internal_revenue_service number release date index numbers ------------------------------------------------------------ ------------ ------------------------------------------------------------ - --------------- -------------------------------------- -------------------------------------- --------- 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 b3 plr-103119-18 date date x --------------------------------------------------------------------------------------------------- ------------------------ legend country --------- date ----------------------- dear ----------------- this letter responds to a letter dated date submitted on behalf of x by its authorized representatives requesting an extension of time under sec_301_9100-3 of the procedure and administration regulations to file an election under sec_301_7701-3 to be treated as a disregarded_entity for federal tax purposes facts the information submitted discloses that x was organized on date under the laws of country x intended to be classified as a disregarded_entity effective date however due to inadvertence form_8832 entity classification election was not timely filed law and analysis sec_301_7701-3 provides in part that a business_entity that is not classified as a corporation under sec_301_7701-2 or an plr-103119-18 eligible_entity can elect its classification for federal tax purposes as provided in sec_301_7701-3 an eligible_entity with at least two members can elect to be classified as either an association and thus a corporation under sec_301_7701-2 or a partnership and an eligible_entity with a single owner can elect to be classified as an association or to be disregarded as an entity separate from its owner sec_301_7701-3 provides that except as provided in sec_301 b unless the entity elects otherwise a foreign eligible_entity is a a partnership if it has two or more members and at least one member does not have limited_liability b an association if all members have limited_liability or c disregarded as an entity separate from its owner if it has a single owner that does not have limited_liability sec_301_7701-3 provides in part that for purposes of sec_301 b i a member of a foreign eligible_entity has limited_liability if the member has no personal liability for the debts of or claims against the entity by reason of being a member sec_301_7701-3 provides in part that an eligible_entity may elect to be classified other than as provided under sec_301_7701-3 or to change its classification by filing form_8832 with the service_center designated on form_8832 sec_301_7701-3 provides that an election made under sec_301 c i will be effective on the date specified by the entity on form_8832 or on the date filed if no such date is specified on the election form the effective date specified on form_8832 can not be more than days prior to the date on which the election is filed and can not be more than months after the date on which the election is filed if an election specifies an effective date more than days prior to the date on which the election is filed it will be effective days prior to the date it was filed sec_301_9100-1 provides that the commissioner in exercising the commissioner’s discretion may grant a reasonable extension of time under the rules set forth in sec_301_9100-2 and sec_301_9100-3 to make a regulatory election or a statutory election but not more than months except in the case of a taxpayer who is abroad under all subtitles of the internal_revenue_code code except subtitles e g h and i sec_301_9100-1 provides that the term regulatory election includes an election whose due_date is prescribed by a regulation published in the federal_register sec_301_9100-2 provides the standards the commissioner will use to determine whether to grant an automatic_extension of time for making certain elections sec_301_9100-3 provides the guidelines for granting extensions of time for making elections that do not meet the requirements of sec_301_9100-2 sec_301 a provides that requests for relief subject_to sec_301_9100-3 will be granted when the plr-103119-18 taxpayer provides the evidence including affidavits described in sec_301_9100-3 to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and the grant of relief will not prejudice the interests of the government conclusion based solely on the facts submitted and the representations made we conclude that x has satisfied the requirements of sec_301_9100-1 and sec_301_9100-3 as a result we grant x an extension of time of one hundred twenty days from the date of this letter to file form_8832 with the appropriate service_center to elect to be classified as a disregarded_entity effective date a copy of this letter should be attached to the form_8832 this ruling is contingent on the owners of x filing within days of this letter all required returns for all open years consistent with the requested relief these returns may include but are not limited to the following forms i form_5471 information_return of u s persons with respect to foreign_corporations ii form_8865 return of u s persons with respect to foreign_partnerships and iii form_8858 return of u s persons with respect to disregarded entities such that these forms reflect the consequences of the relief granted in this letter a copy of this letter should be attached to any such returns except as specifically set forth above we express or imply no opinion concerning the federal tax consequences of the facts of this case under any other provision of the code in addition sec_301_9100-1 provides that the granting of an extension of time for making an election is not a determination that the taxpayer is otherwise eligible to make the election in addition we express no opinion concerning the assessment of any interest additions to tax additional_amounts or penalties for failure_to_file a timely income_tax or information_return with respect to any taxable_year that may be affected by this ruling for example we express no opinion as to whether a taxpayer is entitled to relief from any penalty on the basis that the taxpayer had reasonable_cause for failure_to_file timely any income_tax or information returns we are directing the ruling only to the taxpayer who requested it sec_6110 of the code provides that it may not be used or cited as precedent pursuant to a power_of_attorney on file with this office we are sending a copy of this letter to x’s authorized representatives plr-103119-18 the ruling contained in this letter is based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in support of the ruling_request it is subject_to verification on examination sincerely associate chief_counsel passthroughs special industries by _______________________ caroline e hay assistant to the branch chief branch office of the associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes cc


internal_revenue_service department of the treasury number release date index number washington dc person to contact telephone number refer reply to dc acc tege eb ec-plr-120432-00 date date union x y plan a plan b this is in response to your request for a ruling on behalf of union x and y concerning the federal_income_tax consequences of the establishment of plan b and a_trust to provide excess_benefits to certain participants of plan plan a is a multiemployer defined_benefit_plan qualified under sec_401 of the internal_revenue_code retirement benefit levels under plan a reflect such factors as length of service employee status age at retirement and form of annuity income selected these features incorporate the terms of the underlying collective bargaining agreements negotiated by union x with various employers including y that are required under these agreements to contribute certain amounts to plan a contribution levels by the various employers are stipulated in the respective collective agreements and are intended to be adequate to fund the benefits called for under such agreements the benefits themselves under plan a are in accordance with the applicable provisions of the written plan document in all instances subject_to the limitations of sec_415 of the code the enrolled_actuary to plan a has advised that there are participants of plan a whose qualified_plan benefits have been limited by the application of sec_415 under the terms of the collective bargaining agreements union x has established plan b plan b is intended to provide benefits to participants whose benefits under plan a have been limited by sec_415 under the terms of plan b the participating employers will make monthly pension contributions under the collective bargaining agreements these contributions will be deposited in a holding account at a bank and distributed to plan a and plan b by a third-party administrator the third-party administrator will determine each month how much will be contributed to plan b the contributions to plan b will be made pursuant to a formula that takes into account the monthly benefit that would have been paid to plan a participants in pay status but for the application of sec_415 the excess_amount in addition the contribution to plan b will include an amount every month to be allocated to each participant’s account equal to the employee’s portion of the employment_taxes payable with respect to the excess_amount the gross up amount amounts necessary to pay the employer’s portion of applicable employment_taxes and administrative expenses of the trust will also be contributed to plan b each month the remaining pension contributions from plr-120432-00 the participating employers will be contributed to the trust associated with plan a union x and y have represented that each month as required by the collective bargaining agreement y will contribute the amounts necessary to plan b to pay y’s portion of the plan b benefits applicable employment_taxes and the reimbursement of plan b administrative expenses amounts contributed to plan b will be held in a non-interest bearing account under the terms of plan b all contributions to the trust are irrevocable and are held for the exclusive benefit of plan b participants in pay status under the terms of plans a and b it is impossible for any funds ever paid to plan b to revert or otherwise to be transferred to plan a or to be transferred from plan a to plan b further the moneys designated for and paid over to plan b are immediately identified as being for the payment of benefits from plan b and are promptly disbursed as such and thus could not be used for any other purpose under the terms of plan b the plan_administrator shall assure that by the end of each taxable_year that all assets accumulated during that tax_year have been paid out for benefits fica and other payroll_taxes and or administrative expenses thus there are no accumulated earnings and plan b and the related non-interest bearing account serve only as conduits through which collectively bargained contributions are identified and allocated to the individual accounts of plan b participants the administrative expenses include for example attorneys fees fees of plan b’s third party administrator and accounting fees the administrative expenses are described in plan b as the reasonable and necessary expenses_incurred in the collection of contributions and in the administration and operation of the plan plan b provides that p lan assets will not be held for investment and the plan_administrator will not incur fees for brokerage commissions investment management service or similar investment related activities you have represented that b ecause plan b will not hold assets for investment plan b will not incur any fees for brokerage commissions investment management services or similar investment related activities that have been ruled to be deductible only under code sec_404 sec_3 of the employee_retirement_income_security_act_of_1974 erisa defines an excess_benefit_plan as one maintained solely for the purpose of providing benefits for certain plan participants in excess of the limitations imposed by sec_415 of the code without regard to whether the plan is funded there is no corresponding section of the code with respect to excess_benefit plans sec_401 of the code provides that a_trust shall not constitute a qualified_trust if the plan of which the trust is a part provides for benefits or contributions which exceed the limitations of sec_415 sec_412 of the code provides minimum_funding requirements that must be satisfied in qualified_pension plans plr-120432-00 sec_1_414_l_-1 of the regulations state that a plan is a single_plan if and only if on an ongoing basis all of the plan assets are available to pay benefits to plan participants under this definition plan a and plan b taken together do not constitute a single_plan because there is no possibility of transfer of assets from either one to pay benefits provided by the other since plan b is a nonqualified and unfunded plan operating separately from plan a the existence of plan b does not affect the qualified status of plan a sec_415 of the code sets out limitations on benefits payable from a qualified defined_benefit_plan sec_83 of the internal_revenue_code provides that the excess if any of the fair_market_value of property transferred in_connection_with_the_performance_of_services over the amount_paid if any for the property is includible in the gross_income of the person who performed the services for the first taxable_year in which the property becomes transferrable or is not subject_to a substantial_risk_of_forfeiture sec_1_83-3 of the income_tax regulations provides that for purposes of sec_83 the term property includes real and personal_property other than money or an unfunded and unsecured promise to pay money or property in the future property also includes a beneficial_interest in assets including money transferred or set_aside from claims of the transferor’s creditors for example in a_trust or escrow account sec_402 of the code provides that contributions made by any employer to an employees’ trust that is not exempt from tax under sec_501 are included in the employee’s gross_income in accordance with sec_83 except that the value of the employees’ interest in the trust will be substituted for the fair_market_value of the property in applying sec_83 under sec_1_402_b_-1 of the regulations employer contributions to a nonexempt employee’s trust are included as compensation in the employee’s gross_income for the taxable_year in which the contribution is made but only to the extent that the employee’s interest in such contribution is substantially_vested as defined in the regulations under sec_83 sec_1_402_b_-1 of the regulations provides that any amount actually distributed or made available to any distributee by an employees’ trust in a taxable_year in which it is not exempt under sec_501 shall be taxable under sec_72 relating to annuities to the distributee in the taxable_year in which it is so distributed or made available sec_404 of the code provides the general deduction timing rules applicable to a stock bonus pension profit-sharing or annuity plan or if compensation is paid_or_accrued on account of any employee under a plan or arrangement for deferring compensation regardless of the code section under which the amounts might otherwise be deductible pursuant to sec_404 contributions or compensation plr-120432-00 deferred under a nonqualified_plan or arrangement are deductible in the taxable_year in which an amount attributable to the contribution are includible in the gross_income of the employees participating in the plan but in the case of a plan in which more than one employee participates only if separate_accounts are maintained for each employee see also sec_1_404_a_-12 of the regulations sec_1_404_a_-12 of the regulations provides a deduction is allowable for contributions paid only in the taxable_year in which or with which ends the taxable_year of an employee in which an amount attributable to such contribution is includible in his or her income as compensation and then only to the extent allowable under sec_404 sec_162 of the code allows a deduction for the ordinary and necessary expenses paid_or_incurred during the taxable_year in carrying on any trade_or_business sec_3101 of the code imposes federal_insurance_contribution_act fica tax on the income of every individual equal to a percentage of the wages received by the individual sec_3102 of the code requires the employer to collect the fica tax by deducting the amount of the tax from wages when paid sec_3102 provides that the employer required to deduct the tax is liable for the payment of the tax sec_3301 of the code in general imposes federal_unemployment_tax_act futa_tax on employers equal to a percentage of the wages paid_by the employer sec_3402 of the code requires an employer making payment of wages to deduct and withhold from such wages the appropriate amount of tax sec_3403 of the code provides that the employer is liable for the payment of the tax required to be deducted and withheld under sec_3402 an employer’s payment of taxes assessable against an employee constitutes additional taxable_income to such employee old colony trust co v commissioner 179_us_716 viii-2 c b sec_31_3401_a_-1 of the employment_tax regulations provides generally that the term wages includes the payment by an employer of an employee’s tax_liability including the taxes imposed by sec_3101 revproc_81_48 1981_2_cb_623 and revrul_86_14 1986_1_cb_304 set forth the methods of calculating and reporting an employee’s fica tax when such amount is not deducted from the employee’s pay because employees who participate in plan b are fully vested in their plan b benefits when y’s contributions are made and separate_accounts are maintained for each participating y employee y is entitled to a deduction under sec_404 of the code in an amount equal to the amount included in income by the respective y employee assuming all other requirements for deductibility are met the deduction is plr-120432-00 allowable in the taxable_year in which or with which ends the taxable_year of the employee in which the amount is includible in the employee’s income as compensation revrul_86_142 1986_2_cb_61 considered the deductibility of brokers’ commissions charged in connection with the purchase and sale of securities for a qualified employee’s trust or an individual_retirement_arrangement ira it notes that brokers’ fees are not recurring administrative or overhead expenses_incurred in connection with the maintenance of the trust or ira instead brokers’ commissions are intrinsic to the value of the trust’s or ira’s assets buying commissions are part of the cost of the securities purchased and selling commissions are an offset against sales_price based on this analysis revrul_86_142 holds that employer contributions to the trust of a qualified_plan or direct payments by the employer to a broker to pay brokers’ commissions cannot be separately deducted under sec_162 or sec_212 of the code unlike the brokers’ fees at issue in revrul_86_142 the administrative expenses described in this case are recurring administrative or overhead expenses_incurred in connection with the maintenance of plan b the administrative expenses include attorneys’ fees fees of plan b’s third party administrator accounting fees etc and are limited by the terms of plan b to the reasonable and necessary expenses_incurred in the collection of contributions and in the administration and operation of the trust under sec_3102 sec_3301 and sec_3402 of the code the employer is liable for the payment of fica and futa_tax required to be deducted and withheld from the employee’s wages the fica and futa_tax required to be paid_by the employer is a direct consequence of the employer’s obligation to pay the underlying wages and as such are deductible by the employer as ordinary and necessary business_expenses under sec_162 based on the information submitted and representations made we conclude that the establishment and operation of plan b by the trustees of plan a will not cause plan a or the trust established thereunder to lose their respective tax- qualified and tax-exempt statuses the method of funding plan b will not cause plan a or the trust established thereunder to lose their respective tax-qualified and tax-exempt statuses plan a and plan b taken together do not constitute a single_plan under sec_1_414_l_-1 of the regulations because there is no possibility of transfer of assets from either plan to pay benefits provided by the other plan plan b participants and beneficiaries are taxable on contributions including the portions allocable to payroll_taxes made on their behalf to the plan b_trust at the time the contributions to the trust are made plan b is not taxable on contributions that are disbursed to plan b participants plr-120432-00 on a monthly basis assuming the requirements for deductibility are otherwise met y’s contributions to pay the excess_amount and the gross up amounts are fully deductible by y in the taxable_year in which or with which ends the taxable_year of the employees in which the amounts are includible in the employees’ gross_income y’s payments to plan b of y’s portion of applicable employment_taxes are deductible under sec_162 in the taxable_year in which plan b disburses such payments to the applicable taxing authorities y’s payments to plan b to reimburse plan b’s administrative expenses are deductible under sec_162 in the taxable_year in which plan b disburses such payments to the administrative service providers except as specifically ruled on above no opinion is expressed as to the federal tax consequences of the above transaction under any other provision of the code this ruling is directed only to the taxpayer s requesting it sec_6110 of the code provides that it may not be used or cited as precedent 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 charles t deliee chief executive compensation branch office of the division counsel associate chief_counsel tax exempt and government entities


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-123896-06 date date --------------------------------- company -------------------------------------------------------------- ----------------------- -------------------------------- ----------------------------------- ------------------------------------------------- trust --------------------------------------------------------------- grantor ------------------------------------------------------------------------------------- ---------------------------------------------------- trustee ------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------- country entity ------------------------------------------------------ a b c ---------------------------------------------------------------- ---------------------- ---------------------- ------- dear ------------- on date the internal_revenue_service issued plr-159437-04 granting company an extension of time to elect under ' c of the procedure and administration regulations to be treated as a disregarded_entity since that time we have discovered that the effective date specified in the ruling letter for the relief plr-123896-06 granted company was not the date originally requested by company consequently pursuant to dollar_figure of revproc_2006_1 2006_1_irb_1 we hereby revoke plr- with retroactive effect the ruling as requested by company follows company was formed in a as a country entity with trust as its sole owner company invested solely in municipal_bonds effective for trust’s tax_year beginning b the federal tax treatment of these bonds changed under newly amended regulations company’s and trustee’s primary legal and tax advisor failed to timely inform them of the effect of the new regulations and never advised them to make an entity classification election thus company failed to file form_8832 entity classification election sec_301_7701-3 provides that a business_entity that is not classified as a corporation under ' b or an eligible_entity may elect its classification for federal tax purposes as provided in this section an eligible_entity with a single owner may elect to be classified as an association and thus a corporation under ' b or to be disregarded as an entity separate from its owner sec_301_7701-3 provides in general that unless it elects otherwise an eligible_entity in existence before the effective date of the entity classification regulations will have the same classification that the entity claimed under sec_301_7701-1 through as in effect on date provided in the case of a foreign eligible_entity that this classification was relevant as defined in sec_301_7701-3 sec_301_7701-3 provides in general that an eligible_entity may elect to be classified other than as provided under ' b by filing form_8832 with the applicable service_center sec_301_7701-3 provides that an election made under ' c i will be effective on the date specified by the entity on form_8832 or on the date filed if no such date is specified on the election form the effective date specified on form_8832 can not be more than days prior to the date on which the election is filed and can not be more than months after the date on which the election is filed under ' c the commissioner may grant a reasonable extension of time to make a regulatory election or a statutory election but no more than six months except in the case of a taxpayer who is abroad under all subtitles of the internal_revenue_code except subtitles e g h and i plr-123896-06 sec_301_9100-1 through provide the standards the commissioner will use to determine whether to grant an extension of time to make a regulatory election sec_301_9100-1 sec_301_9100-2 provides automatic extensions of time for making certain elections sec_301_9100-3 provides extensions of time for making elections that do not meet the requirements of ' requests for relief under ' will be granted when the taxpayer provides evidence to establish that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government sec_301_9100-3 based on the facts and representations submitted company has established that the requirements of and are satisfied consequently company is granted an extension of days from the date of this letter for electing under ' to be disregarded as an entity separate from its owner effective c company must file form_8832 within the extension period with the appropriate service_center with a copy of this letter attached the effect of company’s proposed election is prescribed in sec_301 g iii if an eligible_entity classified as an association elects under sec_301 c i to be disregarded as an entity separate from its owner the association is deemed to distribute all of its assets and liabilities to its single owner in liquidation except for the specific ruling above we express or imply no opinion concerning the federal tax consequences of the facts of this case under any other provision of the code sec_301_9100-1 provides that the granting of an extension of time for making an election is not a determination that the taxpayer is otherwise eligible to make the election in accordance with the power_of_attorney on file with this office we are sending the original of this letter to you and a copy to company plr-123896-06 this ruling is directed only to the taxpayer on whose behalf it was requested according to ' k of the internal_revenue_code this ruling may not be used or cited as precedent sincerely enclosures copy of this letter copy for ' purposes cc heather c maloy associate chief_counsel passthroughs and special industries


internal_revenue_service number release date index number ------------------------ ------------------- --------------------------- ------------------------------ legend donor brother date trust a dear --------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ----------------------------------------------------- -------------------------------------- telephone number ---------------------- refer reply to cc psi b04 plr-120295-16 date date --------------------------------------------------- -------------------------- --------------------------- ------------------------------------------------------ -------- this letter responds to your authorized representative’s letter dated date and subsequent correspondence requesting a ruling regarding the application of sec_2632 of the internal_revenue_code to donor’s transfer to trust the facts and representations submitted are as follows on date a date occurring after donor created trust for the benefit of brother brother’s spouse and brother’s descendants on the same date donor transferred dollar_figurea to trust under the trust instrument brother has a lifetime and testamentary limited power to appoint trust assets to brother’s spouse or lineal_descendants subject_to an ascertainable_standard and the power to appoint trust assets to any charitable_organization but has no power to appoint assets in favor of himself his estate his creditors the creditors of his estate or to discharge any of his legal obligations under the trust instrument brother has a withdrawal power in an amount equal to any contribution to trust and upon his death the withdrawal power passes to plr-120295-16 brother’s spouse the withdrawal power may not exceed the least of i the total amount of contributions to trust during that year ii the amount allowable at the time of the first contribution as an exclusion from gift_tax under sec_2503 or twice this amount if the donor is married on the date of the last of all contributions made during that year and iii the greater of dollar_figure or percent of the value of trust trust provides that any unexercised right of withdrawal shall lapse at the end of each year or if earlier thirty days after the contribution to which it relates donor was advised by his counsel that trust is a gst_trust as defined in sec_2632 and thus the rules regarding the automatic allocation of generation-skipping_transfer gst_exemption contained in sec_2632 applied to trust donor is now advised by his counsel that trust may not be a gst_trust as defined in sec_2632 you request a ruling that on the date of donor’s transfer trust was a gst_trust as defined in sec_2632 and therefore donor’s available gst_exemption was automatically allocated to the transfer to trust in the alternative you request an extension of time under sec_301_9100-3 of the procedure and administration regulations to allocate donor’s gst_exemption to donor’s transfer on date law and analysis sec_2501 imposes a tax for each calendar_year on the transfer of property by gift during such calendar_year by any 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_2503 provides that in the case of gifts other than gifts of future_interest in property made to any person by the donor during the calendar_year the first dollar_figure adjusted for inflation of such gifts to such person shall not for purposes of sec_2503 be included in the total_amount_of_gifts made during such year sec_2601 imposes a tax on every gst a gst is defined under sec_2611 as a taxable_distribution a taxable_termination and a direct_skip sec_2602 provides that the amount of the tax is the taxable_amount multiplied by the applicable_rate sec_2641 defines applicable_rate as the product of the maximum_federal_estate_tax_rate and the inclusion_ratio with respect to the transfer sec_2642 provides the method for determining the inclusion_ratio sec_2631 provides that for purposes of determining the inclusion_ratio every individual shall be allowed a gst_exemption amount which may be allocated by such individual or his executor to any property with respect to which such individual is plr-120295-16 the transferor sec_2631 provides that any allocation under sec_2631 once made shall be irrevocable sec_2632 provides that any allocation by an individual of his gst_exemption under sec_2631 may be made at any time on or before the date prescribed for filing the estate_tax_return for such individual’s estate determined with regard to extensions regardless of whether such a return is required to be filed sec_2632 provides that if any individual makes an indirect_skip during such individual's lifetime any unused portion of such individual's gst_exemption shall be allocated to the property transferred to the extent necessary to make the inclusion_ratio for such property zero if the amount of the indirect_skip exceeds such unused portion the entire unused portion shall be allocated to the property transferred sec_2632 provides that the term indirect_skip means any transfer of property other than a direct_skip subject_to the tax imposed by chapter made to a gst_trust sec_2632 provides that the term gst_trust means a_trust that could have a generation-skipping_transfer with respect to the transferor unless- i ii iii iv v the trust instrument provides that more than percent of the trust corpus must be distributed to or may be withdrawn by one or more individuals who are non-skip persons i before the date that the individual attains age ii on or before one or more dates specified in the trust instrument that will occur before the date that such individual attains age or iii upon the occurrence of an event that in accordance with regulations prescribed by the secretary may reasonably be expected to occur before the date that such individual attains age the trust instrument provides that more than percent of the trust corpus must be distributed to or may be withdrawn by one or more individuals who are non-skip persons and who are living on the date of death of another person identified in the instrument by name or by class who is more than years older than such individuals the trust instrument provides that if one or more individuals who are non- skip persons die on or before a date or event described in clause i or ii more than percent of the trust corpus either must be distributed to the estate or estates of one or more of such individuals or is subject_to a general_power_of_appointment exercisable by one or more of such individuals the trust is a_trust any portion of which would be included in the gross_estate of a non-skip_person other than the transferor if such person died immediately_after_the_transfer the trust is a charitable_lead_annuity_trust within the meaning of sec_2642 or a charitable_remainder_annuity_trust or a charitable plr-120295-16 remainder unitrust within the meaning of sec_664 or vi the trust is a_trust with respect to which a deduction was allowed under sec_2522 for the amount of an interest in the form of the right to receive annual payments of a fixed percentage of the net fair_market_value of the trust property determined yearly and which is required to pay principal to a non-skip_person if such person is alive when the yearly payments for which the deduction was allowed terminate for purposes of sec_2632 the value of transferred property shall not be considered to be includible in the gross_estate of a non-skip_person or subject_to a right of withdrawal by reason of such person holding a right to withdraw so much of such property as does not exceed the amount referred to in sec_2503 with respect to any transferor and it shall be assumed that powers of appointment held by non-skip persons will not be exercised sec_26_2632-1 of the generation-skipping_transfer_tax regulations provides in relevant part that an indirect_skip is a transfer of property to a gst_trust as defined in sec_2632 provided that the transfer is subject_to gift_tax and does not qualify as a direct_skip in the case of an indirect_skip made after date to which sec_2642 does not apply the transferor's unused gst_exemption is automatically allocated to the property transferred but not in excess of the fair_market_value of the property on the date of the transfer the automatic allocation is effective whether or not a form_709 is filed reporting the transfer and is effective as of the date of the transfer to which it relates an automatic allocation is irrevocable after the due_date of the form_709 for the calendar_year in which the transfer is made in this case trust is a_trust that could have a gst with respect to the transferor under the terms of trust no provision is made for mandatory distributions to beneficiaries who are non-skip persons although brother is granted a power_of_appointment over trust corpus the power is limited to a certain class of beneficiaries and brother has no power to appoint assets in favor of himself his estate his creditors the creditors of his estate or to discharge any of his legal obligations although trust provides withdrawal powers to beneficiaries who are non-skip persons since the amount of the annual withdrawal rights in trust do not exceed the amount referred to in sec_2503 the amount subject_to the withdrawal right shall not be considered to be includible in the gross_estate of a non-skip_person or subject_to a right of withdrawal pursuant to sec_2632 furthermore the withdrawal rights lapse each year in their entirety accordingly based on the facts submitted and the representations made we conclude that none of the exceptions to the definition of a gst_trust in sec_2632 apply therefore on the date of donor’s transfer to trust trust was considered a gst_trust under sec_2632 and accordingly we conclude that donor’s available gst_exemption was automatically allocated to the transfer to trust on date pursuant to sec_2632 plr-120295-16 in accordance with the power_of_attorney on file with this office we have sent a copy of this letter to your authorized representatives except as expressly provided herein we neither express nor imply any opinion concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter 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 this ruling is directed only to the taxpayer requesting it sec_6110 provides that it may not be used or cited as precedent sincerely karlene m lesho karlene m lesho senior technician reviewer branch office of the associate chief_counsel passthroughs and special industries enclosures copy for sec_6110 purposes copy of this letter


department of the treasury internal_revenue_service washington d c date number info release date uil conex-152412-02 cc psi b8 i am responding to your fax dated date forwarding any inquiry from wrote about a notice of proposed rulemaking on the definition of a highway on behalf of your constituent vehicle for federal excise_tax purposes this proposed rule appeared in the federal_register on date copy enclosed although we do not respond to individual comments during the rulemaking process we will consider his comments before we finalize the regulations i appreciate any questions please contact me at comments thank you for forwarding his letter if you have sincerely associate chief_counsel passthroughs and special industries by richard a kocak chief branch enclosure


internal_revenue_service number release date index number ---------------------------------------------------------- ---------------------- ------------------------------ ---------------------------- department of the treasury washington dc person to contact ------------------- id no ------------- telephone number --------------------- refer reply to cc psi b04 - plr-123285-08 date date ---------------------------------------- legend legend decedent spouse law firm year year state statute ------------------------------------------------------------------------------------ ---------------------- ------------------- ---------------------------------------- ------- ------- dear -------------------------------------- this is in response to a letter dated date from your authorized representative requesting an extension of time under sec_301_9100-1 and sec_301_9100-3 of the procedure and administration regulations to sever a_trust pursuant to sec_26_2654-1 of the generation-skipping_transfer_tax regulations and make an election under sec_2652 of the internal_revenue_code facts decedent died in year survived by spouse and two children decedent bequeathed the residue of his estate to a_trust trust for the benefit of spouse estate hired law firm to assist in the administration of the estate and prepare the form_706 united_states estate and generation-skipping_transfer_tax return a qualified_terminable_interest_property qtip_election under sec_2056 was made with respect to the property in trust in an affidavit law firm stated that they inadvertently failed to advise the estate that trust should be severed into a gst exempt qtip_trust and a gst nonexempt qtip_trust and that a reverse_qtip_election under sec_2652 should be plr-123285-08 made with respect to the exempt trust upon the death of spouse in year it was discovered that trust was not severed and a reverse_qtip_election was not made the trust instrument does not provide for the severance of trust however state statute authorizes an executor or a trustee to establish two or more separate trusts without prior court approval or the consent of the persons interested for the purpose of segregating the property held in trust which would be excepted excluded or exempt from gst tax from such property which is not so excepted so that one or more of such separate trusts will have an inclusion_ratio of zero to date there have been no taxable_distributions from trust law and analysis sec_2001 imposes a tax on the transfer of the taxable_estate of every decedent who is a citizen or resident_of_the_united_states sec_2056 provides that for purposes of the tax imposed by sec_2001 the value of the taxable_estate is to be determined by deducting from the value of the gross_estate an amount equal to the value of any interest in property that passes or has passed_from_the_decedent to the surviving_spouse sec_2056 provides that no deduction shall be allowed for an interest passing to the surviving_spouse if on the lapse of time on the occurrence of an event or contingency or on the failure of an event or contingency to occur the interest will terminate or fail and a an interest in such property passes or has passed for less than an adequate_and_full_consideration in money_or_money's_worth from the decedent to any person other than the surviving_spouse or the estate of such spouse and b if by reason of such passing such person or his heirs or assigns may possess or enjoy any part of such property after such termination or failure of the interest so passing to the surviving_spouse sec_2056 provides that in the case of qtip the property shall be treated as passing to the surviving_spouse for purposes of sec_2056 and no part of the property shall be treated as passing to any person other than the surviving_spouse for purposes of sec_2056 sec_2056 defines qualified_terminable_interest_property qtip as property which passes from the decedent in which the surviving_spouse has a qualifying_income_interest_for_life and to which an election under sec_2056 applies sec_2056 provides that an election under sec_2056 with respect to any property shall be made by the executor on the return of tax imposed by sec_2001 the election once made is irrevocable plr-123285-08 under sec_2044 any property in which the decedent had a qualifying_income_interest_for_life and for which a deduction was allowed under sec_2056 is includable in the decedent's gross_estate sec_2601 imposes a tax on every generation-skipping_transfer sec_2631 provides that for purposes of determining the gst tax every individual shall be allowed a gst_exemption of dollar_figure adjusted for inflation under sec_2631 that may be allocated by such individual or his executor to any property with respect to which such individual is the transferor sec_2631 provides that once an allocation of gst_exemption is made it is irrevocable under sec_2632 any allocation by an individual of his gst_exemption may be made at any time on or before the date prescribed for filing the individual's estate_tax_return including extensions sec_2632 provides that any portion of an individual's gst_exemption which has not been allocated within the time prescribed by sec_2632 shall be deemed to be allocated as follows - a first to property which is the subject of a direct_skip occurring at the individual's death and b second to trusts with respect to which the individual is the transferor and from which a taxable_distribution or a taxable_termination might occur at or after the individual's death sec_2652 provides that in the case of any trust with respect to which a deduction is allowed to the decedent under sec_2056 the estate of the decedent may elect to treat all of the property in the trust for purposes of the gst tax as if the qtip_election had not been made this election is referred to as the reverse_qtip_election the consequence of a reverse_qtip_election is that the decedent remains for gst tax purposes the transferor of the qtip_trust for which the election is made as a result the decedent's gst_exemption may be allocated to the qtip_trust sec_26_2652-2 provides that the reverse_qtip_election is to be made on the return on which the qtip_election is made sec_26_2654-1 provides that the severance of a_trust that is included in the transferor's gross_estate or created under the transferor's will into two or more trusts is recognized for purposes of chapter if the governing instrument does not require or otherwise direct severance but the trust is severed pursuant to discretionary authority granted either under the governing instrument or under local law and a the terms of the new trusts provide in the aggregate for the same succession of interests and beneficiaries as are provided in the original trust b the severance occurs or a reformation proceeding if required is commenced prior plr-123285-08 to the date prescribed for filing the federal estate_tax_return including extensions actually granted for the estate of the transferor and c either - the new trusts are severed on a fractional basis if severed on a fractional basis the separate trusts need not be funded with a pro_rata portion of each asset held by the undivided trust the trusts may be funded on a nonpro rata basis provided funding is based on either the fair_market_value of the assets on the date of funding or in a manner that fairly reflects the net appreciation or depreciation in the value of the assets measured from the valuation_date to the date of funding or if the severance is required by the terms of the governing instrument to be made on the basis of a pecuniary amount the pecuniary payment is satisfied in a manner that would meet the requirements of sec_26_2654-1 if it were paid to an individual under sec_301_9100-1 the commissioner may grant a reasonable extension of time under the rules set forth in sec_301_9100-2 and sec_301_9100-3 to make a regulatory election or a statutory election but no more than months except in the case of a taxpayer who is abroad under all subtitles of the code except subtitles e g h and i sec_301_9100-1 through provide standards the commissioner will use to determine whether to grant an extension of time to make a regulatory election sec_301_9100-3 provides that requests for extensions of time for regulatory elections that do not meet the requirements of sec_301_9100-2 must be made under the rules of sec_301_9100-3 requests for relief subject_to sec_301_9100-3 will be granted when the taxpayer provides the evidence to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and the grant of relief will not prejudice the interests of the government sec_301_9100-3 b v provides that a taxpayer is deemed to have acted reasonably and in good_faith if the taxpayer reasonably relied on a qualified_tax professional including a tax professional employed by the taxpayer and the tax professional failed to make or advise the taxpayer to make the election in this case as a result of the qtip_election made on the form_706 trust's assets are includible in spouse's gross_estate pursuant to sec_2044 accordingly spouse is the transferor of trust's assets for gst tax purposes therefore decedent's gst_exemption cannot be allocated to trust's assets however if trust is severed into two trusts a gst exempt trust and a gst nonexempt trust pursuant to sec_26_2654-1 and a reverse_qtip_election under sec_2652 is made with respect to the gst exempt trust decedent will be treated as the transferor of the gst exempt trust's assets and decedent's gst_exemption may be allocated to the gst exempt trust it has been represented that decedent has sufficient gst_exemption to allocate to the plr-123285-08 gst exempt trust based on the facts submitted and the representations made we conclude that the requirements of sec_301_9100-3 have been satisfied accordingly the estate is granted sixty days from the date of this letter to sever trust into a gst exempt trust and a gst nonexempt trust and to file a supplemental form_706 on which the reverse_qtip_election is to be made for the gst exempt trust and decedent's gst_exemption is to be allocated to the gst exempt trust the supplemental form_706 should be filed with the internal_revenue_service center cincinnati ohio a copy of this letter should be attached to the return 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 regarding whether trust qualifies as a qtip_trust under sec_2056 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 curt g wilson deputy associate chief_counsel passthroughs and special industries enclosure copy for sec_6110 purposes copy of this letter cc


t c summary opinion united_states tax_court jack r janshen petitioner v commissioner of internal revenue respondent docket no 17517-12s l filed date jack r janshen pro_se lisa m oshiro for respondent summary opinion gerber judge this case is being considered pursuant to the provisions of sec_7463 of the internal_revenue_code in effect when the petition was filed pursuant to sec_7463 the decision to be entered is not reviewable by any other court and this opinion shall not be treated as precedent for any other case this case involves a petition for review of a lien or levy action respondent in a motion filed date moved for summary_judgment with respect to the issues raised in the petition petitioner was given days to object or respond and failed to file any response to respondent’s motion for the reasons outlined in this opinion respondent’s motion for summary_judgment will be granted background respondent mailed a final notice-notice of intent to levy and notice of your right to a hearing to petitioner on date advising of the intention to levy to collect petitioner’s unpaid tax_liability for and offering an opportunity for a hearing with the internal_revenue_service irs office of appeals appeals petitioner timely mailed a form request for a collection_due_process or equivalent_hearing on date following some correspondence a telephone hearing was scheduled for date appeals confirmed by reviewing petitioner’s records and transcript of account that unless otherwise indicated all section references are to the internal_revenue_code in effect at all relevant times and all rule references are to the tax_court rules_of_practice and procedure the income_tax_liability had been properly assessed and the proper notices had been issued respondent’s settlement officer spoke with petitioner’s wife about the possibility of a collection alternative such as an offer-in-compromise petitioner’s wife asked that the hearing be rescheduled the hearing was rescheduled to date petitioner’s wife was reminded that in accord with prior correspondence petitioner had to submit certain financial information before the date hearing to facilitate any consideration of a collection alternative on date the settlement officer telephoned petitioner but petitioner did not answer and the settlement officer left a voice message on date the settlement officer spoke with petitioner’s wife and informed her that no financial information had been received petitioner’s wife advised that she had sent the information to petitioner several weeks before date the settlement officer provided an office address fax number and telephone number and advised petitioner’s wife that petitioner would be allowed until date to provide his financial information nothing further was received from petitioner and on date respondent issued a notice_of_determination concerning collection action s under sec_6320 and or sustaining the proposed levy to collect petitioner’s income_tax liabilities in his petition petitioner questioned the underlying liability for indicated that collection would be a hardship and stated that he was entitled to a collection alternative petitioner resided in the state of washington at the time his petition was filed before this collection action respondent had properly mailed a statutory_notice_of_deficiency to petitioner concerning his tax_year there is no evidence that the statutory_notice_of_deficiency was returned to the irs nor has petitioner ever denied its receipt the underlying assessment for the income_tax was made following petitioner’s failure_to_file a petition in response to respondent’s issuance of a statutory_notice_of_deficiency for that year discussion summary_judgment is appropriate where it is shown that there is no genuine dispute as to any material fact and that a decision may be rendered as a matter of law rule b during the appeals process petitioner raised no issues with respect to the merits of the tax_liability therefore the appropriate standard of review in this case is an abuse_of_discretion standard see 114_tc_176 to establish an abuse_of_discretion the taxpayer must show that the decision complained of is arbitrary capricious or without sound basis in fact or law 129_tc_107 citing 114_tc_604 and 112_tc_19 see also 568_f3d_710 9th cir aff’g in part tcmemo_2006_166 in reviewing for abuse_of_discretion the court generally considers only the arguments issues and other matters that were raised at the collection_due_process_hearing or otherwise brought to the attention of appeals see giamelli v commissioner t c pincite 118_tc_488 sec_301 f q a-f3 proced admin regs a notice_of_deficiency was sent to petitioner at his last_known_address and he failed to petition this court or to challenge the income_tax deficiency under those circumstances petitioner may not challenge during the collection proceeding the existence or amount of the underlying tax_liability see 114_tc_604 accordingly the merits of the tax_liability are not at issue petitioner was provided several opportunities to present information so that collection alternatives could be considered he did not provide the information it is not an abuse_of_discretion when the settlement officer sustains a proposed collection action on account of the taxpayer’s failure to provide requested information that would have permitted consideration of collection alternatives see long v commissioner tcmemo_2010_7 huntress v commissioner tcmemo_2009_161 nelson v commissioner tcmemo_2009_108 we find that there is no genuine issue of any material fact for trial in this case and hold that there was no abuse_of_discretion in respondent’s decision to proceed with collection therefore respondent’s motion for summary_judgment will be granted to reflect the foregoing an appropriate order and decision will be entered


department of the treasury washington dc person to contact --------------- id no ------------- telephone number --------------------- refer reply to cc psi - plr-127654-04 date september internal_revenue_service number release date index number -------------------------- ---------------------------------------------------- -------------------------------------- -------------------------- re --------------------------------- -------------------- - legend trust grandchild -------------------------------------------------------------- decedent son grandchild grandchild --------------------------------- ---------------------------- -------------------------------------------- --------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------- ----------------------- --------------------- ------------------------ --------------------------- ---------------------- --------------------- ------------------------ ------------- --------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------- date date date date date date bank state state court -------------------------------------- ---------------------------------- state law state law upon the death of grandchild trust is to terminate and the trustee is to pursuant to paragraph of trust the trustee shall pay so much of the net the facts and representations submitted are summarized as follows on date this is in response to your letter dated date concerning the estate plr-127654-04 dear --------------- tax and generation-skipping_transfer gst tax consequences of a proposed modification of trust and the appointment of a successor trustee prior to date decedent established an irrevocable_trust trust for the benefit of decedent’s grandson grandchild trust is administered under the laws of state decedent’s son son was the initial trustee of trust income and principal of the trust estate to grandchild as in the sole discretion of trustee is necessary for grandchild 3’s support education and medical_care any unexpended balance of income is to be accumulated and added to principal until the termination of trust distribute the trust estate pursuant to son’s exercise of a limited power to appoint the trust corpus among decedent’s issue other than son in the absence of an appointment by son disposing of the entire trust estate the unappointed portion is to be distributed pursuant to grandchild 3’s exercise of a testamentary limited power to appoint the trust corpus among to decedent’s issue however grandchild may not appoint the trust property to grandchild his estate his creditor or his spouse in the absence of such appointment completely disposing of the trust estate the unappointed portion shall be distributed free of trust to the then living issue of grandchild by right of representation paragraph of trust provides that son may resign as trustee without leave of court at any time and for any reason by giving written notification to grandchild son may appoint by written notification any person or corporation qualified to act as trustee in state to act as his successor if for any reason he fails to act as trustee if son fails to appoint a successor to act in his place then bank shall act as trustee no successor trustee has the right to appoint a successor of trust in the event that son failed or ceased to act as trustee the instrument further provided that if grandchild fails or ceases to act as trustee son appoints as successor trustee the individual or corporation or series thereof as may be designated in writing by grandchild son died on date and grandchild accepted his appointment as trustee on date by an instrument dated date son appointed grandchild as successor trustee grandchild has resigned as trustee of trust effective upon the court plr-127654-04 acceptance of his resignation and appointment of a successor trustee instruct the trustee of trust that whenever any current beneficiary of trust is acting as trustee on or about date grandchild petitioned state court requesting that the court such person shall exercise the trustee’s discretionary distribution powers set forth in paragraph sec_4 and b of the trust only for such his or her support education and medical_care within the meaning of sec_2041 and sec_2514 of the internal_revenue_code_of_1986 as amended grandchild further requested state court to accept the resignation of grandchild and to modify paragraph of trust to appoint successor trustees in the following order of priority grandchild then any person designated by written instrument signed by grandchild then bank bank as the current successor trustee named in paragraph has consented to the proposed state court order changing the trustee succession in a written instrument dated date grandchild consented to act as trustee of trust state law provides that if the vacancy in the office of the trustee is not filled as provided in subdivision b or c of state law on petition of any interested person or any person named as trustee in the trust instrument the court may in its discretion appoint a trustee to fill the vacancy if the trust provides for more than one trustee the court may in its own discretion appoint the original number or any lesser number of trustees in selecting a trustee the court shall give consideration to any nomination by the beneficiaries who are years of age or older or uncontrolled discretion on a trustee the trustee shall act in accordance with fiduciary principles and shall not act in bad faith or in disregard of the purposes of the trust moreover notwithstanding the use of terms like absolute sole or uncontrolled by a settlor or a testator a person who is a beneficiary of a_trust that permits the person either individually or as trustee or cotrustee to make discretionary distributions of income or principal to or for the benefit of himself or herself pursuant to a standard shall exercise that power reasonably and in accordance with the standard state law further provides that unless a settlor or a testator clearly indicates that a broader power is intended by express reference to this subdivision a person who is a beneficiary of a_trust that permits the person as trustee or cotrustee to make discretionary distributions of income or principal to or for the benefit of himself or herself may exercise that power in his or her favor only for his or her health education state law provides in part that if a_trust instrument confers absolute sole plr-127654-04 support or maintenance within the meaning of sec_2041 and sec_2514 of the internal_revenue_code constructive additions have been made to trust after that date trust was irrevocable on date it is represented that no actual or you have requested the following ruling requests the issuance of instructions as contained in the petition regarding the trustee’s power to make discretionary distributions when the beneficiary is acting as trustee will not cause trust to lose its gst exempt status the appointment of a successor trustee in accordance with the petition will not cause trust to lose its gst exempt status the potential or actual appointment of grandchild as successor trustee in accordance with the petition will not create a general_power_of_appointment and cause the corpus and any undistributed_income of trust to be included in grandchild 3’s gross_estate sec_2601 imposes a tax on every generation-skipping_transfer made by a under section a of the tax_reform_act_of_1986 the gst tax is generally issue sec_1 and transferor to a skip_person in general under sec_2652 and sec_26_2652-1 of the generation-skipping_transfer gst tax regulations the transferor for gst tax purposes is the last person with respect to whom the property was subject_to the estate or gift_tax applicable to generation-skipping transfers made after date however under section1433 b a of the tax reform act and sec_26_2601-1 of the regulations the tax does not apply to a transfer from a_trust if the trust was irrevocable on date the rule does not apply to the extent additions actual or constructive were made to the trust after that date further this rule does not apply to a transfer of property after date pursuant to the exercise release or lapse of a general_power_of_appointment that is treated as a taxable transfer for estate or gift_tax purposes sec_26_2601-1 provides that except as provided under sec_26_2601-1 where any portion of a_trust remains in the trust after the post date release exercise or lapse of a power_of_appointment over that portion of the trust and the release exercise or lapse is treated to any extent as a taxable transfer under chapter or chapter the value of the entire portion of the trust subject_to the power that was released exercised or lapsed is sec_26_2601-1 provides that a modification of the governing sec_26_2601-1 provides rules for determining when a modification plr-127654-04 treated as if that portion had been withdrawn and immediately retransferred to the trust at the time of the release exercise or lapse judicial construction settlement agreement or trustee action with respect to a_trust that is exempt from the gst tax under sec_26_2601-1 or hereinafter referred to as an exempt trust will not cause the trust to lose its exempt status the rules contained in sec_26_2601-1 are except as otherwise noted applicable only for purposes of determining whether an exempt trust retains its exempt status for gst tax purposes the rules do not generally 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 instrument of an exempt trust including a trustee distribution settlement or construction that does not satisfy sec_26_2601-1 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 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 b i d 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 transfer or the creation of a new gst transfer to determine whether a modification of an irrevocable_trust will shift a beneficial_interest in a_trust to a beneficiary who occupies a lower generation the effect of the instrument on the date of the modification is measured against the effect of the instrument in existence immediately before the modification if the effect of the modification cannot be immediately determined it is deemed to shift a beneficial_interest in the trust to a beneficiary who occupies a lower generation as defined in sec_2651 than the person or persons who held the beneficial_interest prior to the modification 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 sec_26_2601-1 provides that for purposes of sec_26 sec_26_2601-1 example involves a situation where in grantor executed an irrevocable_trust for the benefit of grantor's issue naming a bank and five other individuals as trustees in the appropriate local court approves a modification of the trust that decreases the number of trustees which results in lower plr-127654-04 administrative costs the modification pertains to the administration of the trust and does not shift a beneficial_interest in the trust to any beneficiary who occupies a lower generation as defined in sec_2651 than the person or persons who held the beneficial_interest prior to the modification in addition 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 therefore the trust will not be subject_to the provisions of chapter of the internal_revenue_code no additions have been made to trust after that date grandchild petitioned state court to instruct the trustee in the event that the beneficiary of trust is acting as trustee that such person shall exercise the trustee’s discretionary distribution powers only to provide for the beneficiary’s support education and medical_care state law establishes that a_trust beneficiary who is also a trustee can only make distributions to himself or herself based on an ascertainable_standard relating to health education support and maintenance as provided in sec_2041 and sec_2514 of the code in this case trust was irrevocable on date it is represented that based upon the information submitted and the representations made the issuance of instructions regarding the trustee’s power to make discretionary distributions when the beneficiary is acting as trustee is consistent with the terms of the instrument and applicable state law therefore the instructions would not result in any shift of a beneficial_interest in trust to a person or persons who occupy a lower generation as defined in sec_2651 than the person or persons who held the beneficial_interest prior to the modification further state court’s instructions will not extend the time for vesting of any beneficial_interest in trust beyond the period provided for prior to the modification therefore based upon the information submitted and representations made we conclude that the proposed modification to trust will not constitute an addition to trust or otherwise subject trust or distributions from trust to the gst tax accordingly assuming state court orders the issuance of instructions regarding the trustee’s power to make discretionary distributions when the beneficiary is acting as trustee such instructions will not cause trust to lose its gst exempt status grandchild also petitioned state court to modify paragraph of trust to provide for a new succession of trustees in the following order of priority grandchild then any person designated by written instrument signed by grandchild then bank state law provides that an interested person may petition the court in its discretion to appoint successor trustees based upon the information submitted and the representations made the proposed modification of paragraph is administrative in nature and does not shift a beneficial_interest in trust to a person or persons who occupy a lower generation as defined in sec_2651 than the person or persons who held the beneficial_interest prior to the modification further the modification will not extend the time for vesting of any beneficial_interest in trust beyond the period provided plr-127654-04 for prior to the modification therefore the modification will not cause trust to lose its exempt status for gst tax purposes further as discussed below the actual appointment of grandchild as successor trustee of trust will not result in grandchild possessing a general_power_of_appointment over trust corpus and income for purposes of sec_2041 accordingly the actual appointment of grandchild as successor trustee of trust will not constitute an addition to trust or otherwise subject trust or distributions from trust to the gst tax moreover assuming state court orders the appointment of successor trustees as petitioned the modification to paragraph of trust or the actual appointment of grandchild as trustee will not cause trust to lose its gst exempt status issue sec_2041 provides that the value of the gross_estate shall include the value of all property with respect to which the decedent has at the time of his death a general_power_of_appointment created after date or with respect to which the decedent has at any time exercised or released such a power_of_appointment by a disposition which is of such nature that if it were a transfer of property owned by the decedent such property would be includible in the decedent's gross_estate under sec_2035 to inclusive a general_power_of_appointment is defined in sec_2041 as a power which is exercisable in favor of the individual possessing the power his estate his creditors or the creditors of his estate under sec_2041 a power to consume invade or appropriate property for the benefit of the decedent relating to the health education support or maintenance of the decedent shall not be considered a general_power_of_appointment sec_20_2041-1 of the estate_tax regulations provides in part that if a_trust instrument provides that the beneficiary may appropriate or consume the principal of the trust the power to consume or appropriate is a power_of_appointment however the mere power of management investment custody of assets or the power to allocate receipts and disbursements as between income and principal exercisable in a fiduciary capacity whereby the holder has no interest therein except as an incidental consequence of the discharge of such fiduciary duties is not a power_of_appointment sec_20_2041-1 provides in part that the term general_power_of_appointment as defined in sec_2041 means any power_of_appointment exercisable in favor of the decedent his estate his creditors or the creditors of his estate except i joint powers to the extent provided in sec_20_2041-2 and sec_20_2041-3 and ii certain powers limited by an ascertainable_standard to the extent provided in sec_20_2041-1 a power_of_appointment exercisable for the sec_20_2041-1 provides that a power to consume invade appropriate plr-127654-04 purpose of discharging a legal_obligation of the decedent or for his pecuniary benefit is considered a power_of_appointment exercisable in favor of the decedent or his creditors income or corpus or both for the benefit of the decedent which is limited by an ascertainable_standard relating to the health education support or maintenance of the decedent is by reason of sec_2041 not a general_power_of_appointment a power is limited by such a standard if the extent of the holder’s duty to exercise and not to exercise the power is reasonably measurable in terms of his needs for health education or support or any combination of them as used in this subparagraph the words support and maintenance are synonymous and their meaning is not limited to the bare necessities of life a power to use property for the comfort welfare or happiness of the holder of the power is not limited by the requisite standard examples of powers which are limited by the requisite standard are powers exercisable for the holder’s support support in reasonable comfort maintenance in health and reasonable comfort support in his accustomed manner of living education including college and professional education health and medical dental hospital and nursing expenses and expenses of invalidism in determining whether a power is limited by an ascertainable_standard it is immaterial whether the beneficiary is required to exhaust his other income before the power can be exercised sec_2514 provides for a similar definition of a general_power_of_appointment for gift_tax purposes and sec_25_2514-1 of the gift_tax regulations contains provisions similar to sec_20_2041-1 sec_2514 provides that the exercise or release of a general_power_of_appointment created after date shall be deemed a transfer of property by the individual possessing such power in the present case the actual appointment of grandchild as successor trustee of trust will not cause grandchild as a beneficiary of trust acting as trustee to possess a general_power_of_appointment over trust grandchild 3’s power as trustee to distribute net_income and principal from trust to himself is limited by an ascertainable_standard relating to health maintenance support and education under the terms of the trust instrument and state laws accordingly pursuant to sec_20_2041-1 and sec_25_2514-1 grandchild as successor trustee will not possess a general_power_of_appointment that will cause the corpus and any undistributed_income of trust to be included in grandchild 3’s gross_estate under sec_2041 see revrul_78_398 1978_2_cb_237 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 the rulings contained in this letter are based upon information and plr-127654-04 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 letter is being sent to the taxpayer in accordance with the power_of_attorney on file with this office a copy of this sincerely george l masnik chief branch office of associate chief_counsel passthroughs and special industries enclosures copy for sec_6110 purposes copy of this letter ----------------------------------- -------------------- cc --------------------------------- ------------------------------------- cc ------------------------------------------------------------- ------------------------------------------------ ------------------------------------------- cc


department of the treasury employer_identification_number contact telephone number contact telephone number uil - internal_revenue_service p o box cincinnati oh release number release date date date legend b name c name x dollars amount y dollars amount dear you asked for advance approval of your educational grant procedures under internal_revenue_code sec_4945 this approval is required because you are a private_foundation that is exempt from federal_income_tax our determination we approved your procedures for awarding educational grants based on the information you submitted and assuming you will conduct your program as proposed we determined that your procedures for awarding educational grants meet the requirements of code sec_4945 as a result expenditures you make under these procedures won't be taxable description of your request your letter indicates that you will operate an educational grant program called b one of your purposes is to support charitable causes important to c and the communities it serves with a special emphasis on excellence in journalism the purpose of b is to provide a month fellowship consisting of a salary benefits and training to post graduates who are seeking to advance their careers in journalism you will seek applicants with a demonstrated passion for and commitment to journalism and a desire to learn the skills needed to lead the newsrooms of tomorrow you will design b to be a career defining experience for the participants because they will be given the opportunity to learn from top journalists as well as improve their leadership skills recipients of b will also convene for a series of workshops on leadership project management innovation and the business of journalism each recipient will receive a salary of x dollars plus benefits including medical and dental insurance for a total package valued at y dollars you have determined the amount of the fellowships by comparing b to other similar programs as well as considering the cost of living in host cities and the cost of training and travel the number of fellowships that you will award will be based on the budget allocation approved by your board you will publicize b through a mix of internal and external communications which may include press releases e-newsletters and social media accounts as well as email blasts and advertising in industry publications to be eligible for b applicants must have completed a bachelor’s degree by the time their site placement begins be in the early years of their career and demonstrate an interest in and capacity for journalism through previous experience and work however a bachelor’s degree in journalism is not required applicants must provide the following by your deadline a cover letter explaining why they desire the fellowship a resume primarily detailing work experience transcripts or other documentation that a bachelor's degree was earned letters of recommendation work samples a link to an online portfolio recipients will be chosen by a selection committee based on their capacity and expertise in reporting and writing as demonstrated by their resume and portfolio previous work experience recommendations and performance in the selection interviews the selection committee will consist of your representatives representatives from host sites and other outside experts furthermore employees of c may not occupy more than one-third of the seats on your selection committee the recommendations of the committee must be approved by your president in addition if you receive numerous applications you may ask c talent acquisition staff to help eliminate those submissions that do not meet your eligibility requirements and to identify those that appear to best meet your selection criteria relatives of members of your selection committee or your officers directors or substantial contributors are also not eligible for awards made under your program fellows must sign a fellowship contract committing months to b at the host site furthermore they must pass a background check and drug screening fellows will be under the daily supervision of an on-site supervisor appointed by the host site you will periodically contact the fellows and their supervisors because your goal is to work through any difficulties that might arise performance evaluations are also completed by the assigned supervisor on site however if a fellow fails to meet your letter catalog number 58222y a standards or those of the host site supervisors the contract may be terminated finally fellows are asked to complete an exit survey at the end of their fellowships you represent that you will complete the following arrange to receive and review grantee reports annually and upon completion of the purpose for which the grant was awarded investigate diversion of funds from their intended purposes take all reasonable and appropriate steps to recover the diverted funds ensure other grant funds held by the grantee are used for their intended purposes and withhold further payments to grantees until you obtain grantees’ assurances that future diversions will not occur and that grantees will take extraordinary precautions to prevent future diversions from occurring you represent that you will maintain all records related to the following individual grants including information to evaluate grantees grantees which are identified as a disqualified_person how the amount and purpose of each grant was established and how you established supervision and investigation of the grants described above basis for our determination the law imposes certain excise_taxes on the taxable_expenditures of private_foundations code sec_4945 a taxable_expenditure is any amount a private_foundation pays as a grant to an individual for travel study or other similar purposes however a grant that meets all of the following requirements of code sec_4945 is not a taxable_expenditure e e e the foundation awards the grant on an objective and nondiscriminatory basis the irs approves in advance the procedure for awarding the grant the grant is - - - ascholarship or fellowship subject_to sec_117 and is to be used for study at an educational_organization described in sec_170 or a prize or award subject_to the provisions of sec_74 if the recipient of the prize or award is selected from the general_public or to achieve a specific objective produce a report or similar product or improve or enhance a literary artistic musical scientific teaching or other similar skill or talent of the recipient to receive approval of its educational grant procedures sec_53_4945-4 requires that a private_foundation show e e e the grant procedure includes an objective and nondiscriminatory selection process the grant procedure results in the recipients performing the activities the grants were intended to finance the foundation plans to obtain reports to determine whether the recipients have performed the activities that the grants were intended to finance letter catalog number 58222y other conditions that apply to this determination this determination covers only the grant program described above this approval will apply to succeeding grant programs only if their standards and procedures don’t differ significantly from those described in your original request this determination applies only to you it may not be cited as precedent you cannot rely on the conclusions in this letter if the facts you provided have changed substantially you must report any significant changes in your program to the cincinnati office of exempt_organizations at internal_revenue_service exempt_organizations determinations p o box cincinnati oh you cannot make grants to your creators officers directors trustees foundation managers or members of selection committees or their relatives all funds distributed to individuals must be made on a charitable basis and must further the purposes of your organization you cannot award grants for a purpose that is inconsistent with code sec_170 you should keep adequate_records and case histories so that you can substantiate your grant loan distributions with the irs if necessary we've sent a copy of this letter to your representative as indicated in your power_of_attorney please keep a copy of this letter in your records if you have any questions please contact the person listed at the top of this letter sincerely stephen a martin director exempt_organizations rulings and agreements catalog number 58222y letter


- significant index number department of the treasury internal_revenue_service washington d c tax exempt and government entities nov i oq q tep ral az _ re trustees dear this letter is in reference to your request dated date as supplemented by the additional information provided by the plan’s authorized representative on approval has been granted for your request for a 5-year date automatic_extension for amortizing the unfunded liabilities described in sec_431 and sec_431 of the internal_revenue_code code and sec_304 and sec_304 of the employee_retirement_income_security_act_of_1974 erisa the extension of the amortization periods of the unfunded liabilities of the plan has been granted in accordance with sec_431 of the code this extension is effective for the plan_year beginning date and applies to the eligible outstanding amortization charge bases as of that date sec_431 of the code requires the secretary to extend the period of time required to amortize any unfunded_liability of a plan for a period of time not in excess of years if the plan submits an application meeting the criteria stated in sec_431 the plan has submitted the required information including a certification from the plan’s actuary that i absent the extension under subparagraph d a the plan would have an accumulated_funding_deficiency in the current plan_year or any of the succeeding plan years ii the plan_sponsor has adopted a plan to improve the plan's funding status iii the plan is projected to have sufficient assets to timely pay expected benefits and anticipated expenditures over the amortization period as extended and iv the notice required under paragraph d a has been provided _ we have sent a copy of this letter to the and to the - i letter should be sent to the enrolled_actuary for the plan a copy of this this ruling is directed only to the taxpayer that requested it sec_6110 of the internal_revenue_code provides that it may not be used or cited by others as precedent if you have any questions regarding this matter please contact sincerely david m ziegler manager employee_plans actuarial group


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 corp b02 plr-126203-09 date date legend parent ----------------------------------------------------------- ------------------------------------------------------------------- ---------------------------------- sub ---------------------- ----------------------------------------------------------- ------------------------------------------------------------------- sub ----------------------------------------------------------- ------------------------------------------------------------------- ------------------------------------- sub ----------------------------------------------------------- ------------------------------------------------------------------- -------------------------------- sub ----------------------------------------------------------- --------------------------------------------------------------- ---------------------------- company official ---------------------------------------------------------------------------------- ------------------ date date date -------------------------- -------------------------- --------------------- plr-126203-09 dear -------------- this letter responds to a letter dated date submitted on behalf of parent requesting an extension of time under sec_301_9100-1 through of the procedure and administration regulations to file an election parent is requesting an extension for parent and its subsidiaries to make an election the election to file a consolidated federal_income_tax return with parent as the common parent under sec_1_1502-75 of the income_tax regulations effective for the tax_year that ended date the material information is summarized below parent was formed on date on date parent acquired all the stock of sub sub and sub none of the acquisitions was a reverse_acquisition within the meaning of sec_1_1502-75 at the time of the date acquisition sub owned all the stock of sub and sub continues to own all the stock of sub an election under sec_1_1502-75 to file a consolidated_return for the taxable_year that ended on date was required to be filed by the due_date of parent’s return including extensions parent intended to file the election but for various reasons a valid election was not timely filed the period of limitations on assessment under sec_6501 has not expired for parent’s or any of its subsidiaries’ taxable years in which the election should have been filed or for any taxable years that would have been affected by the election had it been timely filed after the due_date for the election it was discovered that the election had not been filed subsequently this request was submitted under sec_301_9100-3 for an extension of time to file the election under sec_301_9100-1 the commissioner has discretion to grant a reasonable extension of time to make a regulatory election or a statutory election but no more than six months except in the case of a taxpayer who is abroad under all subtitles of the internal_revenue_code except subtitles e g h and i sec_301_9100-1 through provide the standards the commissioner will use to determine whether to grant an extension of time to make a regulatory election sec_301_9100-1 sec_301_9100-2 provides automatic extensions of time for making certain elections requests for relief under sec_301_9100-3 will be granted when the taxpayer provides evidence to establish that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government sec_301_9100-3 in this case the time for filing the election is fixed by the regulations ie sec_1_1502-75 therefore the commissioner has discretionary authority under sec_301_9100-3 to grant an extension of time for parent and its includible subsidiaries to file the election provided parent acted reasonably and in good_faith the requirements of sec_301_9100-1 and plr-126203-09 are satisfied and granting relief will not prejudice the interests of the government information affidavits and representations submitted by parent and company official explain the circumstances that resulted in the failure to timely file a valid election the information establishes that the request for relief was filed before the failure to make the election was discovered by the internal_revenue_service see sec_301_9100-3 based on the facts and information submitted including the representations made we conclude that parent has shown it acted reasonably and in good_faith the requirements of sec_301_9100-1 and sec_301_9100-3 are satisfied and granting relief will not prejudice the interests of the government accordingly an extension of time is granted under sec_301_9100-3 until days from the date on this letter for parent and its includible subsidiaries to file the election by filing a consolidated_return with parent as the common parent and attaching form_851 and a form_1122 for each of the includible subsidiaries for the taxable_year that ended date the above extension of time is conditioned on the taxpayers' parent's and its subsidiaries tax_liability if any being not lower in the aggregate for all years to which the election applies than it would have been if the election had been timely made taking into account the time_value_of_money no opinion is expressed as to the taxpayers' tax_liability for the years involved a determination thereof will be made by the applicable director's office upon audit of the federal_income_tax returns involved further no opinion is expressed as to the federal_income_tax effect if any if it is determined that the taxpayers' tax_liability is lower sec_301_9100-3 we express no opinion with respect to whether parent and its subsidiaries qualify substantively to file a consolidated_return further we express no opinion as to the tax consequences of filing the election late under the provisions of any other section of the code or regulations or as to the tax treatment of any conditions existing at the time of or resulting from filing the election late that are not specifically set forth in the above ruling for purposes of granting relief under sec_301_9100-3 we relied on certain statements and representations made by the taxpayer however the director should verify all essential facts in addition notwithstanding that an extension is granted under sec_301_9100-3 to file the election penalties and interest that would otherwise be applicable if any continue to apply 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 a copy of this letter must be attached to any income_tax return to which it is relevant alternatively taxpayers filing their returns electronically may satisfy this requirement by attaching a statement to their return that provides the date and control number of the letter_ruling plr-126203-09 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 _____________________________ ken cohen senior technician reviewer branch office of associate chief_counsel corporate