internal_revenue_service department of the treasury washington dc coniact person telephone number in reference to date t ep ra t1 dec lil a0l legend individual a individual b plan x trust fund fund dear this is in response to a request for a letter_ruling submitted by your authorized representative on date as supplemented by additional correspondence on august october and date concerning the minimum distribution_requirements under sec_401 of the internal_revenue_code the code your representative submitted the following facts and representations in support of your request individual a reached his required_beginning_date as that term is defined in sec_401 a on date and he died on date distributions from plan x to individual a prior to his death were based on his single recalculated life expectancy individual a executed a_trust instrument on date the trust and on date individual a designated the trust as the beneficiary of his account under plan x you represent that the trust is valid under state law individual b individual a’s daughter was named trustee of the trust your authorized representative asserts that pursuant to its terms the trust became irrevocable at the death of individual a article iv of the trust provided that the trust property be divided into two trust estates fund and fund at the death of individual a article v provided that upon individual a’s death individual b was entitled to the income and principal of fund subject_to a standard article v further provided that the remainder of assets under fund be paid and distributed to each child of individual b then living or to the lineal_descendants of each child the trust also entitled individual b to the income and principal subject_to a standard of fund under the terms of the trust individual b could appoint the remainder of any property in fund but the appointment was limited to her lineal_descendants your authorized representative asserts that the plan x administrator was provided a copy of the trust instrument at the time minimum distributions commenced individual b is older than any of her lineal_descendants referenced above as potential remaindermen of trust property based on the above facts and representations you request a ruling that for purposes of determining the required minimum distributions incident to the death of individual a individual b is treated as the designated_beneficiary of individual a’s account under plan x and therefore required minimum distributions from plan x may be made over individual b’s single life expectancy as the beneficiary with the shortest life expectancy of all potential beneficiaries existing at the time of individual a’s required_beginning_date sec_401 of the code provides that a_trust shall not constitute a qualified_trust under this subsection unless the plan provides that the entire_interest of each employee will be distributed to such employee not later than the required_beginning_date in accordance with regulations over the life of such employee or over the lives of such employee and a designated_beneficiary or over a period not extending beyond the life expectancy of such employee and a designated_beneficiary sec_401 of the code provides that for purposes of this paragraph the term required_beginning_date means april of the calendar_year following the later of the calendar_year in which the employee retires or attains age and sec_1_401_a_9_-1 of the proposed_regulations q a d-3 provides the general_rule that for purposes of determining the distribution period described in sec_401 of the code for distributions before death the designated_beneficiary will be determined as of the employee’s required_beginning_date sec_1_401_a_9_-1 of the proposed_regulations q a d-5 a provides that pursuant to d- 2a of this section only an individual may be a designated_beneficiary for purposes of determining the distribution period under sec_401 consequently a_trust may not be the designated_beneficiary even though the trust is named as beneficiary however if the requirements of paragraph b of this d-5 are met distributions made to the trust will be treated as having been paid to the beneficiaries of the trust with respect to the employee’s interest under the plan for purposes of determining the distribution period under sec_401 if as of any date on or after the employee’s required_beginning_date a_trust is named as a beneficiary of the employee and the requirements of paragraph b of this d-5 are not met the employee will be treated as not having a designated_beneficiary under the plan for purposes of sec_401 consequently for calendar years beginning after that date distributions must be made over the employee’s life or over the period which would have been the employee’s remaining life expectancy determined as if no beneficiary had been designated as of the employee’s required_beginning_date the requirements of paragraph d-5 b are met if as of the later of the date on which the trust is named as a beneficiary of the employee or the employee’s required_beginning_date and as of all subsequent periods during which the trust is named as a beneficiary the following requirements are met the trust is a valid trust under state law or would be but for the fact that there is no corpus the trust is irrevocable or will by its terms become irrevocable upon the death of the employee the beneficiaries of the trust who are beneficiaries with respect to the trust’s interest in the employee’s benefit are identifiable from the trust instrument within the meaning of d-2 of this section the documentation described in d-7 of this section has been provided to the plan_administrator sec_1_401_a_9_-1 of the proposed_regulations q a e-5 a provides that if more than one individual is designated as a beneficiary with respect to an employee as of the applicable_date for determining the designated_beneficiary the designated_beneficiary with the shortest life expectancy will be the designated_beneficiary for purposes of determining the distribution period sec_401 of the code provides that where distributions of an employee’s interest have begun in accordance with subparagraph a ii concerning required distributions and the employee dies before his interest has been distributed to him the remaining portion of such interest will be distributed at least as rapidly as under the method of distribution being listed under subparagraph a ii as of the date of his death in this case individual a participated in plan x a qualified_retirement_plan individual a began taking minimum distributions in and died in the beneficiary of his interest in plan x was the trust a_trust in effect at individual a’s required_beginning_date the trust provided that individual b is the income and principal beneficiary subject_to a standard of fund and fund the trust satisfies the requirements of sec_1_401_a_9_-1 of the proposed_regulations q a d-5 the facts indicate that only the children of individual b or if deceased the children of individual b’s children are entitled to the remainder of the trust assets individual b is the oldest beneficiary of all potential beneficiaries of individual a’s interest in plan x accordingly we conclude that individual b is treated as the designated_beneficiary of individual a’s account under plan x and therefore that minimum required distributions may be made to individual b over her single life expectancy measured from individual a’s required_beginning_date the above ruling is based on assumption that plan x is qualified at all times relevant to the transaction this ruling is directed only to the taxpayers who requested it sec_6110 of the code provides that it may not be used or cited by others as precedent a copy of this ruling is being sent to your authorized representative in accordance with a power_of_attorney on file in this office sincerely yours ign’ she john swieca john swieca manager employee_plans technical group tax_exempt_and_government_entities_division enclosures deleted copy of this letter notice of intention to disclose cc


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 b03 plr-124289-09 date date x --------------------------------------------------------------------------------------------------- ----------------------- legend country --------------------- date ----------------- dear ---------- this letter responds to a letter dated date and subsequent correspondence submitted on behalf of x by its authorized representative requesting that x be granted an extension of time under sec_301_9100-3 of the procedure and administration regulations to elect to be treated as a disregarded_entity under sec_301_7701-3 facts x was formed under the laws of country on date x represents that it is a foreign_entity eligible to elect to be classified as a disregarded_entity for federal tax purposes 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 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 eligible_entity can elect its classification for federal tax purposes as provided in plr-124289-09 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_7701-3 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 except as provided in sec_301_7701-3 and v an eligible_entity may elect to be classified other than as provided in 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 in part that an election made under sec_301_7701-3 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 sec_301_9100-1 through provide the standards the commissioner will use to determine whether to grant an extension of time to make the election sec_301_9100-1 provides that 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 code except subtitles e g h and i sec_301_9100-1 defines the term regulatory election as an election whose due_date is prescribed by a regulation published in the federal_register or a revenue_ruling revenue_procedure notice or announcement published in the internal_revenue_bulletin sec_301_9100-2 provides the rules governing automatic extensions of time for making certain elections sec_301_9100-3 provides the standards the commissioner will use to determine whether to grant an extension of time for regulatory elections that do not meet the requirements of sec_301_9100-2 plr-124289-09 sec_301_9100-3 provides that requests for relief under sec_301_9100-3 will be granted when the 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 information submitted and the representations made we conclude that the requirements of sec_301_9100-1 and sec_301_9100-3 have been satisfied as a result x is granted an extension of time of days from the date of this letter to file a form_8832 with the appropriate service_center to elect to be treated as a disregarded_entity effective date a copy of this letter should be attached to the form_8832 except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter this ruling is directed only to the taxpayer requesting it sec_6110 of the code provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office we are sending a copy of this letter to your authorized representative 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 s curt g wilson associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes cc


department of the treasury internal_revenue_service number release date index number washington dc person to contact telephone number refer reply to cc psi - plr-108518-03 date date x a d1 dear this letter responds to your letter date submitted on behalf of x requesting a ruling under sec_1362 of the internal_revenue_code the information submitted states that x was incorporated on d1 a x’s sole shareholder represents that he intended for x to be an s_corporation effective d1 x filed a form ss-4 application_for employer_identification_number indicating that x was an s_corporation however no form_2553 election by a small_business_corporation was timely filed for x sec_1362 of the code provides that if -- a an election under sec_1362 is made for any taxable_year after the date prescribed by sec_1362 for making such election for such taxable_year or no such election is made for any taxable_year and b the secretary determines that there was reasonable_cause for the failure to timely make such election the secretary may treat such an election as timely made for such taxable_year based solely on the facts and the representations submitted we conclude that x has established reasonable_cause for failing to make a timely election to be an s_corporation effective d1 accordingly provided that x makes an election to be an s_corporation by filing a completed form_2553 effective d1 along with a copy of this letter with the appropriate service_center within days from the date of this letter then such election will be treated as timely made for d1 plr-108518-03 except as specifically set forth above no opinion is expressed concerning the federal tax consequences of the facts described above under any other provision of the code including whether x was or is a small_business_corporation under sec_1361 of the code this ruling is directed only to the taxpayer who requested it sec_6110 of the code provides that it may not be used or cited as precedent pursuant to a power_of_attorney on file with this office a copy of this letter is being forwarded to x sincerely yours j thomas hines chief branch associate chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes


third party communication date of communication month dd yyyy cca-06031123-15 id uilc number release date from ---------------- sent wednesday date am to ------------------------ subject fw assistance with privacy question i don’t have any actual experience in dealing with the federal reserve but my reading of item and the exception found in section finds that it would serve as a statement as to why the act does not apply to the request i believe however that the exception is most often used in conjunction with summonsed information for which particular procedures are set forth in title_26 as to protecting the information i don’t see that requirement enumerated below but the protections that the irs accords return_information would more than satisfy any protections accorded by the rfpa question for you are you okay with the requirement in item which states a commitment that the information requested shall not be disclosed to any person outside the agency without the written permission of the board or its general counsel ------------------------ ------------------------------- -------------------------- ---------------------------- ------------------------


department of the treasury internal_revenue_service te_ge eo examination date taxpayer_identification_number person to contact id number contact numbers telephone fax government entities division release number release date uil code dear during our examination of the return s indicated above we determined that your organization was not described in internal_revenue_code sec_501 for the tax period s listed above and therefore it does not qualify for exemption from federal_income_tax this letter is not a determination of your exempt status under sec_501 for any period other than the tax period s listed above the attached report of examination form 886-a explanation of items summarizes the facts the applicable law and the service’s position regarding the examination of the tax period s listed above you have agreed with our determination by signing form 6018-a consent to proposed action accepting our determination of non-exempt status for the period s stated above you have filed the required income_tax retums in the future if you believe your organization qualifies for tax-exempt status and would like to establish its status you may request a determination from the internal_revenue_service by filing form_1024 application_for recognition of exemption under sec_501 and paying the required user_fee you have the right to contact the office_of_the_taxpayer_advocate taxpayer_advocate assistance is not a substitute for established irs procedures such as the formal appeals process the taxpayer_advocate cannot reverse a legally correct_tax determination or extend the tithe fixed by law that you have to file a petition in a united_states court the taxpayer_advocate can sec that a tax matter that may not have been resolved through normal channels gets prompt and proper handling you may call toll-free and ask for taxpayer_advocate assistance if you prefer you may contact your local taxpayer_advocate at _ local taxpayer_advocate letter catalog number if you have any questions please call the contact person at the telephone number shown in the heading of this letter need to contact you if you write please provide a telephone number and the most convenient time to call if we thank you for your cooperation sincerely vicki l hansen acting director eo examinations enclosures form 886-a letter catalog number 48368b deparihent of the treasury internal revenue servwe explanation of items schedule no or exhibit e a m name of taxpayer 20xx issues can the intemal revenue code for the period ending december 20xx when their primary activities consist of the operation of a multiple listing service hereinafter referred to as mls and the publication of a homes magazine that are considered particular services for members qualify for exempt status under sec_501 of the facts hereinafter referred to the return of organization exempt from income for the period ending december 2cxx j organization type that they are described within sec_501 of the internal_revenue_code the a with the service the service records show that the current status of the organizations other than c or without determination letters but who file forms and a subsection code of c has never filed a form_1024 application_for recagnition of exemption under section has shown on their filed form is _is incorporated in the state of under the general not for profit corporation law on march 19xx their articles of incorporation article v sections a through f hold that the purposes for which was formed are v v counties of for the purpose of exerting a beneficial influence upon the real_estate business and to unite those engaged in the real_estate business in the and related interest to promote and maintain high standards of conduct in the real_estate business to provide a unified medium for real_estate owners and those engaged in the real_estate business whereby their interests may be safeguarded and advanced to further the interest in home and other real_property ownership to unite those engaged in the real_estate business in the and thereby furthering their own objectives throughout the state and nation and obtaining the benefits and privileges of membership therein to designate for the benefit of the public those individuals within its jurisdiction authorized to use the term realtor and realtor associate as prescribed and controlled by the national association of realtors association of realtors and the national association of realtors counties of with the form acrev deparunent of the ‘l'reasury - internal_revenue_service page -1- deparuviénr of the treasury ntemal revenue service form 886a name of taxpayer explanation of items schedule no or exhibit 20xx _has a full-time_employee association executive and a part-time_employee to assist the the association executive with his her duties following is a breakdown of the associate executive's time spent by activity education association of realtors hereinafter referred to as activities hour sec_40 offsite non- new member orientation lc education and business meetings mls training board co-sponsored education note exampies of courses offered onsite site sewage system sec_2 local impact on state government quarteny ae seminar sec_3 time management technology a total hours member management activities hours _ __ total hours committee support general phone cails board and general member meetings files management roster management accounting functions correspondence meetings new member registration training caravan tours software management hour sec_50 activities related to mls listing activities total hours _ phone calls form acrev cs page -2- department of the treasury - internal_revenue_service departrbém of the treasury - internal_revenue_service explanation of items schedule no or exhibit form 886a name of taxpayer 20xx lockbox and key management activities hardware management_contract management _key programming and reprogramming total hours hour sec_65 notes this comes to a total of hours for the year the schedule below shows the associate executive's time spent on activities related to exempt_purpose and activities that constitute particular services nonexempt description associate executive's time spent homes - magazine hours spent exempt mls hours hours other total activities hours education a os a roster management member management committee support accounting functions correspondence general phone cails board general membership ____files management ___ listing activities lockbox and key management homes magazine other activitie sec_1278 description total mls _ oe non exempt_activities percentage totals hours spent total hours available _ percentage totals __ _ sec_5 form acrev deparunent of the treasury - internal_revenue_service - page -3- name of taxpayer form_886 a depannin of the treasury - intemal revenue service explanation of items ‘schedule no or exhibit 20xx the time spent by volunteers on _committees is as follows ___total volunteer hours by committee committee mls homes magazine awards bylaws banquet membership feeo legislative rpac nominations education programs strategic plan plan of action ____total volunteer hours hour sec_164 __ aq _ - volunteer committee hours _ non description ___ mls homes magazine awards ‘bylaws __ banquet education membership eeo legislative rpac rewer ame nme percentage hours ours toles spent spent available sec_4 nominations _ strategic plan plan of of actio n oo ol b38 totals a -_ _ the breakdown of the mls income is as follows income service charge is dollar_figure dollar_figure for the certified appraiser per month or dollar_figure per year plus an annual board membership fee of the number of members is approximately the number of members times dollar_figure per v v v year equals dollar_figure according to part vil 93a of the form_990 the income for the total income for the organization is dollar_figure based on the above information the income for the mls service i sec_23 of income the mls service was dollar_figure total form aciev deparument of the treasury - intemal revenue service page -4- depacraefir ot che treasury - imemas revenue service 886a form orm name of taxpayer explanation of items exhibit 20xx the breakdown of the homes magazine income is as follows income the monthly homes magazine fees are based on how many partial page ads and full-page ads each realtor wants to use the income reported on form_990 part vii 93b is dollar_figure the total income for the organization is dollar_figure based on the above information the homes magazine service i sec_44 of the breakdown of the expenses for the exempt and non-exempt purposes is as follows -income direct age mls age home non description expense amount expenses for expenses exempt_purpose mls amount expenses homes mag magazine amount exempt expense amount dollar_figure _ _ dollar_figure js dollar_figure sef dollar_figure fe sec_4 dollar_figure _ dollar_figure dollar_figure dollar_figure dollar_figure - dollar_figure dollar_figure dollar_figure dollar_figure salaries payroll_taxes accounting fees supplies telephone postage shipping equipment rental maintenance copierlease dollar_figure printing publications travel dollar_figure dollar_figure conferences conventions meetings board _fucntions _ interest rent continuing education miscellaneous warranty support repairs dues subscriptions other expenses insurance furniture totals dollar_figure dollar_figure dollar_figure _dollar_figure sec_33 _dollar_figure __dollar_figure dollar_figure dollar_figure dollar_figure dollar_figure _ sec_4 dollar_figure dollar_figure we _100 dollar_figure dollar_figure dollar_figure dollar_figure dollar_figure _ ss dollar_figure dollar_figure dollar_figure s dollar_figure dollar_figure dollar_figure dollar_figure dollar_figure dollar_figure to dollar_figure q form axrev deparanent of the treasury - internal reve aue service page -5- form 886a --oo- deparuitent of the treasury - imtemal revenue service ‘schedule no or explanation of items exhibit name of taxpayer 20xx law sec_501 provides the following definition business_leagues chambers_of_commerce real- estate boards boards_of_trade or professional_football_leagues whether or not administering a pension fund for football players not organized for profit and no part of the net_earnings of which inures to the benefit of any private_shareholder_or_individual sec_1 c -1- provides in part that a business league is an association of persons having some common business_interest the purpose of which is to promote such common interest and not to engage in a regular business of a kind ordinarily carried on for profit it is an organization of the same general class as a chamber of commerce or board_of trade thus its activities should be directed to the improvement of business conditions of one or more lines of business as distinguished from the performance of particular services for individual persons an organization whose purpose is to engage in a regular business of a kind ordinarily carried on for profit even though the business is conducted on a cooperative basis or produces only sufficient income to be self-sustaining is not a business league revrul_59_234 1959_2_cb_149 - held that an organization whose primary purpose is to stimulate and facilitate the transaction of business between members through cooperation and exchange of exclusive listings which is inherently designed for the rendering of particular services for individual members as a convenience and economy in the conduct of their respective businesses is not entitled to exemption from federal_income_tax as an organization described in c of the code revrul_78_52 1978_1_cb_166 - held that the distribution of a magazine by a business league exempt from federal_income_tax under sec_501 c of the internal_revenue_code of is unrelated_trade_or_business within the meaning of sec_513 governments position the total amount of time spent during the year by the associate executive on providing particular services for members the mls homes magazine and other activities is hours out of total hours or the total amount of time spent during the year by volunteers on providing particular services for members the mls homes magazine service and awards service i sec_269 hours out of hours or the total amount of income devoted to particular services for members the mls and the homes magazine is dollar_figure total income or the total amount of expenses devoted of the dollar_figure form a rev page -6- department of the treasury - intemal revenue service oo ‘ deparinem of the aeasury- diternal revenue service __ explanation of items schedule no or exhibit f 886a name of taxpayer 20xx to particular services for members the mls and the homes magazine services is dollar_figure dollar_figure total expenses or of the articles of incorporation provide that the purpose of the the the real_estate business to promote and maintain high standards of conduct to provide a unified medium for real_estate owners and those engaged in real_estate to further the interest in home or other_property ownership and to allow individuals to use the term realtor and realtor associate as prescribed by the national association of realtors this purpose promotes the member and not the industry as a whole to unite those engaged in operation is substantially devoted both time spent and financially to as shown above activities that are considered particular services to members as described in revrul_59_234 1959_2_cb_149 and revrul_78_52 1978_1_cb_166 these rulings held the organizations not to be a business league within the intendment of sec_501 of the code revocation of the organizations exempt status under c of the code was proposed and upheld a minimal amount of the whole as described in regulation sec_1_501_c_6_-1 it has been shown that assets of the inuring to the member which is prohibited under sec_501 of the code ‘time spent and finances are devoted to activities that benefit the industry as a are therefore it is the government's position that the and multiple listing services are a substantial part of particular services to their members rather than to the business industry as a whole the activities of the realty companies are no different than that of a for-profit organization or other activities of operating the homes magazine operations and these services provide taxpayer's position to be submitted by taxpayer conclusion based on the information above it is concluded that the does not meet the requirements to be recognized as exempt from federal_income_tax under sec_501 c of the internal_revenue_code accordingly the -is not eligible to file the form_990 return of exempt_organizations for the period ending december 20xx or any period thereafter unless they can show to the service that their activities have changed and can qualify for exempt status under sec_501 of the code form_1120 returns should be filed for the tax periods after january 20xx form at rev deparment of the ‘treasury - internal_revenue_service page -7-


department of the treasury internal_revenue_service washington d c t a x e x e m p t a n d g o v e r n m e n t e n t i t i e s d i v i s i o n contact person se te eo ra t pe telephone number identification_number employer_identification_number number release date date date no third party contact uil legend b -- c-- d-- m-- n -- p-- q--- r - s- t--- v--- x-- y-- z -- dear ------------------ partnership units and related transactions that will occur upon the death of x will constitute acts of direct or indirect acts of self-dealing under sec_4941 of the code foundation under sec_509 the directors of m are x y and z m’s mission is to provide funds to certain charitable organizations that are tax exempt under sec_501 funds the primary unit holders of n are p b c and d p is a holding_company that is owned by x b and c are x’s sons n is a limited_partnership engaged in the management and distribution of publicly traded this is in response to your ruling_request as to whether the redemption of certain limited n manages and distributes certain publicly traded mutual funds known as r q holds a m is exempt from tax under sec_501 of the code and classified as a private x is the founder of n and serves as its senior research advisor and serves as the chairman x’s estate is expected to have sufficient assets other than p’s shares to fully fund the s provides that after x’s death after the payment of his debts administration_expenses general_partnership interest in n b serves as the chairman and ceo of q which is the general_partner of n c is the president of n approximately -----------of n limited_partner units are owned either directly or indirectly by x b and c p is a holding_company and has a ------------- interest in n and real_estate and ceo of p y is married to x x’s will provides that after the payment of debts administration_expenses and after certain bequests of tangible_personal_property and residential real_estate x’s residuary shall be paid to the trustee of a revocable_trust agreement with x as settlor and an unrelated individual as trustee and taxes the trust will be distributed to two marital trusts for the lifetime benefit of y if she survives x the marital trusts are designed to qualify for the estate_tax_marital_deduction under sec_2056 of the code upon y’s death and after payment of any applicable administration_expenses and taxes the remaining assets of the marital trusts up to a defined pecuniary amount will be divided into separate shares for the benefit of x’s living descendants all remaining trust assets in excess of the pecuniary bequests will be distributed outright to m a private_foundation formed and funded by x pecuniary bequests accordingly x’s estate plan should cause his p shares to pass to m after the deaths of x and y m would then indirectly own units in n through p by n x b and c are also concerned about the potential sec_4941 self dealing problems that might arise by m indirectly owning interests in n as well as the taxes imposed under sec_4943 of the code for excess_business_holdings accordingly n p and x have entered into a redemption agreement whereby the n units currently owned by p as well as any n units owned directly by x would be redeemed for fair_market_value upon x’s death binding on x’s estate and s the transactions under the redemption agreement will be completed before x’s estate is considered terminated for federal_income_tax purposes under sec_1_641_b_-3 of the regulations or before s is considered subject_to sec_4947 of the code the purchase_price of n units purchased under the redemption agreement would be the higher of the unit formula price provided under the n agreement or the finally determined estate_tax_value of the n units the formula price is based on a combination of n’s assets under management and a multiple of n’s adjusted earnings as measured at the time of purchase historically the unit formula price has been used in situations where a limited_partner is prohibited from assigning his or her n units under the terms of the n agreement and must sell the units back to either n or the general_partner in addition the formula price has been used in connection with n’s employee unit options and unit appreciation rights the formula price has also been used in recent sale transactions between the partners x’s estate and or s will receive an amount that equals or exceeds the fair_market_value of m’s interest or expectancy in x b and c desire to have all n units owned by members of x’s family or person employed under the terms of the redemption agreement the purchase and sale of the n units are the note will be payable in ten equal annual installments beginning one year after the the purchase_price of the n units purchased under the redemption agreement will be n units at the time of the transaction taking into account the terms of the redemption agreement paid at closing with a combination of cash and a promissory note note the executor of x’s estate and s trustee will seek approval from the probate_court having jurisdiction over the applicable entities or entity to sell the n units under the redemption agreement the cash will equal the lesser_of t or the purchase_price and the note will equal the purchase_price less the cash payment the formula price of the n units currently owned by p is v as of august ----- ------ the initial principal value of the note will be adjusted retroactively to reflect any increase in the value of the n units for federal estate_tax purposes at the time such values have been finally determined closing and can be pre-paid at any time the note will bear interest at the then effective applicable_federal_rate the note repayment is subject_to a debt service limitation the limitation provides that the total interest and principal payments due for any year under the note shall not exceed of the pro_rata cash_flow of the redeemed units pro_rata cash_flow is the percentage interest in n represented by the redeemed units times the amount of available cash as defined in the n agreement available cash is defined as of n’s net book income excluding death_benefits under key man life_insurance or such lesser amount as is approved by in interest of the general_partner and voting limited_partner units calculated on the basis of the four calendar quarters most recently ended prior to the date as of which the pro_rata cash_flow is determined payments deferred under the debt service limitation are due on the next payment_date again subject_to the debt service limitation notwithstanding the debt service limitation all interest or principal on the note must be paid no later than years after the redemption date time after y passes away or upon x’s death if he survives y the remaining balance on the note and any remaining repayment proceeds will be distributed to m after payment of the pecuniary bequests and any properly payable debts administration_expenses and taxes reasonable protections to the note holder specifically the note will become immediately due and payable at the option of the holder and the outstanding balance will bear a default interest rate equal to over the initial interest rate in addition during the term of any default n is prohibited from making any dividends distributions or loans to its partners as well as other restrictions listed in the redemption agreement and its net assets distributed to its shareholders according to their respective interests because x owns of p it is expected that the shareholder would be paid in cash from the sale and the estate’s share would consist of the note and any other remaining assets the note and its repayment proceeds will be distributed to the marital trusts during y’s life following the redemption of the n units from p it is expected that p would be liquidated if the note is in default the redemption agreement and note contain commercially you are seeking the following rulings the redemption of the n units and subsequent liquidation of p will not constitute acts of direct or indirect acts of self dealing under sec_4941 of the code to b c p and x the receipt holding collection and distribution of the note or the net_proceeds of the note by the estate s marital trusts or m will not cause the redemption or the holding of the note to become a direct or indirect act of self-dealing under sec_4941 of the code payments on the note while it is held by estate s marital trusts and or m will not result in direct or indirect acts of self dealing under sec_4941 of the code sec_4941 of the code imposes a tax on acts of self-dealing between a sec_4946 defines the term disqualified persons with respect to a private law disqualified_person as defined in sec_4946 and a private_foundation sec_4941 of the code provides in part that the term self dealing means any direct or indirect sale_or_exchange of property or the extension of credit between a foundation and a disqualified_person foundation as including a substantial_contributor to the foundation a foundation_manager and an owner of more than percent of the total combined voting power of a corporation which is a substantial_contributor to the foundation it also includes a member_of_the_family of any individual described above it also includes a corporation partnership trust or estate in which persons described above hold more than percent of the beneficial_interest therein trustee of a foundation or an individual having powers or responsibilities similar to those officers directors or trustees of the foundation sec_4946 states that the term family with respect to any individual that is a disqualified_person includes the spouse children of and grandchildren of the disqualified_person contributed or bequeathed an aggregate amount of more than dollar_figure to a private_foundation if such amount is more than percent of the total contributions and bequests received by the foundation before the close of the taxable_year of the foundation in which the contribution or bequest is received by the foundation from such person in the case of a_trust the term substantial_contributor also means the creator of the trust purposes of sec_4941 the term self-dealing means any direct or indirect transaction described in sec_53_4941_d_-2 of the regulations sec_53_4941_d_-1 of the regulations states that indirect self-dealing includes any transaction between a disqualified_person and an organization controlled by a private_foundation sec_53_4941_d_-1 of the foundation and excise_tax regulations provides that for the sec_4946 defines the term foundation_manager as including an officer director or sec_507 of the code defines a substantial_contributor as any person who sec_53_4941_d_-1 of the regulations provides that the term indirect self-dealing shall not include a transaction with respect to a private foundation’s interest or expectancy in property whether or not encumbered held by an estate or revocable_trust including a_trust which has become irrevocable on a grantor’s death regardless of when title to the property vest under local law if i the administrator or executor of an estate or trustee of a revocable_trust either a possess a power of sale with respect to the property b has the power to reallocate the property to another beneficiary or c is required to sell the property under the terms of any option subject_to which the property was acquired by the estate or revocable_trust ii iii iv such transaction is approved by the probate_court having jurisdiction over the estate or by another court having jurisdiction over the estate_or_trust or over the private_foundation such transaction occurs before the estate is considered to be terminated for federal_income_tax purposes pursuant to paragraph a of sec_1_641_b_-3 of this chapter or in the case of a revocable_trust before it is considered to be subject_to sec_4947 the estate_or_trust receives an amount which equals or exceeds the fair market of the foundation’s interest or expectancy in such property at the time of the transaction taking into account the terms of any option to which the property was acquired by the estate_or_trust and v with respect to transactions occurring after date the transaction either- a results in the foundation receiving an interest or expectancy at least as liquid b results in the foundation receiving an asset related to the active carrying out of as the one it gave up its exempt purposes or trust c is required under the terms of any option which is binding on the estate or sec_53_4941_d_-2 of the regulations provides that the transfer of real or personal_property by a disqualified_person to a private_foundation shall be treated as a sale_or_exchange if the foundation assumes a mortgage or similar lien which was placed on the property prior to the transfer or takes subject_to a mortgage or similar lien which a disqualified_person placed on the property within the year period ending on the date of the transfer for purposes of this subparagraph term similar lien shall include but is not limited to deeds of trust and vendors’ liens but shall not include any other lien if such lien is insignificant in relation to the fair_market_value of the property transferred sec_4947 of the code provides that certain trusts which are not exempt under sec_53_4941_d_-2 of the regulations provides that the lending of money or other extension of credit between a private_foundation and a disqualified_person shall constitute an act of self-dealing thus for example an act of self dealing occurs where a third party purchases property and assumes a mortgage the mortgagee of which is a private_foundation and subsequently the third party transfers the property to a disqualified_person who either assumes a liability under the mortgage or takes the property subject_to a mortgage similarly except in the case of the receipt and holding of a note pursuant to a transaction described in sec_53_4941_d_-1 an act of self dealing occurs where a note the obligor of which is a disqualified_person is transferred by a third party to a private_foundation is transferred by a third party to a private_foundation which becomes the creditor under the note sec_501 of the code are treated as private_foundations and subject_to the excise_taxes imposed by chapter sec_4947 of the code provides that trusts which are not exempt under sec_501 not all of the unexpired interests in which are devoted to one or more of the purposes described in sec_170 sec_545 sec_556 sec_642 sec_2055 sec_2106 or sec_2522 are subject_to the provisions of sec_507 sec_508 and to the extent applicable in the same manner as if such trusts were private_foundations sec_53_4947-1 of the regulations provides that when an estate from which the executor or administrator is required to distribute all of the net assets in trust for charitable beneficiaries or free of trust to such beneficiaries is considered terminated for federal_income_tax purposes under sec_1_641_b_-3 the estate will be treated as a charitable_trust under sec_4947 between the date on which the estate is considered terminated under sec_1_641_b_-3 and the date of the final distribution of all of the net assets is made to or for the benefit of the charitable beneficiaries interests are charitable_remainder interests and in which the charitable beneficiaries have become entitled to distribution of corpus in trust or free of trust shall continue to be treated as a split interest trust under sec_4947 until the date on which final distribution of all the net assets is made however if after the expiration of any intervening interests the trust is considered terminated for federal_income_tax purposes under sec_1_641_b_-3 the trust will be terminated as a charitable_trust under sec_4947 rather than as a split-interest trust under sec_4947 between the date on which such final distribution of all of the trust assets is made to or for the benefit of the charitable_remainder beneficiaries rationale x is a disqualified_person with respect to m as described in sec_4946 of the code by being a substantial_contributor to m as described in sec_507 of the code y is a disqualified_person with respect to m within the meaning of sec_4946 by being the wife of x b and c are disqualified persons with respect to m because they are the children of x n p s are disqualified persons with respect to m because more than of their beneficial sec_53_4947-1 provides that a split-interest trust in which all of the unexpired following the redemption of the units by p it will be liquidated and its net assets a transaction will not be subject_to the self-dealing rules described in sec_4941 if the the redemption agreement between n p and x would be considered a sale_or_exchange interests are being held by b c and x of property for purposes of sec_4941 because the transaction is between x a disqualified_person and p and n organizations that are disqualified persons with respect to m as described in sec_53_4941_d_-1 of the regulations distributed to its shareholder according to their respective interests m has an expectancy in p the redemption to p will be for a combination of cash and a note and ultimately distributed to m the potential holding of the note according to the terms of the redemption would be an act of self-dealing as described in sec_53_4941_d_-2 of the regulations unless it falls within the estate exception transaction involves situations that take place during the administration of an estate or revocable_trust as described in sec_53_4941_d_-1 of the regulations sec_53_4941_d_-1 has been satisfied in this situation because the executor of x’s estate and the s have a power of sale with respect to the p stock and n units and they will seek approval from the probate_court having jurisdiction over the applicable_entity or entities to sell n units under the redemption agreement the transactions under the redemption agreement will be completed before the x estate is considered terminated for federal_income_tax purposes under sec_1_641_b_-3 of the code or before s is considered subject_to sec_4947 of the code x’s estate and s will receive an amount that equals or exceeds fair_market_value of m’s interest or expectancy in the n units at the time of the transaction taking into account the terms of the redemption agreement and the sale of the n units under the redemption agreement is required under the terms of that agreement and that agreement will be legally binding on x’s estate and s or m in exchange for the n units is not considered an act of self dealing under sec_53_4941_d_-2 of the regulations because the note may be transferred to m during the administration of x’s estate based on the following we rule as follows furthermore the transfer of the note or the net_proceeds to the estate of x s marital trust sec_1 the redemption of the n units and subsequent liquidation of p will not constitute acts of direct or indirect acts of self dealing under sec_4941 of the code to b c p and x the receipt holding collection and distribution of the note or the net_proceeds of the note by the estate s marital trusts or m will not cause the redemption or the holding of the note to become a direct or indirect act of self-dealing under sec_4941 of the code payments on the note while it is held by estate s marital trusts and or m will not result in direct or indirect acts of self dealing under sec_4941 of the code this ruling will be made available for public inspection under sec_6110 of the code if you have any questions about this ruling please contact the person whose name and this ruling is directed only to the organization that requested it sec_6110 of the after certain deletions of identifying information are made for details see enclosed notice notice of intention to disclose a copy of this ruling with deletions that we intend to make available for public inspection is attached to notice if you disagree with our proposed deletions you should follow the instructions in notice code provides that it may not be used or cited by others as precedent telephone number are shown in the heading of this letter enclosure notice steven b grodnitzky acting manager exempt_organizations technical group sincerely


t c memo united_states tax_court william mark scott petitioner v commissioner of internal revenue respondent docket no 1224-17w filed date william mark scott pro_se philip edward blondin patricia p davis and kevin g gillin for respondent memorandum opinion jacobs judge this case is before the court on respondent’s motion for summary_judgment filed date pursuant to rule petitioner filed his response in opposition to motion for summary_judgment on date for the 1unless otherwise noted all rule references are to the tax_court rules_of_practice and procedure and all section references are to the internal_revenue_code_of_1986 as amended reasons discussed infra we conclude that there is no dispute as to a material fact and thus this case is ripe for summary adjudication background petitioner is the former director of the internal_revenue_service irs office of tax exempt bonds tax exempt bonds he worked for more than years at the irs and the irs office_of_chief_counsel he has more than years’ experience in the area of tax-exempt municipal_bonds on date the irs whistleblower office whistleblower office received a form_211 application_for award for original information with an attached narrative and exhibits from petitioner the form_211 alleges that certain tax-exempt_bonds issued by a u s city’s industrial development agency agency did not qualify for tax exempt treatment the form_211 alleged that the bonds violated the general arbitrage yield restriction rules of sec_1_148-2 income_tax regs and thus concluded that the bonds were taxable private_activity_bonds the form_211 noted that a prior examination of the bonds was closed without any adjustments petitioner’s claim was assigned claim no and the whistleblower office sent petitioner a letter acknowledging receipt of his form_211 on or about date on date petitioner’s form_211 was forwarded for review to a subject matter expert in the irs tax_exempt_and_government_entities_division te_ge on date the form_211 was further forwarded to a tax-exempt_bond subject matter expert randy torres for additional review and recommendation on date mr torres sent a form confidential evaluation report on claim for reward to the whistleblower office the form stated that the bond issuance is not recommended for another examination since the examination addressed and tested arbitrage issues and did not identify an arbitrage issue the whistleblower assumes the bond yield calculation was miscalculated because the net benefit test did not include the sida fee as an investment fee the wb did not provide any schedules documents or a bond yield calculation to show bond yield was computed incorrectly upon receipt of the form on date whistleblower office analyst steven mitzel prepared an award recommendation memorandum which recommended denial of petitioner’s claim based on the tax-exempt_bond subject matter expert’s decision not to pursue petitioner’s claim subsequently analyst mitzel sent petitioner a preliminary denial letter on date on date petitioner responded to analyst mitzel’s letter the 2petitioner objects to the admission of the above quoted portion of the form on the grounds of hearsay we admit it as a record kept in the course of a regularly conducted activity of an organization see fed r evid response encouraged respondent to reconsider the proposed denial and to proceed with an examination of the bonds based on petitioner’s information upon receipt of petitioner’s response analyst mitzel forwarded the response to te_ge for additional consideration on date te_ge requested that the whistleblower office return petitioner’s claim to it to allow a different person to review the merits of the claim on date the reviewing tax-exempt_bonds subject matter expert james held sent a new form to the whistleblower office recommending the irs not open a new examination of the bond issuance for the following reasons a full-scope examination had previously been conducted revealing no issues associated with the bond issue the arbitrage report provided in the prior examination indicated a negative rebate liability no indications of fraud abusive transactions or other tax law violations were found petitioner under penalties of perjury stated in his claim my review has not identified any fraudulent activities and my review has not uncovered any specific allegation of a tax law violation instead i am challenging the tax law conclusion reached by the law firm in this matter whose opinion has been and continues to be relied upon by everyone involved in the transaction including holders of the bonds the issuer and the obligor no credible_evidence was provided by petitioner indicating that a violation of the tax laws occurred instead he merely has a difference of opinion that does not constitute credible_evidence and does not warrant the reopening of the bond issuance whistleblower office analyst joel calandreli reviewed this form on date on date petitioner sent the whistleblower office a letter containing additional information which was forwarded to the tax- exempt bonds subject matter expert on date the whistleblower office received an email response from the tax-exempt_bonds subject matter expert wherein the expert stated that the additional information did not change his conclusion not to reopen the examination of the agency on date the whistleblower office prepared an updated award recommendation memorandum and on date the whistleblower office issued petitioner a final denial efficient in its use of details specific to petitioner’s claim the final denial states the claim has been recommended for denial because the irs took no action based on the information that you provided common reasons for declining to act on information include statute_of_limitations issues limited resources or a conclusion that there are no material issues discussion summary_judgment serves to expedite litigation and avoid unnecessary and expensive trials fla peach corp v commissioner 90_tc_678 either party may move for summary_judgment upon all or any part of the legal issues in controversy but we may grant summary_judgment only if there is no genuine dispute as to any material fact rule a and b 85_tc_527 the moving party bears the burden of showing that there is no genuine dispute of material fact and the court views all factual materials and inferences in the light most favorable to the nonmoving party 85_tc_812 rule d provides that where the moving party properly makes and supports a motion for summary_judgment an adverse_party may not rest upon the mere allegations or denials of such party’s pleading but rather must set forth specific facts by affidavits or otherwise showing that there is a genuine dispute for trial a whistleblower award under sec_7623 generally depends on two prerequisites the commissioner’s commencing an administrative or judicial action and the collection of proceeds 139_tc_299 aff’d 550_fedappx_10 d c cir 136_tc_597 we have held that we may not order the commissioner to commence an administrative or judicial action see cohen v commissioner t c pincite cooper v commissioner t c pincite in his motion for summary_judgment and supported by the declaration of analyst calandreli respondent detailed all of the actions taken by the whistleblower office and the tax exempt bonds agents respondent stated that the irs reviewed petitioner’s submission and supplemental submission but took no action and collected no proceeds petitioner contends that respondent in fact commenced an administrative action and collected_proceeds related to the bond issuances in the declaration attached to his response in opposition to respondent’s motion for summary_judgment petitioner states that he obtained specific information and records regarding two separate attempts by teb tax exempt bonds to disguise the collection of proceeds on examinations initiated through submissions of form sec_211 the information and records collected relate specifically to whistleblower office claim no and claim no petitioner asserts that the irs issued no-change letters to the governmental issuer of the bonds but the tax exempt bonds division subsequently took administrative actions so as to collect millions in tax dollars from the beneficial owners of the bonds petitioner further asserts that in connection with these two claim numbers i have been informed that teb had failed to report these administrative actions and collections on the forms sent to the irs whistleblower office continuing he states i have been informed that the irs whistleblower office had been working on denial letters based upon teb’s erroneous forms prior to receiving the results of my independent research petitioner further states i have been told that the treatment of whistleblowers by teb has been subject_to active consideration of a possible review by the treasury_inspector_general_for_tax_administration in his response in opposition to respondent’s motion for summary_judgment petitioner posits b ased on recent history teb would not have reported administrative actions against the beneficial owners of the bonds on the forms petitioner asserts that the administrative file does not preclude the possibility of administrative actions against the beneficial owners of the bonds or other possible collections consequently petitioner argues given that respondent failed to complete the administrative file and petitioner is legally unable to force the third-party conduit borrower to execute an affidavit or declaration or to produce records prior to the date set for trial respondent’s request for summary_judgment is premature w l gore assoc v commissioner tcmemo_1995_96 rule e respondent’s motion for summary_judgment should be denied as reasonable doubts as to material facts exist that are not included within the administrative file including whether teb took actions to collect directly from the actual taxpayers and whether the related action has been completed and resulted in a collection petitioner’s statements are not compelling first we note that petitioner has no personal knowledge of the irs actions upon which he reports he states that he has been informed of the irs’ alleged malfeasance in other situations and presents what he has been told as true in this situation rule d provides that s upporting and opposing affidavits or declarations shall be made on personal knowledge shall set forth such facts as would be admissible in evidence and shall show affirmatively that the affiant or declarant is competent to testify to the matters stated therein our rule is modeled in large part after rule of the federal rules of civil procedure 61_tc_861 consequently ‘sheer hearsay’ ‘counts for nothing’ on summary_judgment 505_f3d_1306 d c cir quoting 199_f3d_1365 d c cir this is not the end of our analysis even though petitioner’s evidence would not be admissible at trial summary_judgment evidence need not be in a form that would be admissible at trial so long as it is capable of being converted into admissible evidence gleklen f 3d pincite but beyond the hearsay issue petitioner’s statements also suffer from relevancy problems even if petitioner can establish that there was malfeasance in the other cases ie claim no and claim no petitioner has presented no evidence admissible or otherwise that such occurrences in fact occurred in his case petitioner’s argument is missing a vital step petitioner asserts malfeasance in another case then a gap of uncertainty then his conclusion that malfeasance exists in this case petitioner appeals to rule e citing the difficulty in acquiring factual information in this case rule e provides the rule for instances when affidavits or declarations are unavailable if it appears from the affidavits or declarations of a party opposing the motion that such party cannot for reasons stated present by affidavit or declaration facts essential to justify such party’s opposition then the court may deny the motion or may order a continuance to permit affidavits or declarations to be obtained or other steps to be taken or may make such other order as is just if it appears from the affidavits or declarations of a party opposing the motion that such party’s only legally available method of contravening the facts set forth in the supporting affidavits or declarations of the moving party is through cross-examination of such affiants or declarants or the testimony of third parties from whom affidavits or declarations cannot be secured then such a showing may be deemed sufficient to establish that the facts set forth in such supporting affidavits or declarations are genuinely disputed in his response to respondent’s motion for summary_judgment petitioner asserts that the administrative file is incomplete but that he has no means to acquire further documents and he is unable to force the agency to execute an affidavit or declaration or produce records in 137_tc_183 we stated rule e is modeled in large part after former rule f of the federal rules of civil procedure redesignated rule d in with nonsubstantive changes in 866_f2d_1386 fed cir applying former rule f the court held that the plaintiff could not avoid summary_judgment by requesting discovery the court characterized the plaintiff’s opposition as saying in effect we have no factual basis for opposing summary_judgment but if you stay proceedings we might find something id pincite the court observed if all one had to do to obtain a grant of a rule f motion were to allege possession by movant of ‘certain information’ and ‘other evidence’ every summary_judgment decision would have to be delayed while the non-movant goes fishing in the movant’s files id to conclude we hold that there is no genuine issue as to any material fact and we may render a decision as a matter of law as previously noted the irs examined the bonds issued by the agency and the examination was closed without any adjustments respondent via sworn affidavit states that no proceeds were collected and petitioner presented no evidence that any such proceeds were collected in this matter consequently we shall grant respondent’s motion for summary_judgment filed date in the light of the foregoing an appropriate order and decision will be entered


number release date id office uilc cca_2011041513213926 -------------- from ---------------------------- sent friday date pm to --------------------------- cc ------------------------------------------ subject return of deposit ------------ --- the taxpayer's representative remitted a check accompanied by a letter clearly designating the remittance as a deposit in the nature of a cash bond rather than a payment deposits in the nature of a cash bond are to be returned to taxpayers upon request unless the service has applied them as a payment against an assessed tax_liability section dollar_figure of revproc_2005_18 the emails you've sent confirm that there has been no assessed tax_liability against which this deposit could be applied nor has there been a determination that collection of any_tax to be assessed against the taxpayers is in jeopardy while the letter accompanying the check does not specify the disputable issue as required by section dollar_figure of the rev_proc this only has bearing on whether sec_6603 interest will be paid with the return of the deposit it does not affect the underlying nature of the remittance as a deposit in the nature of a cash bond the full amount of the deposit should be returned to the taxpayer the representative's letter requesting the return of the deposit does not request that any interest should be paid on the deposit and it does not appear that the taxpayer has met the requirements of section dollar_figure such that the taxpayer would be entitled to interest accordingly the deposit should be returned without interest also under section of the rev_proc because the deposit is being returned the underpayment interest will not be suspended during the period for which the remittance was held as a deposit if a deficiency is later assessed against the taxpayer for the same period and tax i will be out next week but --------------------- has assisted me with this matter and can help you in my absence thanks ------------- ---------------------------- --------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------


id office uilc cca-911102-08 -------------- number release date from ------------------- sent thu am to ------------------------------------ cc --------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------- subject re tefra advisors if a form_1065 has only one schedule_k-1 showing only one partner this may not constitute a partnership return invoking sec_6233 since by definition under sec_761 a partnership constitutes more that one person a return showing only one owner may not constitute a partnership return even though it is labeled as such in other words the contents of the return rather than the label may control my understanding however is that the return in this case in fact had two schedules k-1 one for a de owned by the other partner sec_6233 would seem to apply in that circumstance since the contents of the return show two partners under rev rule the reporting of a de as a partner makes tefra apply see also sec_6231 ------------------------------------------------------------------------------------------------------


internal_revenue_service number release date index number --------------------------------------- ------------------------ ---------------------------- -------------------------------------- - department of the treasury washington dc third party communication none date of communication not applicable_person to contact ------------------ id no ------------- telephone number --------------------- refer reply to cc psi b04 plr-147107-05 date august ------------------ ------------------------ ------------------- -------------------- ----------------- -------------------------------------- ------------------------------------- ---------------------------------------- ------------------------------ ----------------------------------------------------------------------------------- re ------------------------------------ legend settlor son grandchild a grandchild b grandchild c great-grandchild a great-grandchild b great-grandchild c spouse trust --------------------------------------------------------------------------------------------------------------------- -- trust a_trust a-1 trust a-2 trust b_trust c trustee a trustee b court ------------------------------------------------------------------------------------------------------------------------ state state statute date date date --------------------------------- ------------------------------------------------------ ------------------------------------------------------ ---------------------------------------------------- ------------------------------------------------- -------------------------------------------------------- -- ------------------------------------- ----------------------------------------------------------------------------------- -------- -------------------------------------- ---------------------- ------------------------- -- ---------------------- facts this responds to a letter from your authorized representative dated september plr-147107-05 ---------------------- requesting rulings concerning the generation-skipping_transfer gst tax consequences of a proposed modification of a_trust instrument three separate trusts were established one for each of settlor’s granddaughters trust a for grandchild a_trust b for grandchild b and trust c for grandchild c on date pursuant to applicable state law state statute trust a for the benefit of grandchild a was divided into two identical trusts trust a-1 and trust a-2 that continued to be administered according to the terms of trust prior to the division the division of trust a was approved by court grandchild a is married to spouse and has three children great-grandchild a great-grandchild b and great-grandchild c neither grandchild b nor grandchild c has or has ever had descendants settlor created trust on date prior to date under the trust settlor’s child son and trustee a are the trustees of trust a-1 son and spouse are trustees of trust a-2 son and trustee a are trustees of trust b and son and trustee b are trustees of trust c paragraph iii a of trust provides that the trustees of each separate trust shall distribute to or for the benefit of grandchild a grandchild b or grandchild c respectively during her lifetime so much of the income and corpus from such trust as the trustees in their sole discretion consider necessary or advisable paragraph iii b provides that upon the death of the respective grandchild a grandchild b or grandchild c the trust created for the benefit of the grandchild shall terminate and the remaining corpus and undistributed_income is to be distributed to the grandchild’s living descendants equally per stirpes or if none then in equal shares to the grandchild’s surviving sisters or to the living descendants of any deceased sister per stirpes provided that any portion distributable to a beneficiary for whom any property is being held in trust under the trust instrument is to be added thereto if any portion is to become distributable to a minor such portion is to immediately vest in such minor but the trustees are to retain possession until such minor become sec_21 years of age the parties propose to modify paragraph iii b to provide as follows upon the death of the beneficiary of each trust the trust of such beneficiary shall terminate and the remaining corpus or undistributed_income thereof shall be forthwith distributed to her living descendants equally per stirpes or if none then in equal plr-147107-05 shares to her surviving sisters or to the living descendants of any deceased sister per stirpes provided however that i any portion distributable to any of grandchild a grandchild b or grandchild c for whom any property is being held in trust hereunder shall be added thereto and ii any portion distributable to a descendant of grandchild a grandchild b or grandchild c shall immediately vest in such descendant but shall be held administered and distributed in a continuation trust for the benefit of such descendant or added to such trust if one is already in existence described in succeeding paragraph iiia hereof in addition a new paragraph paragraph iiia will be added to trust as follows a designation to the extent that other provisions of this agreement shall direct that properties allocable to a descendant of grandchild a grandchild b or grandchild c shall be held in or added to a continuation trust each such trust shall exist for the primary benefit of that descendant the beneficiary and be designated by the name of the beneficiary followed by continuation trust each such trust shall be distributed as provided in this paragraph b income and principal the trustee shall be authorized to distribute to the beneficiary so much or all of the net_income principal or both of the trust as the trustee considers advisable for any purpose or purposes whatever including without limitation to allow the beneficiary the opportunity to make gifts tax motivated or otherwise to charitable organizations or members of the beneficiary’s family without intending to limit or expand the discretion granted to the trustee by the preceding sentence it is intended that the trustee be liberal in the exercise of its discretion with respect to distributions to the beneficiary undistributed_income if any shall be incorporated into the principal of the trust annually c power_of_appointment if the beneficiary of a continuation trust is a descendant of grandchild a and if spouse survives grandchild a then following the death of grandchild a spouse shall have the continuing discretionary power exercisable in his individual capacity and not as a fiduciary by deed to appoint to such beneficiary either immediately or thereafter upon a date or dates specified therein and occurring before the termination of such continuation trust pursuant to plr-147107-05 succeeding subparagraph d all or any part of the income principal or both of the trust as spouse in his absolute discretion shall direct any exercise of such power directing that distributions to the beneficiary be made at a date or dates occurring thereafter shall be revocable in whole or part before the occurrence of such date or dates by a subsequent deed unless spouse specifically provides otherwise in the original deed each such exercise or revocation of a prior exercise of said power shall be accomplished immediately upon delivery to the trustee by spouse of a written instrument of exercise or revocation that is dated signed and acknowledged by spouse notwithstanding the foregoing grandchild a by duly probated last will and testament or codicil thereto may cancel reduce or restrict such power in any respect as to all or any of her descendants d termination and distribution if not earlier terminated through distributions pursuant to preceding subparagraphs b and c each continuation trust shall terminate upon the death of its beneficiary or if earlier upon a date or dates specified by i grandchild a in the case of a descendant of grandchild a ii grandchild b in the case of a descendant of grandchild b or iii grandchild c in the case of a descendant of grandchild c in her duly probated last will and testament or codicil thereto ie either all at once on a particular date or time or in whole or in part in any amounts or proportions on any two or more dates or times specified in any such will or codicil provided that unless grandchild a shall direct otherwise pursuant to an exercise of her power described in the final sentence of preceding subparagraph c an exercise by spouse of powers described in the opening sentence of said subparagraph c shall to the extent inconsistent with the terms of any such will or codicil of grandchild a supersede such terms upon termination the remaining principal and undistributed_income of each such trust shall be distributed to the personal representative of the beneficiary’s estate as such term is defined in the state probate code or should the beneficiary still be living to the beneficiary on date court issued an order modifying trust as described above the court order is contingent on receipt of a favorable private_letter_ruling from the internal_revenue_service as described above will not cause the trusts to lose its exempt status under b a of the tax_reform_act_of_1986 act you have requested a ruling that the proposed modifications of the trust agreement plr-147107-05 sec_2601 of the internal_revenue_code imposes a tax on each generation- law and analysis skipping transfer under b a of the act and sec_26_2601-1 of the generation-skipping_transfer_tax regulations the gst tax does not apply to any generation-skipping_transfer under a_trust that was irrevocable on date sec_26_2601-1 provides that any trust in existence on date will be considered an irrevocable_trust except as provided in sec_26_2601-1 or c relating to property includible in the grantor's gross_estate under sec_2038 and sec_2042 sec_26_2601-1 provides rules for determining when a modification judicial construction settlement agreement or trustee action with respect to a_trust that is exempt from the gst tax will not cause the trust to lose its exempt status the rules contained in the paragraph are generally applicable only for purposes of determining whether an exempt trust retains its exempt status for gst tax purposes unless specifically provided otherwise the rules do not apply in determining for example whether the transaction results in a gift subject_to gift_tax or may cause the trust to be included in the gross_estate of a beneficiary or may result in the realization of capital_gain for purposes of sec_1001 instrument of an exempt trust including a trustee distribution settlement or construction that does not satisfy paragraph b i a b or c of this section 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 sec_26_2601-1 provides that a modification of the governing in this case trust was irrevocable on date and there have been no actual or constructive additions to trust after date as discussed above under the proposed modification and court order the assets in each continuation trust immediately vest in the named beneficiary and each continuation trust will be held for the exclusive benefit of the named beneficiary during the beneficiary’s lifetime in addition if not earlier terminated through distributions to the named beneficiary on the death of the named beneficiary any remaining principal and undistributed_income will be distributed to the personal representative of the beneficiary’s estate and therefore will be includible in the beneficiary’s gross_estate for federal estate_tax purposes plr-147107-05 under these circumstances based on the facts submitted and the representations except as specifically ruled herein we express no opinion on the federal tax made we conclude that the proposed modifications will not shift a beneficial_interest in trust to a beneficiary who occupies a lower generation than the person who held beneficial interests prior to the modification in addition the modification will not extend the time for vesting of any beneficial interests beyond the period provided in trust therefore based on the facts submitted and representations made we conclude that the proposed modifications will not cause trust trust a-1 trust a-2 trust b or trust c to lose exempt status for gst tax purposes consequences of the transaction under the cited provisions or under any other provisions of the code 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 materials submitted in support of the request for rulings it is subject_to verification on examination provides that it may not be used or cited as precedent sent to your authorized representative enclosure copy for sec_6110 purposes george masnik branch chief branch office of associate chief_counsel passthroughs and special industries pursuant to a power_of_attorney on file with this office a copy of this letter is being this ruling is directed only to the taxpayer who requested it sec_6110 sincerely yours


t c memo united_states tax_court gary gougler petitioner v commissioner of internal revenue respondent docket no 9049-o1l filed date gary gougler pro_se russell k stewart for respondent memorandum opinion cohen judge respondent sent to petitioner a notice_of_determination concerning collection action s under sec_6320 and or with respect to petitioner’s federal income taxes for and petitioner contends that he did not receive a refund that was due to him for unless otherwise indicated - - all section references are to the internal_revenue_code in effect for the years in issue petitioner resided in robesonia pennsylvania at the time that his petition was filed in response to a notice_of_intent_to_levy for and petitioner requested a hearing under sec_6330 on date an appeals officer sent to petitioner a letter as follows i scheduled the conference you requested on this case for date a m please let me know within days from the date of this letter whether thi sec_1s convenient if it is not i will be glad to arrange another time the conference will be informal you may present facts arguments and legal authority to support your position if you plan to introduce new evidence or information send it to me at least days before the conference statements of fact should be presented as affidavits or signed under penalties of perjury you can authorize an attorney certified_public_accountant or person enrolled to practice before the internal_revenue_service to represent you at the conference your authorization should be made ona form_2848 power_of_attorney and declaration of representative form_8821 tax_information_authorization and declaration of representative ora similar document i hope our conference will resolve your case call me if you have any questions or need additional information petitioner did not appear at the time and place designated the appeals officer reviewed transcripts of petitioner’s account and determined that requirements of applicable laws and administrative procedures had been met and that the actions taken or proposed by the revenue_officer were appropriate under the circumstances the notice_of_determination sent date concluded sec_6330 requires that the appeals officer consider whether any collection action balances the need for efficient collection_of_taxes with the legitimate concern that any collection action be no more intrusive than necessary you did not appear at the hearing nor contact me in any way or present an acceptable alternative that is less intrusive than levy action therefore appeals has determined the levy action should be taken in his petition and at trial petitioner attacked the credibility of the appeals officer arguing that he attempted to contact the appeals officer with regard to the hearing petitioner argues that the hearing should not have been conducted at the internal_revenue_service irs office in philadelphia because petitioner live sec_75 miles away and that the hearing should have been conducted at a neutral place petitioner complains about computer-generated documents forms not signed by individuals and other alleged government abuses his main contention however is that the irs stole dollar_figure from him in at the time of trial petitioner presented a notice dated date with respect to his tax_liability for as support for his argument that he did not receive a refund that was due to him the notice stated - - statement of account account balance before this change decrease in tax because of this change dollar_figurecr interest earned 74cr amount to be refunded to you if you owe no other obligations dollar_figure you may have already received this check if not please allow weeks for it to be mailed to you unless there are other matters pending which could postpone your refund this is a result of your correspondence of date interest earned must be reported as income on your next income_tax return petitioner also presented a handwritten letter from a tax examiner explaining application of the overpayment for as follows dear mr gougler this is in reference to our telephone conversation concerning the above tax account our records show we have adjusted your account and the credit of dollar_figure has been applied to your tax account therefore there is no balance due for tax_year the remaining credit of dollar_figure from has been applied to your tax account as of date our records show a balance due of dollar_figure for tax_year and dollar_figure for the tax_year we are sorry for any inconvenience this may have caused at trial of this case respondent presented transcripts of petitioner’s accounts for and the transcript for reflects application of a credit of dollar_figure for an overpayment from as well as application of withholding_tax credits - - the only substantive issue that petitioner raised in this proceeding is his entitlement to the refund for the records that he presented in support of his claim however reflect that the refund was applied to his outstanding liabilities the transcripts that were presented by respondent are consistent with those records there may have been a missed communication between petitioner and the appeals officer concerning the scheduled hearing petitioner’s demand about the location of the hearing however was not reasonable see 115_tc_329 the appeals officer’s determination was based on the materials in petitioner’s file and the transcripts of his account see sec_301 d q a d7 proced admin regs at trial petitioner was unable to identify any materials submitted by him to the appeals officer that were not duly considered or that would have affected the result in this case under the circumstances the absence of a face-to-face hearing has not affected petitioner’s rights the case may be decided on the present record see 117_tc_183 we conclude that respondent’s determination that levy action should proceed is not erroneous decision will be entered for respondent