date however the service has no record of receiving form_2553 election by a small_business_corporation for x 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 plr-130854-11 sec_1361 provides that an s_corporation cannot have as a shareholder a person other than an estate a_trust described in sec_1361 or an organization described in sec_1361 who is not an individual 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 for the year in which the election is made under sec_1362 however if an s election is made after the first two and one-half months of a corporation’s taxable_year then that corporation will not be treated as an s_corporation until the taxable_year after the year in which the s election is filed sec_1362 provides that if no sec_1362 election is made for any taxable_year and the secretary determines that there was reasonable_cause for the failure to timely make the election then the secretary may treat the election as timely made for that taxable_year and sec_1362 shall not apply based solely on the facts submitted and the representations made we conclude that x will be treated as an s_corporation effective date provided that x submits a properly completed form_2553 to the appropriate service_center a copy of this letter should be attached to form_2553 and is enclosed for that purpose 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 we express no opinion as to whether x otherwise qualifies as an s_corporation the rulings contained in this letter are based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in support of the request for rulings it is subject_to verification on examination plr-130854-11 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 sincerely bradford r poston senior counsel branch office of associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes cc