significant index no department of the treasury q internal_revenue_service washington d c tax exempt and cover som ee nov se tier pa ag re substitute mortality_table ruling taxpayer ein plana plan b ein plan no ein plan no plan c plan d ein ein plane plan no plan no ein plan no dear this letter is to inform you that your request to use substitute mortality tables for making computations under sec_430 of the internal_revenue_code the code for plan e has been granted with respect to the populations specified in this letter subject_to the conditions outlined herein this ruling is effective for a period of plan years beginning with the plan_year commencing january granted in accordance with sec_430 of the code and sec_303 of the employee_retirement_income_security_act_of_1974 your request has been this approval applies to the following specific populations the substitute mortality tables will also apply to the disabled participants in these populations e e e male annuitants female annuitants male nonannuitants in granting this approval we have only considered whether the substitute mortality rates were developed in accordance with sec_1_430_h_3_-2 of the treasury regulations regulations and revproc_2017_55 accordingly we are not expressing any opinion as to the accuracy or acceptability of any calculations or other material submitted with your request permission is hereby granted to use the substitute mortality rates shown in the table below for the populations in the plan e approved for use beginning with the plan_year commencing january substitute mortality tables base_year male _ female male annuitants annuitants nonannuitants o n o c a r o o o n i o c - n i o g b d t n i o o c o o o a o o f s o f o f a o l a o f a e y a f n i o n male female male annuitants annuitants nonannuitants male female male annuitants annuitants nonannuitants male female male age annuitants annuitants nonannuitant sec_102 during the study period plans a through e existed separately and were aggregated in accordance with sec_1_430_h_3_-2 of the regulations plans a through d were subsequently merged into plan e a request seeking approval to change one or more funding methods has not been received by the internal_revenue_service the above rates were developed using a 2-year experience study period with a base_year of the rates were calculated by adjusting the applicable standard mortality tables in sec_1_430_h_3_-1 of the regulations indicated in the table below using the mortality ratio and credibility weighting factor individually determined for each population as shown in the table below population male annuitants female annuitants male nonannuitants mortality ratio credibility factor the internal_revenue_service has reviewed the substitute mortality rates and supporting information and has determined that based on the information submitted the rates were developed in accordance with sec_1_430_h_3_-2 of the regulations and revproc_2017_55 the above rates must be applied on a generational basis as provided in sec_1_430_h_3_-2 of the regulations this ruling has been granted subject_to the following condition in order to continue using the substitute mortality tables for making computations under sec_430 of the code the following information must be provided by the october immediately following the end of each plan_year beginning with the october population have changed significantly from the population that existed during the experience study period most notable male nonannuitants and further changes can be expected this condition is required because certain segments of the plan_year due the number of actual deaths during the experience study period used to develop the substitute mortality tables and the beginning and ending dates of the experience study period a table showing the number of expected deaths and actual deaths reported separately for each year beginning with deaths during through the year preceding the most recent actuarial valuation and in total a table similar to the stability demonstration required under section of revproc_2017_55 showing the average number of participants in the population included in the experience study and the number of participants in the population as of the end of each plan_year beginning with december actuarial valuation expressed both as a headcount and as a percentage of the average number of participants in the experience study through the date immediately preceding the most recent and dollar_figure anddollar_figure‘_ between dollar_figure a table showing a comparison of i the average ages and ii percentage of the population by the following monthly single_life_annuity brackets underdollar_figure betweendollar_figure between dollar_figure_ experience study and at the end of each plan_year beginning with december through the date immediately preceding the most recent actuarial valuation the table should also show the average age and average benefit amount for the population in total for both the experience study data and at the end of each plan_year beginning with december immediately preceding the most recent actuarial valuation and over for the population in the through the date between dollar_figure anddollar_figure dollar_figure dollar_figure --s an explanation of any material changes in the population and a certification by the enrolled_actuary for the plan as to whether the substitute mortality_table is accurately predictive along with any additional demographic or other information to substantiate this claim a certification signed by the enrolled_actuary stating that a the enrolled_actuary is current with educational requirements set forth by the joint board for the enrollment of actuaries as well as any other actuarial designations asserted b the enrolled_actuary was personally involved in the deterniination that the c substitute mortality_table is still accurately predictive and provides the actuary's best estimate for the plan in determining that the substitute mortality_table is still his or her best -estimate the enrolled_actuary took into consideration the effect of business combinations plan mergers or spinoffs and settlements other risk transfers and other events that would have similar effects on the relevant populations and d the enrolled_actuary has the specific knowledge and experience to make the judgements set forth above and attests to these representations this information must be provided to david m ziegler or to another individual designated by the service by fax at or to the following address internal_revenue_service attn mr david m ziegler te_ge se t ep ra t a2 nca-630 constitution ave nw washington dc failure to provide this information by the due_date may result in the requirement that the standard mortality tables must be used for purposes of sec_430 of the code beginning with the plan_year during which the deadline for providing this information is missed your attention is called to sec_430 of the code and sec_1 h - d of the regulations which describe the circumstances in which the use of the substitute mortality_table will terminate before the end of the 10-year period described above in general the substitute mortality tables can no longer be used as of the earliest of for a plan using a substitute mortality_table for only one gender the first plan_year for which there is full or partial credible mortality information with respect to the other gender that had lacked credible mortality information unless an approved substitute mortality_table is used for that gender the first plan_year in which the plan fails to satisfy the requirements of sec_1_430_h_3_-2 of the regulations regarding the requirement that other plans and populations in the controlled_group must also use substitute mortality tables unless it can be demonstrated that they do not have credible mortality information taking into account the transition_period for newly affiliated companies in sec_1_430_h_3_-2 of the regulations the second plan_year following the plan_year for which there is a significant change in individuals covered by the plan as described in sec_1_430_h_3_-2 of the regulations the plan_year following the plan_year in which a substitute mortality_table used for a plan population is no longer accurately predictive of future mortality of that population as determined by the commissioner or as certified by the plan’s actuary to the satisfaction of the commissioner or the date specified in guidance published in the internal_revenue_bulletin pursuant to a replacement of mortality tables specified under sec_430 of the code and sec_1_430_h_3_-1 of the regulations other than annual updates to the static mortality tables issued pursuant to sec_1_430_h_3_-1 of the regulations or changes to the mortality improvement rates pursuant to sec_1_430_h_3_-1 of the regulations _ we draw your attention to the fact that the female nonannuitants experienced deaths during the experience study period using the simplified rule described in sec_1_430_h_3_-2 of the regulations note that this population will have credible mortality experience if it experiences at least corresponding to the length of the experience study used to construct the substitute mortality tables for the other populations it is important to monitor this population to ensure that appropriate action is taken should this occur to avoid violating paragraph above deaths during a 2-year period - this ruling is directed only to the taxpayer that requested it sec_6110 of the code provides that it may not be used or cited by others as precedent when filing form_5500 for the plan years for which the substitute mortality tables are used please note the information that is required to be attached to schedule sb actuarial information in accordance with the instructions to that form we have sent a copy of this letter to your authorized representative pursuant to a power_of_attorney form on file in this office and to the manager ep classification in columbus ohio and to the manager ep compliance unit in chicago illinois if you require further assistance in this matter please contact id yat - sincerely david m ziegler manager employee_plans actuarial group cc


tax_exempt_and_government_entities_division uics department of the treasury washington d c nov se tier rats legend taxpayer a taxpayer b company a bank b ira x plan x state w dear this is in response to your letter as supplemented by a letter dated in which you request a waiver of the 60-day rollover requirement contained in n sec_402 a of the internal_revenue_code code the following facts and representations have been submitted under penalty of perjury in support of the ruling_request taxpayer a whose date of birth was pb cica a resident of state w on not having attained age prior to his death taxpayer a had set up an individual_retirement_arrangement ira ira x described in sec_408 of the code with bank b taxpayer b is the sole named beneficiary of taxpayer a’s ira x taxpayer b has not attained age taxpayer a requested that all amounts standing to his credit under on plan x a plan qualified within the meaning of code sec_401 sponsored by company a be distributed to him in a single sum the request indicated that taxpayer a elected to have his plan x distribution be directly rolled over into one or more iras indicated that the recipient ira was ira x held with bank b and also indicated that any check representing the distribution of his plan x account balance was to be made payable to bank b f b o taxpayer a taxpayer b as taxpayer a’s spouse consented to taxpayer a’s distribution choice two surrender checks dated b as custodian of taxpayer a’s ira x were mailed to taxpayer a on the date of taxpayer a’s death totaling amount and payable to bank taxpayer b is taxpayer a’s surviving_spouse the sole executrix of his estate and the sole beneficiary thereof subsequent to taxpayer a’s death taxpayer b attempted to contribute the two surrender checks referenced above to taxpayer a’s ira x however bank b refused to accept said checks because the checks were dated after taxpayer a’s death on or about company a advised taxpayer b’s counsel that it would reissue the two surrender checks to the estate of taxpayer a pursuant to an agreement between taxpayer b’s counsel and company a on said surrender checks were reissued to the estate of taxpayer a taxpayer b subsequently deposited the checks in a non-qualified savings account the deposited amounts remain in said savings account and taxpayer b represents that amount has not been used for any purpose taxpayer b intends to contribute an amount not to exceed amount into an ira set up and maintained in the name of taxpayer a if possible said contribution will be made to the above-referenced ira x ifthe contribution is made to ira x taxpayer b as named beneficiary thereof will receive a distribution of the contributed amount and within days of receipt of the ira x distribution taxpayer b will roll over said distribution into an ira set up and maintained in her name based on the facts and representations you request the following letter rulings that pursuant to code sec_402 and revproc_2003_16 taxpayer b be permitted to roll over an amount not to exceed amount into an ira set up and maintained in the name of taxpayer a and that if taxpayer b is the named beneficiary of the rollover ira referenced in ruling_request then she is permitted to roll over said rolled over amount into an ira set up and maintained in the name of taxpayer b with respect to your first ruling_request code sec_402 provides that amounts distributed from a_trust described in sec_401 which is tax exempt under sec_501 shall be taxed to the distributee in the taxable_year in which distributed under sec_72 relating to annuities sec_402 of the code provides rules governing rollovers of amounts from exempt trusts to eligible retirement plans including iras code sec_402 provides that except as provided in subparagraph b paragraph shall not apply to any transfer of a distribution made after the 60th day following the day on which the distributee received the property distributed code sec_402 defines eligible rollover distributions in general a single sum distribution from a retirement_plan qualified within the meaning of code sec_401 constitutes an eligible_rollover_distribution sec_402 of the code provides generally that the provisions of code sec_402 apply to a distribution attributable to the death of an employee which is payable to the surviving_spouse thereof after the employee’s death sec_1 c of the income_tax regulations question and answer-7 b provides that any amount_paid from a retirement_plan qualified within the meaning of code sec_401 before january of the year in which the employee attains or would have attained age will not be treated as required under sec_401 and thus is an eligible_rollover_distribution if it otherwise qualifies sec_1_401_a_31_-1 of the income_tax regulations q a-4 indicates that a direct_rollover may be accomplished by providing the distribute with a check and directing the distribute to deliver the check to an eligible_retirement_plan in such a case the check should be made payable to a trustee as trustee of a named eligible_retirement_plan sec_402 of the code provides in relevant part that the secretary may waive the 60-day requirement under sec_402 where the failure to waive such requirement would be against equity or good conscience including casualty disaster or other events beyond the reasonable control of the individual subject_to such requirement only distributions that occurred after date are eligible for the waiver under sec_408 of the code revproc_2003_16 2003_4_irb_359 date provides that in determining whether to grant a waiver of the 60-day rollover requirement pursuant to sec_408 the service will consider all relevant facts and circumstances including errors committed by a financial_institution inability to complete a rollover due to death disability hospitalization incarceration restrictions imposed by a foreign_country or postal error the use of the amount distributed for example in the case of payment by check whether the check was cashed and the time elapsed since the distribution occurred zuv0v38029 the documentation presented by taxpayer b demonstrates that taxpayer a did not timely roll over into an ira set up in his name the checks dated payable to bank b the custodian of taxpayer a’s ira x because taxpayer a had died prior to the date the checks were received which led to confusion on the part of taxpayer b company a and bank b with respect to the proper method of handling said checks the documentation also indicates that taxpayer a had made the checks payable to the custodian of his ira x evidencing an intent on his part to directly contribute said checks into an ira with bank b taxpayer b is the surviving_spouse of taxpayer a and the sole executrix of his estate she proposes to complete taxpayer a’s intended rollover based on the above pursuant to sec_402 of the code the service hereby concludes that taxpayer b’s intended action taken as taxpayer a’s surviving_spouse and executrix of taxpayer a’s estate whereby she will contribute the checks representing proceeds of taxpayer a’s plan x distribution into an ira in the name of taxpayer a within days of the date of this letter_ruling will comply with the requirements of code sec_402 and will be deemed to constitute a valid rollover_contribution pursuant to said code section this ruling does not authorize the rollover of amounts that are required to be distributed by sec_401 of the code if any with respect to your second ruling_request sec_408 of the code provides that for purposes of this section the term individual_retirement_account means a_trust created or organized in the united_states for the exclusive benefit of an individual or his beneficiaries but only if the written governing instrument creating the trust meets certain requirements sec_408 of the code provides the general_rule for the tax treatment of distributions from iras this section provides in pertinent part that except as otherwise provided in subsection d any amount_paid or distributed out of an individual_retirement_plan or under an individual_retirement_annuity shall be included in gross_income by the payee or distributee as the case may be in the manner provided under sec_72 sec_408 of the code establishes an exception to the contribution rules of sec_408 and the income inclusion rule_of sec_408 for certain transactions characterized as rollover_contributions under sec_408 an amount is described in paragraph as a rollover_contribution if it meets the requirements of subparagraphs a and b subparagraph a of sec_408 of the code states in pertinent part that paragraph of sec_408 does not apply to any amount_paid or distributed out of an individual_retirement_account or individual_retirement_annuity to the individual for whose benefit the account or annuity is maintained if -- i the entire amount received including money and any other_property is paid into an individual_retirement_account or individual retirement annuity other than an endowment_contract for the benefit of such individual not later than the 60th day after the day on which he receives the payment or distribution subparagraph b of sec_408 in short provides that this paragraph does not apply to any amount described in subparagraph a i received by an individual from an ira account or annuity if at any time during the 1-year period ending on the day of such receipt such individual received any other amount described in that subparagraph from an ira account or annuity which was not includible in his gross_income because of the application of this paragraph subparagraph c of sec_408 provides in general that the rollover rules of code sec_408 do not apply to inherited iras in general an inherited ira is an ira payable at and as a result of the death of an ira holder to a beneficiary who is not the surviving_spouse of the deceased ira owner subparagraph e of sec_408 provides in general that the rollover rules of code sec_408 do not apply to amounts required to be distributed pursuant to code sec_401 made applicable to iras pursuant to code sec_408 in this case as noted above taxpayer b is taxpayer a’s surviving_spouse as also noted taxpayer b is the sole named beneficiary of taxpayer a’s ira x as such with respect to taxpayer b ira x is not an inherited ira thus amounts distributed from ira x to taxpayer b into an ira set up and maintained in the name of taxpayer b as a result of the death of taxpayer a are eligible to be rolled over thus with respect to your second ruling_request we conclude as follows that if taxpayer b is the named beneficiary of the ira into which amount will be rolled over referenced in ruling_request she will the be permitted to roll over said amount into an ira set up and maintained in the name of taxpayer b thus if amount is initially rolled over into ira x an ira set up by taxpayer a prior to his death of which taxpayer b is the sole beneficiary named by taxpayer a then taxpayer b may roll over a distribution of said amount made from ira x into an ira set up and maintained in her name said rollover into taxpayer b’s ira must occur no later than the day following the date on which amount is distributed to taxpayer b from ira x this ruling letter is based on the assumption that taxpayer a’s ira x is and was described in code sec_408 at all times relevant thereto as represented it also assumes that the contributory ira set up and maintained in the name of taxpayer b into which amount may be rolled over will meet the requirements of code sec_408 as represented made with respect thereto additionally it assumes the correctness of all facts and representations if you have any questions concerning this letter_ruling please contact esquire id - i not a toll-free number please address all correspondence to se t ep ra t3 no opinion is expressed as to the tax treatment of the transaction described herein under the provisions of any other section of either the code or regulations which may be applicable thereto this letter is directed only to the taxpayer who requested it sec_6110 of the code provides that it may not be used or cited as precedent a copy of this letter_ruling is being sent to your authorized representative in accordance with a power_of_attorney on file with this office sincerely yours donan v slo ftatices v sloan manager employee_plans technical f oup enclosures deleted copy of this letter notice of intention to disclose notice


internal_revenue_service number release date index number 468a ---------------------------- -------------------------------- -------------------------------- ------------------------ ------------------------- 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 b06 plr-154010-07 date june re schedule of deductions ------------------------------------------------------------------ legend taxpayer intermediate parent plant location date method commission a commission b commission c fund order ----------------------------------------- ein ---------------- ------------------------------------------------------------ ein ---------------- -------------------------------- ein ---------------- ------------------------------------------------------------------ --------------------- -------------------------- ---------------------- ------------------------------------------ -------------------------- ----------------------------------------------------- ------------------------------------------ ------------------------------------------------------------ -------------------------------------------------- --------------------------------------------------------------------------------- director ------------------------------------------------------------------------------------------------------------ dear -------------- this letter responds to your request dated -------------------------- for a schedule of ruling amounts pursuant to sec_468a of the internal_revenue_code and sec_1_468a-3t of the temporary income_tax regulations taxpayer was previously granted schedules of ruling amounts most recently on ------------------ information was submitted pursuant to sec_1_468a-3t e taxpayer now requests a mandatory review of the most recent revised schedule of ruling amounts pursuant to sec_1_468a-3t f plr-154010-07 taxpayer represents the facts and information relating to its request for a revised schedule of ruling amounts as follows taxpayer is a wholly-owned subsidiary of intermediate parent files a consolidated_return that includes intermediate and taxpayer taxpayer operates and has a joint and undivided ownership_interest of --- percent in the plant the plant is situated at location the plant’s operating license is scheduled to expire on date the estimated base cost for decommissioning plant is based on an independent study and the proposed method of decommissioning the plant is method taxpayer has been subject_to the jurisdiction of commission a commission b and commission c taxpayer was previously granted a revised schedule of ruling amounts on ------------------ taxpayer is no longer making contributions to the fund from rates under the jurisdiction of commission a and commission c commission b has determined the amount of decommissioning costs to be included in the taxpayer’s cost of service for ratemaking purposes with respect to decommissioning costs of the unit taxpayer’s operations are currently allocated ----- percent to commission b commission b through order approved a reasonable estimate of the decommissioning costs for the plant and reduced the amount of decommissioning costs for the plant included in cost of service taxpayer now requests a mandatory review of the proposed schedule of ruling amounts requested for commission b’s jurisdiction pursuant to sec_1_468a-3t f based on the assumptions adopted by commission b in order it is estimated that fund assets will earn an after-tax rate of return of ------ percent for ------- through --- ------- commission b approved rates for taxpayer containing a decommissioning cost component based upon an estimated cost of dollar_figure----------------- ------- dollars as the base cost for decommissioning the taxpayer’s share in the unit this base cost for decommissioning the taxpayer’s share in the unit was escalated at ------ percent from -- ------- through ------- resulting in total estimated future decommissioning costs of approximately dollar_figure----------------- ------- dollars sec_468a as amended by the energy tax incentives act of the act publaw_109_58 119_stat_594 allows an electing taxpayer to deduct payments made to a nuclear decommissioning reserve fund sec_468a limits the amount that may be paid into the nuclear decommissioning fund in any year to the ruling_amount applicable to that year sec_468a provides that no deduction shall be allowed for any payment to the nuclear decommissioning fund unless the taxpayer requests and receives from the secretary a schedule of ruling amounts the ruling_amount for any_tax year is defined under sec_468a as the amount which the secretary determines to be necessary to fund the total nuclear decommissioning cost of that nuclear power plant over the estimated_useful_life of the plant this term is further defined to include the amount necessary to prevent excessive funding of nuclear decommissioning costs or funding of these costs at a rate more rapid than level_funding taking into account such discount rates as the secretary deems appropriate plr-154010-07 sec_468a provides that a taxpayer shall be deemed to have made a payment to the nuclear decommissioning fund on the last day of a taxable_year if the payment is made on account of such taxable_year and is made within ½ months after the close of the tax_year this section applies to payments made pursuant to either a schedule of ruling amounts or a schedule of deduction amounts sec_1_468a-1t a provides that an eligible_taxpayer may elect to deduct nuclear decommissioning costs under sec_468a of the code an eligible_taxpayer as defined under sec_1_468a-1t b of the regulations is a taxpayer that has a qualifying interest in any portion of a nuclear power plant a qualifying interest is among other things a direct ownership_interest sec_1_468a-2t b provides that the maximum amount of cash payments made or deemed made to a nuclear decommissioning fund during any_tax year shall not exceed the ruling_amount applicable to the nuclear decommissioning fund for such taxable_year the limitation on the amount of cash payments for purposes of sec_1 468a- 2t b does not apply to any special transfer permitted under sec_1_468a-8t sec_1_468a-3t a provides that in general a schedule of ruling amounts for a nuclear decommissioning fund is a ruling specifying annual payments that over the tax years remaining in the funding_period as of the date the schedule first applies will result in a projected balance of the nuclear decommissioning fund as of the last day of the funding_period equal to and in no event more than the amount of decommissioning costs allocable to the fund sec_1_468a-3t a provides that to the extent consistent with the principles and provisions of this section each schedule of ruling amounts shall be based on reasonable assumptions concerning the after-tax rate of return to be earned by the amounts collected for decommissioning the total estimated cost of decommissioning the nuclear plant and the frequency of contributions to a nuclear decommissioning fund for a taxable_year under sec_1_468a-3t a the internal_revenue_service shall provide a schedule of ruling amounts identical to the schedule proposed by the taxpayer but no such schedule shall be provided by the service unless the taxpayer's proposed schedule is consistent with the principles and provisions of that section sec_1_468a-3t a provides that the taxpayer bears the burden of demonstrating that the proposed schedule of ruling amounts is consistent with the principles of the regulations and that it is based on reasonable assumptions that section also provides additional guidance regarding how the service will determine whether a proposed schedule of ruling amounts is based on reasonable assumptions for example if a public_utility commission established or approved the currently applicable rates for the furnishing or sale by the taxpayer of electricity from the plant the taxpayer can generally satisfy this burden_of_proof by demonstrating that the schedule of ruling amounts is calculated using the assumptions used by the public_utility commission in its most recent order in addition a taxpayer that owns an interest in a deregulated nuclear plant may submit assumptions used by a public_utility commission that formerly had regulatory jurisdiction over the plant as support for the assumptions used in calculating the taxpayer’s proposed schedule of ruling amounts with the plr-154010-07 understanding that the assumptions used by the public_utility commission may be given less weight if they are out of date or were developed in a proceeding for a different taxpayer the use of other industry standards such as the assumptions underlying the taxpayer's most recent financial assurance filing with the nrc are described by the temporary regulations as an alternative means of demonstrating that the taxpayer has calculated its proposed schedule of ruling amounts on a reasonable basis sec_1_468a-3t a further provides that consistency with financial_accounting statements is not sufficient in the absence of other supporting evidence to meet the taxpayer’s burden_of_proof sec_1_468a-3t b provides that in general the ruling_amount for any_tax year in the funding_period shall not be less than the ruling_amount for any earlier tax_year under sec_1_468a-3t c the funding_period begins on the first day of the first tax_year for which a deductible payment is made to the nuclear decommissioning fund and ends on the last day of the taxable_year that includes the last day of the estimated_useful_life of the nuclear power plant to which the fund relates sec_1_468a-3t c provides rules for determining the estimated_useful_life of a nuclear plant for purposes of sec_468a in general under sec_1_468a-3t c i a if the plant was included in rate base for ratemaking purposes for a period prior to date the date used in the first such ratemaking proceeding as the estimated date on which the nuclear plant will no longer be included in the taxpayer’s rate base is the end of the estimated_useful_life of the nuclear plant sec_1_468a-3t c i b provides that if the nuclear plant is not described in sec_1_468a-3t c i a the last day of the estimated_useful_life of the nuclear plant is determined as of the date the plant is placed_in_service under sec_1_468a-3t c i c any reasonable method may be used in determining the estimated_useful_life of a nuclear power plant that is not described in sec_1_468a-3t c i a sec_1_468a-3t d provides that the amount of decommissioning costs allocable to a nuclear decommissioning fund is the taxpayer's share of the total estimated cost of decommissioning the nuclear power plant sec_1_468a-3t d provides that a taxpayer's share of the total estimated cost of decommissioning a nuclear power plant equals the total estimated cost of decommissioning such plant multiplied by the taxpayer's qualifying interest in the plant sec_1_468a-3t e enumerates the information required to be contained in a request for a schedule of ruling amounts filed by a taxpayer in order to receive a ruling_amount for any taxable_year sec_1_468a-3t f requires a taxpayer that has obtained a schedule of ruling amounts pursuant to sec_1_468a-3t e to file a request for a revised schedule of ruling amounts on or before the deemed payment deadline date for the 10th taxable_year that begins after the taxable_year in which the most recent schedule of ruling amounts was received if the taxpayer calculated its most recent schedule of ruling amounts on any basis other than an order issued by a public_utility commission the taxpayer must file a request for a revised schedule of ruling amounts on or before the deemed payment deadline date for the 5th taxable_year that begins after the taxable_year in which the most recent schedule of ruling amounts was received plr-154010-07 sec_1_468a-3t f provides that any taxpayer that has previously obtained a schedule of ruling amounts can request a revised schedule of ruling amounts such a request must be made in accordance with the rules of sec_1_468a-3t e the internal_revenue_service shall not provide a revised schedule of ruling amounts applicable to a taxable_year in response to a request for a schedule of ruling amounts that is filed after the deemed payment deadline date for such taxable_year we have examined the representations and information submitted by the taxpayer in relation to the requirements set forth in sec_468a and the regulations thereunder based solely upon these representations of the facts we reach the following conclusions taxpayer has a qualifying interest in the plant and is therefore an eligible_taxpayer under sec_1_468a-1t b of the regulations taxpayer as owner of the plant has calculated its share of the total decommissioning costs under sec_1_468a-3t d of the regulations taxpayer has proposed a schedule of ruling amounts which meets the requirements of sec_1_468a-3t a and of the regulations the annual payments specified in the proposed schedule of ruling amounts are based on the reasonable assumptions and determinations used by commission and will result in a projected fund balance at the end of the funding_period equal to or less than the amount of decommissioning costs allocable to the fund pursuant to sec_1_468a-3t a taxpayer has demonstrated that by following the assumptions approved by commission the proposed schedule of ruling amounts is consistent with the principles of sec_468a and the regulations thereunder and that such schedule is based on reasonable assumptions the maximum amount of cash payments made or deemed made to the fund during any_tax year is restricted to the ruling_amount applicable to the fund as set forth under sec_1_468a-2t b of the regulations based solely on the determinations above we conclude that the taxpayer’s proposed schedule of ruling amounts satisfies the requirements of sec_468a of the code approved schedule of ruling amounts year commission b amount each year ------- - ------- dollar_figure--------------- approval of the schedule of ruling amounts is contingent on there being no change in the facts and circumstances known or assumed at the time the current ruling is issued if any of the events described in sec_1_468a-3t f occur in future years the taxpayer must request a review and revision of the schedule of ruling amounts generally the taxpayer is required to file such a request on or before the deemed plr-154010-07 payment deadline date for the first taxable_year in which the rates reflecting such action became effective when no such event occurs the taxpayer must file a request for a revised schedule of ruling amounts on or before the deemed payment deadline of the tenth taxable_year following the close of the tax_year in which the most recent schedule of ruling amounts was received except as specifically determined above no opinion is expressed or implied concerning the federal_income_tax consequences of the transaction described above this ruling is directed only to the taxpayer who requested it sec_6110 of the code provides 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 representatives we are also sending a copy of this letter_ruling to the director pursuant to sec_1_468a-7t a a copy of this letter must be attached with the required election statement to the taxpayer's federal_income_tax return for each tax_year in which the taxpayer claims a deduction for payments made to the fund sincerely peter c friedman senior technician reviewer branch passthroughs special industries cc


internal_revenue_service number release date index number ----------------------------- --------------------------------------------------- ----------------------------- -------------------------------------- in re --------------------------------------------- ---------------------------- --------------------------------- -------------------------------------- department of the treasury washington dc person to contact ----------------- id no ------------- telephone number --------------------- refer reply to cc psi b01 - plr-136201-03 date nov x ------------------------------------------------- ----------------------- ---------------------------- ---------------------- country date dear ------------ requesting a ruling under sec_301_9100-3 of the procedure and administration regulations that x be granted an extension of time to elect to be a partnership under sec_301_7701-3 facts this letter responds to a letter dated date written on behalf of x according to the information submitted x a country limited_company with more than one member intended to elect to be a partnership for federal tax purposes effective on date however due to inadvertence the 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 eligible_entity can elect its classification for federal tax purposes as provided in this section an eligible_entity with more than one member can elect to be classified as either an association and thus a corporation under sec_301_7701-2 or as a partnership 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 by filing form_8832 with the service_center designated on the form 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 under sec_301_9100-1 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 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 an election sec_301_9100-2 provides automatic_extension of time for making certain elections sec_301_9100-3 provides extensions of time for making elections that do not meet the requirements of sec_301_9100-2 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 conclusions based solely on the facts submitted and the representations made we conclude that x has satisfied the requirements of sec_301_9100-3 as a result x is granted an extension of time of sixty days from the date of this letter to file a properly executed form_8832 with the appropriate service_center and elect to be treated as a partnership for federal_income_tax purposes effective date that purpose a copy of this letter should be attached to the election a copy is enclosed for except as specifically set forth above no opinion is expressed or implied concerning the federal tax consequences of the facts described above under any other provision of the code this ruling is directed only to the taxpayer who requested it sec_6110 of the internal_revenue_code provides that it may not be used or cited as precedent pursuant to the power_of_attorney on file with this office a copy of this letter is being sent to the taxpayer and second listed authorized representative s heather c maloy sincerely heather c maloy associate chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes


t c memo united_states tax_court richard e snyder and marion b snyder petitioners v commissioner of internal revenue respondent richard e snyder and marion snyder petitioners v commissioner of internal revenue respondent docket nos 8740-13l 7701-14l filed date richard e snyder pro_se harry j negro and bradley c plovan for respondent memorandum opinion goeke judge these cases arise from respondent’s efforts to collect petitioners’ income_tax liabilities for and by levy the liabilities are the end result of lengthy litigation in bankruptcy court that preceded the collection effort before us is respondent’s motion for summary_judgment in each of these consolidated cases for the reasons herein we will grant respondent’s motion seven issues raised in the petitions as amended are to be decided in these cases as follows whether the periods of limitations for assessment for the years and expired before the issuance of the notice_of_deficiency whether petitioner marion b snyder is entitled to relief from joint_and_several_liability for the years and whether respondent’s assessments on date for the years and were valid whether overpayments determined by the bankruptcy court for prior years have been properly applied under sec_6330 for the years and whether petitioners are entitled to an overpayment credit to offset the liabilities for the years subject_to collection whether a notice_and_demand for payment was issued and whether petitioners may challenge the underlying liabilities unless otherwise indicated all section references are to the internal_revenue_code in effect at the relevant times and all rule references are to the tax_court rules_of_practice and procedure background petitioners were residents of maryland at the time the petitions were filed on date respondent mailed petitioners a notice_of_deficiency for the years and on date petitioners filed a petition with the tax_court in response to the notice_of_deficiency which was assigned docket no the case was scheduled for trial during the trial session beginning on date at washington d c however petitioners filed a voluntary chapter petition on that day in the u s bankruptcy court for the district of maryland at case no as a result the tax_court proceedings were stayed see u s c sec_362 in their bankruptcy case petitioners initiated an adversary proceeding asking the bankruptcy court to determine their income_tax liabilities for and on date the bankruptcy court issued an order concerning among other things petitioners’ income_tax liabilities for and petitioners appealed the bankruptcy court’s order to the u s district_court for the district of maryland in date the district_court remanded the case to the bankruptcy court for further consideration see 337_br_542 d md on date the bankruptcy court entered an order on remand determining in part that petitioners were liable for income_tax of dollar_figure and an addition_to_tax pursuant to sec_6653 of dollar_figure for the year petitioners were liable for income_tax of dollar_figure and a penalty pursuant to sec_6662 of dollar_figure for the year the notice_of_deficiency for the years and was timely and proper on date petitioners appealed the bankruptcy court’s order to the u s district_court for the district of maryland civil case no 07-cv-00255 on date the district_court affirmed the bankruptcy court’s order petitioners appealed the district court’s decision to the u s court_of_appeals for the fourth circuit which affirmed the judgment of the district_court on date 241_fedappx_984 4th cir because petitioners’ tax_liabilities for and were determined in the bankruptcy court the tax_court was required by res_judicata to enter a decision consistent with the bankruptcy court’s findings on date the tax_court issued an order and decision with respect to the case at docket no deciding that petitioners had a deficiency in income_tax of dollar_figure and are liable for an addition_to_tax pursuant to sec_6653 of dollar_figure for the year and petitioners had a deficiency in income_tax of dollar_figure and are liable for a penalty pursuant to sec_6662 of dollar_figure for the year the present cases are before us after petitioners timely sought review of notices of determination discussion a party may move for summary_judgment if there is no genuine issue of material fact and a decision may be rendered as a matter of law moore v commissioner tcmemo_2007_156 slip op pincite the burden of demonstrating that there is no genuine dispute of material fact is on the moving party and facts are viewed in the light most favorable to the nonmoving party 98_tc_518 aff’d 17_f3d_965 7th cir when a motion for summary_judgment is made and is properly supported by affidavits the nonmoving party may not rely upon mere allegations or denials but must by affidavit or otherwise set forth specific facts showing that there is a genuine dispute for trial rule d petitioners raised four issues in their petitions and three additional issues at the hearing on petitioners’ motion for summary_judgment held in washington d c on date petitioners’ motion for summary_judgment was denied and respondent subsequently filed the motion now before us respondent contends he is entitled to summary_judgment on each of these issue for the reasons discussed below we agree timeliness of the notice_of_deficiency as res_judicata the doctrine_of res_judicata dictates that when a final judgment is entered by a court of competent jurisdiction on the merits of a cause of action the parties and their privies are bound by that decision as to all matters that were or could have been litigated and decided in the proceeding 333_us_591 federal income taxes are determined annually with each year a separate cause of action therefore res_judicata bars subsequent proceedings involving the same tax_year id pincite if a taxpayer files a bankruptcy petition after the tax_court acquires jurisdiction over a case the tax_court proceeding is stayed u s c sec_362 generally the bankruptcy court has jurisdiction to determine the amount or legality of any_tax penalty relating to a tax or addition_to_tax id sec_505 974_f2d_514 4th cir 110_tc_35 after the bankruptcy court has determined the tax_liability the tax_court still retains jurisdiction over the case however the tax_court is bound by the doctrine_of res_judicata to enter a decision consistent with the bankruptcy court’s findings freytag v commissioner t c pincite on date petitioners filed a petition with the tax_court at docket no seeking redetermination of the determinations in the notice_of_deficiency for the years and after filing their petition in the tax_court petitioners filed a voluntary chapter petition in the u s bankruptcy court for the district of maryland in the course of their bankruptcy proceeding petitioners filed an adversary complaint requesting the bankruptcy court to redetermine their tax_liabilities for and as part of petitioners’ adversary proceeding on date the bankruptcy court issued an order on remand determining among other things petitioners’ income_tax liabilities for and and that the notice_of_deficiency for the years and was timely and proper there is no question that petitioners and respondent were the parties to the prior litigation before the bankruptcy court regarding petitioners’ income_tax liabilities for the years and it is also clear that the bankruptcy court in paragraph d of its order on remand dated date the bankruptcy court determined that the notice_of_deficiency was timely and proper entered a valid final judgment on the merits thus the timeliness of the notice_of_deficiency for the years and became res_judicata pursuant to petitioners’ prior bankruptcy proceeding in addition the tax_court has already applied the doctrine_of res_judicata for petitioners’ and tax years the proceedings in the case at docket no were stayed because petitioners filed a bankruptcy court petition since petitioners’ tax_liabilities for and as well as the validity of the notice_of_deficiency were determined by the bankruptcy court the tax_court was bound by the doctrine_of res_judicata to enter a decision consistent with that of the bankruptcy court see id accordingly on date the tax_court entered an order and decision in the case at docket no determining that petitioners’ deficiencies and penalties for the years and were in the amounts set forth in the bankruptcy court’s order dated date accordingly petitioners are precluded by the doctrine_of res_judicata from challenging the timeliness and validity of the notice_of_deficiency for the years and in these cases innocent spouse relief the issue of whether the doctrine_of res_judicata precludes petitioner marion snyder from relief from joint_and_several_liability for the years and has already been decided by the tax_court on date petitioners filed a petition with the tax_court at docket no seeking among other things relief from joint_and_several_liability for marion snyder for the years and respondent filed a motion for partial summary_judgment pursuant to rule pertaining to marion snyder’s claim for relief from joint_and_several_liability the tax_court issued an opinion determining that marion snyder was barred by the doctrine_of res_judicata from raising a claim for relief from joint_and_several_liability in the tax_court for the years and because she had raised the claim in her earlier bankruptcy proceeding snyder v commissioner tcmemo_2001_6 accordingly petitioner marion snyder cannot claim relief from joint_and_several_liability for the years and in these proceedings respondent’s assessments for and on date the tax_court entered an order and decision in the case at docket no for petitioners’ deficiencies and penalties for the years and respondent assessed the deficiencies and penalties for the years and on date days later petitioners assert that the assessments for and were invalid because they were made before the 90-day prohibition period under sec_6213 expired petitioners are mistaken petitioners’ deficiencies and penalties for the years and were properly assessed under sec_6871 if the secretary determines that there is a deficiency he is authorized to send a notice of such deficiency to the taxpayer by certified or registered mail sec_6212 the taxpayer ha sec_90 days or days if the notice is addressed to a person outside the united_states to petition the tax_court for redetermination of the deficiency sec_6213 under sec_6213 if a petition has been filed with the tax_court no assessment of a deficiency can be made until the decision of the tax_court has become final the decision of the tax_court does not become final until after the expiration of the 90-day appeal period sec_7481 sec_7483 however not all assessments are made pursuant to sec_6213 an assessment made pursuant to sec_6871 may be made before the expiration of the 90-day appeal period sec_6871 provides in part that any deficiency with respect to income_tax together with all interest additional_amounts and additions to tax provided by law determined by the secretary may be assessed immediately despite the restrictions imposed by sec_6213 on assessments if liability for the tax has become res_judicata pursuant to a determination in a bankruptcy case under title of the united_states_code see 110_tc_35 thus when a tax_liability is determined by the bankruptcy court the restrictions imposed on assessment by sec_6213 do not apply including the restriction that the commissioner wait until the 90-day appeal period expires before making an assessment sec_6871 petitioners’ deficiencies and penalties for the years and became res_judicata pursuant to the determination in their adversary proceeding accordingly on date the tax_court entered a decision consistent with the bankruptcy court’s findings for the years and since petitioners’ income_tax liabilities for the years and were res_judicata pursuant to their bankruptcy court_proceeding the assessment restrictions under sec_6213 did not apply consequently respondent did not need to wait for the 90-day appeal period to expire and was authorized to immediately assess the deficiencies and penalties for the years and under sec_6871 on date respondent made his assessment as authorized the pendency of an appeal does not suspend operation of a final judgment for the purposes of res_judicata except when the appeal review constitutes a de novo trial 312_us_183 129_f3d_356 n 6th cir the fact that smith has an appeal of that judgment pending does not deprive the judgment of res_judicata effect 45_f3d_155 7th cir 905_f2d_610 2d cir 857_f2d_1366 9th cir 510_f2d_272 5th cir e i du pont de n297_f_580 4th cir on date the district_court affirmed the bankruptcy court’s order denying petitioners’ motion to reconsider the bankruptcy court’s order on remand dated date petitioners appealed the district court's determination to the court_of_appeals for the fourth circuit which affirmed the district court’s determination on date the district_court and court_of_appeals reviews of the bankruptcy court’s order on remand were not de novo consequently the pendency of petitioners’ appeal to the district_court and later to the court_of_appeals did not suspend operation of a final judgment for the purposes of res_judicata huron holding corp u s pincite smith f 3d pincite n petitioners’ tax_liabilities for the years and became res_judicata with the bankruptcy court’s order on remand dated date the tax_court was bound by the doctrine_of res_judicata to enter a decision that was consistent with petitioners’ bankruptcy court determination freytag v commissioner t c pincite on date the tax_court entered an order and decision pursuant to the doctrine_of res_judicata finding that petitioners’ deficiencies and penalties for the years and were as determined by the bankruptcy court even though an appeal in the fourth circuit may have been pending the bankruptcy court determination was certainly res_judicata on the date the tax_court entered its decision petitioners’ pending appeal in the fourth circuit did not affect the finality of the bankruptcy court’s determinations for the purposes of res_judicata accordingly respondent’s date assessments of petitioners’ deficiencies and penalties for the years and as determined by the tax_court were valid pursuant to sec_6871 in certain filings with the court petitioners have suggested that the assessments for the years and are invalid because the internal_revenue_service irs did not follow certain procedures in the internal_revenue_manual eg for quick assessments petitioners’ contention is misplaced the internal_revenue_manual binds neither the irs nor this court the internal_revenue_manual does not have the force of law is not binding on the irs and confers no rights on taxpayers matthews v commissioner tcmemo_2008_126 slip op pincite it is well settled that the provisions of the manual are directory rather than mandatory are not codified regulations and clearly do not have the force and effect of law 947_f2d_983 n d c cir aff’g tcmemo_1989_575 petitioners’ reliance on the internal_revenue_manual is misplaced and is not relevant to this court’s determination petitioners’ tax_liabilities were legally assessed pursuant to sec_6871 application of overpayments in a case brought under sec_6330 a court-determined overpayment or credit from a year not subject_to the collection action may be an available credit that can be taken into account under sec_6330 a to determine whether the liability at issue remains unpaid and whether the irs can proceed with collection 138_tc_348 see precision prosthetic v commissioner tcmemo_2013_110 at a court-determined overpayment or credit is available if it has not been refunded or applied to any other liability weber v commissioner t c pincite the bankruptcy court determined that petitioners had an overpayment of dollar_figure for the year at the time petitioners filed the petitions in these cases petitioners’ transcripts did not reflect the dollar_figure overpayment for the year respondent has since applied the dollar_figure overpayment for the year for petitioners’ tax_year the dollar_figure overpayment was applied for the tax_year in two amounts as follows dollar_figure dollar_figure dollar_figure the dollar_figure overpayment for was applied for the tax_year as of date the due_date for the tax see sec_6072 sec_6151 sec_1_6151-1 income_tax regs because the payments were applied as of their due_date respondent concedes no interest accrues on petitioners’ income_tax_liability to the extent of the payment in addition petitioners’ transcript for the year reflected total payments and credits of dollar_figure instead of the dollar_figure determined by the bankruptcy court a difference of dollar_figure to comply with the bankruptcy court’s determination respondent abated dollar_figure of income_tax for the year this abatement of tax relates back to the date the tax was assessed consequently respondent concedes no interest will accrue because of the difference between the credits determined by the bankruptcy court and those reflected in the transcript the bankruptcy court’s findings in its order dated date for the years through have been fully accommodated including applying the overpayment of dollar_figure for the tax_year after these adjustments petitioners still have a balance due for the tax_year exceeding dollar_figure as of date also there is no further overpayment or credit that is available to reduce or offset petitioners’ tax_liability petitioners have not paid their tax_liability for the year and have a balance due exceeding dollar_figure for that year as of date the overpayments and credits determined by the bankruptcy court have been fully applied to petitioners’ accounts and there still remains a balance due for each of the years and interest as discussed in sec_4 the dollar_figure overpayment for was applied for the tax_year as of the due_date for paying the tax accordingly no interest accrues on petitioners’ income_tax_liability to the extent of the payment in addition the dollar_figure abatement of income_tax for the year relates back to the assessment_date causing any related interest to be abated notice_and_demand for payment in one of their interrogatories to respondent in the case at docket no 8740-13l petitioners inquired when the notice for the assessment made by respondent on date was sent to what address it was sent and whether it included a form_3552 notice of tax due on federal tax_return respondent’s certified transcripts for petitioners’ taxable years and show that statutory notices of balance due assessment notices were sent to petitioners on july and date the certified transcripts are afforded a presumption of correctness 119_tc_252 battle v commissioner tcmemo_2009_171 the underlying income_tax_liability for at the motion hearing on date petitioners challenged the income_tax_liability determined by the bankruptcy court and the tax_court for petitioners base their challenge primarily on the statements of the attorney for the united_states during a date hearing in petitioners’ adversary proceeding the transcript of that hearing shows that during the proceeding the attorney for the united_states stated that item is resolved by allowing petitioners a dollar_figure ordinary_loss as claimed on the basis of this statement petitioners contend that their taxable_income for should be reduced by dollar_figure and that the deficiency and liability for that year should be recomputed contrary to petitioners’ interpretation of the transcript the attorney for the united_states did not say that taxable_income should be adjusted the parties appear to have agreed that there was a dollar_figure loss claimed by petitioners on their return that would be accepted as reported thus there would be no petitioners make similar claims based on the bankruptcy court transcript for lesser amounts adjustment relating to that item when computing petitioners’ income_tax_liability if the loss was already claimed on petitioners’ return taxable_income should not be reduced by dollar_figure as petitioners suggest further the agreed loss would have been incorporated into the bankruptcy court’s determination of petitioners’ income_tax_liability importantly the transcript of the bankruptcy court hearing does not show that the bankruptcy court determined a definitive and independently identifiable credit for the year that remains unapplied it lends no support to petitioners’ apparent contention that respondent failed to apply a credit or payment against their tax_liability even if it could be shown that the tax computations underlying the bankruptcy court’s determinations did not include the loss in question petitioners are nevertheless precluded from recomputing their deficiency and penalty for the year for two independent reasons petitioners are barred under the doctrine_of res_judicata from challenging their underlying income_tax_liability for the year petitioners are also precluded from challenging the existence and amount of their underlying liability for the year under sec_6330 because they received a notice_of_deficiency a petitioners’ liability as res_judicata on date the bankruptcy court determined that petitioners had a deficiency of dollar_figure and an accuracy-related_penalty pursuant to sec_6662 of dollar_figure for the year petitioners and respondent were parties to the prior litigation before the bankruptcy court regarding petitioners’ income_tax_liability for the year the bankruptcy court entered a valid final judgment on the merits determining that liability petitioners’ income_tax_liability for the year became res_judicata pursuant to petitioners’ prior bankruptcy proceeding commissioner v sunnen u s pincite consequently on date the tax_court entered an order and decision consistent with bankruptcy court’s determinations finding that petitioners had a deficiency of dollar_figure and an accuracy-related_penalty pursuant to sec_6662 of dollar_figure for the year just as in the court’s determination of date the doctrine_of res_judicata precludes petitioners from challenging their income_tax_liability for the year b petitioners’ notice_of_deficiency a taxpayer may challenge the existence or amount of the underlying tax_liability in a collection_due_process_hearing under sec_6320 and or if the taxpayer did not receive a statutory_notice_of_deficiency for the tax_liability or did not otherwise have an opportunity to dispute the tax_liability sec_6330 b 114_tc_604 114_tc_176 in the current cases petitioners received a valid notice_of_deficiency for the years and they also disputed their income_tax liabilities for those years in the bankruptcy court since petitioners received a notice_of_deficiency for the year they are precluded from challenging their income_tax_liability for the year in their collection_due_process proceeding at docket no 8740-13l see sec_6330 sego v commissioner t c pincite conclusion the court finds there is no genuine dispute of material fact respondent’s motion for summary_judgment will be granted and respondent’s collection action will be sustained for the revised amounts set forth herein accordingly appropriate orders will be issued and appropriate decisions will be entered


internal_revenue_service number release date index numbers department of the treasury person to contact telephone number refer reply to cc dom corp - plr-111190-99 date date re taxpayer attorney-in-fact company sub state a state b business c date d date e date f type g insurance state a statute a b c plr-111190-99 d stock exchange this is in response to a letter dated date in which you requested rulings on behalf of taxpayer with respect to a proposed transaction additional information was received in letters dated date date date and date the information submitted is summarized below taxpayer is a non-stock reciprocal insurance exchange organized under state a law that provides certain insurance products to certain individuals and to certain corporate and partnership entities and a variety of other entities engaged in business c taxpayer is an association_taxable_as_a_corporation under sec_831 of the code it files its federal_income_tax returns on a calendar-year basis taxpayer files statutory accounting financial statements with the state a insurance regulatory authorities a reciprocal is an organization or group of subscribers including individuals partnerships and corporations who may insure each other by exchanging insurance contracts through their commonly appointed attorney-in-fact all such insurance contracts are executed on behalf of all the subscribers by their designated attorney-in-fact taxpayer’s commonly appointed attorney-in-fact is its wholly owned subsidiary attorney-in-fact attorney-in-fact is included in the consolidated federal_income_tax return filed by taxpayer ownership of taxpayer exists in the form of membership interests which may be owned solely by owners to whom and for whom a policy of insurance has been issued in addition to insurance coverage taxpayer’s members as holders of liability insurance acquire rights a membership interest in taxpayer arising under its subscription agreements and rules and regulations and otherwise among such rights are the right to vote to share in taxpayer’s assets on liquidation and after qualifying as an insured for a certain number of continuous policy periods to receive distributions when declared by taxpayer’s board_of governors the board_of governors can declare a distribution to members out of the surplus determined to be beyond that needed for continuing operating requirements and the protection of the members the qualifications of members to receive dividends declared may be determined by the board_of governors except that a dividend may only be paid to a member who has been insured during four continuous policy periods if taxpayer is liquidated any assets remaining after payment of all liabilities would be distributed to members in accordance with state a law company is a state b corporation formed on date d to be the publicly held holding_company for sub company is a wholly-owned subsidiary of taxpayer sub a wholly owned subsidiary of company is a state a stock insurance corporation organized to write type g insurance in state b sub will have conducted no business prior to the merger described below state a statute provides that the surviving company in a merger of insurance_companies shall be responsible and liable for all of the liabilities and obligations of each of the merged companies plr-111190-99 for what are presented to be valid business purposes the following transaction the merger is proposed taxpayer will be converted from a reciprocal to an state a stock insurance_company the conversion will be effected through a plan and agreement of merger the merger agreement dated as of date e pursuant to which taxpayer will be merged into sub taxpayer represents that as part of the merger all of taxpayer’s membership interests will be extinguished and every person who was a member of taxpayer at the close of business on date e eligible member will receive common shares common shares of stock of company taxpayer further represents that out of a total of a common shares b common shares will be allocated pro-rata among eligible members based on the ratio of each such member’s earned premiums to the total earned premiums of all eligible members from date f through date e the remaining c common shares will be allocated evenly among eligible members no fractional shares will be issued fractional shares will be rounded down or up to the nearest whole number of shares rounding may cause the aggregate number of shares issued to eligible members in the merger to be slightly more or less than a taxpayer also represents that pursuant to the merger agreement the shares of company held by taxpayer will be canceled and in consideration of such cancellation company will issue to sub approximately d of the common shares issued in the merger taxpayer further represents that that d of the common shares will have the same aggregate value as the canceled shares taxpayer held in company before the merger determined immediately prior to taxpayer’s contribution to company of its sub stock after the merger sub will operate the insurance_business that taxpayer had been operating immediately prior to the conversion all insurance policies taxpayer issued as well as taxpayer’s other obligations and liabilities will be assumed or succeeded to by sub in the same manner as if incurred or contracted by sub taxpayer’s policyholders will not receive new policies from sub but they will receive an endorsement informing them that sub is taxpayer’s successor upon their renewal sub will issue those policies taxpayer represents that the business reason for the conversion is to enable company to obtain increased financial and structural flexibility and to provide greater access to capital resources than are currently available to taxpayer as a reciprocal and thus to position it for long term growth as an unincorporated association taxpayer is unable to raise capital through the sale of equity securities in contrast company as a corporation will be able to offer its shares as a means of raising capital the conversion in addition to providing benefits to taxpayer will also provide benefits to its members presently the membership interests in taxpayer are not transferable in contrast company’ common_stock will be freely tradable and will be listed on stock exchange additionally as a result of the conversion eligible members will become stockholders of company the following representations have been made in connection with the proposed transaction subject_to ruling below the merger will qualify under sec_368 and a d of the code and will be subject_to the provisions of sec_381 of the code plr-111190-99 it is the intention of company and sub to join in the filing of a consolidated federal_income_tax return after the merger the transaction will qualify under sec_1_1502-75 and iii of the regulations there will be no reinsurance agreement between taxpayer and sub none of the consideration issued with respect to the membership interests in the merger will be taken as a deduction in computing taxpayer’s taxable_income under subchapter_l of the code taxpayer has no amount of savings_credited_to_subscriber_accounts within the meaning of sec_832 sec_381 of the code provides that if a corporation acquires the assets of another corporation in a transfer to which sec_361 relating to nonrecognition_of_gain_or_loss to corpora- tions applies the acquiring_corporation succeeds to and takes into account as of the close of the date of transfer the items of the transferor_corporation described in sub sec_381 subject_to the conditions and limitations specified in subsections b and c of sec_381 this treatment is allowed only if the transfer is made in connection with a reorganization described in inter alia sec_368 sec_381 of the code provides in part that except in the case of an acquisition in connection with a reorganization described in subparagraph f of sec_368 the taxable_year of the transferor_corporation shall end on the date of transfer sec_381 of the code provides that if the acquiring_corporation is an insurance_company taxable under subchapter_l it must take into account those items of the transferor_corporation required to be taken into account for purposes of subchapter_l to the extent proper to carry out the purposes of sec_381 and of subchapter_l and under such regulations as may be prescribed by the secretary that code section was amended in by p l sec_5 to apply to all insurance_companies prior to that amendment its predecessor applied only to life_insurance_companies the regulations promulgated under that section have not been amended to reflect the change in the statute and continue to refer only to life_insurance_companies taxpayer and company are nonlife insurance_companies subject_to tax under sec_831 and sec_832 which are contained in subchapter_l sec_832 provides that the taxable_income of a nonlife insurance_company is gross_income defined in sec_832 less deductions allowed by sec_832 gross_income as defined in that section includes among other items the gross amount earned from underwriting_income underwriting_income is premiums earned on insurance contracts during the taxable_year less losses_incurred and expenses_incurred sec_832 provides that the computation of premiums earned includes a comparison of the unearned premiums at the end of the preceding year with the unearned premiums at the end of the taxable_year sec_832 provides that the computation of losses_incurred includes a comparison of the discounted_unpaid_losses as defined in sec_846 outstanding at the end of the taxable_year with the discounted_unpaid_losses outstanding at the end of the preceding_taxable_year sec_832 indicates that unpaid loss adjustment expenses shall be included in unpaid_losses plr-111190-99 sec_832 provides in part that in the case of a mutual_insurance_company which is a reciprocal insurer there shall be allowed as a deduction the increase for the taxable_year in savings credited to subscribe accounts or there shall be included as an item_of_gross_income the decrease for the taxable_year in savings_credited_to_subscriber_accounts sec_1_381_c_22_-1 of the regulations requires the acquiring_corporation to take into account the reserves described in former sec_810 of the code now sec_807 transferred to it by the transferor_corporation as of the close of the date of transfer in accordance with the provisions of sec_381 and the regulations thereunder while no similar rule has been promulgated with respect to nonlife insurance_companies subject_to tax under sec_831 et seq it is reasonable to apply a rule similar to the rule in regulation sec_1_381_c_22_-1 to taxpayer’s unpaid_losses sec_846 provides that the amount of a taxpayer’s discounted_unpaid_losses at the end of any taxable_year attributable to any accident_year shall be the present_value of such losses as of such time determined in part by using the taxpayer’s applicable loss_payment_pattern sec_846 and provide that a taxpayer may elect to apply subsection a c of that section by using a loss_payment_pattern determined by reference to certain of the taxpayer’s own experience the election is made separately for each determination_year and every fifth calendar_year thereafter and applies to all of the taxpayer’s eligible lines of business during the determination_year sec_1_846-2 of the regulations provides that an insurer making the election must use its own historical loss_payment_pattern in discounting unpaid_losses for each line_of_business that is an eligible line_of_business in the relevant determination_year sec_1_1502-75 of the regulations provides as a general_rule that an affiliated_group will remain in existence only so long as the common parent_corporation remains as the common parent and at least one subsidiary remains affiliated with it sec_1_1502-75 of the regulations creates an exception to the general_rule of sec_1_1502-75 in the case of a transfer of the common parent's assets to a subsidiary that exception provides that an affiliated_group shall be considered as remaining in existence notwithstanding that the common parent is no longer in existence if the members of the affiliated_group succeed to and become owners of substantially_all of the assets of such former parent and there remains one or more chains of includible corporations connected through stock ownership with a common parent_corporation which is an includible_corporation and which was a member of the group prior to the date such former parent ceases to exist sec_1_1502-75 of the regulations provides in part that if a transfer of assets described in subsection ii of the subparagraph is an acquisition to which sec_381 of the code applies and if the group files a consolidated_return for the taxable_year in which the acquisition occurs then for purposes of sec_381 the former common parent shall not close its taxable_year merely because of the acquisition and all taxable years of such former parent ending on or taxpayer has no amount of savings_credited_to_subscriber_accounts within the meaning of sec_832 plr-111190-99 before the date_of_acquisition shall be treated as taxable years of the acquiring_corporation sec_1_1502-75 further provides that the corporation acquiring the assets shall close its taxable_year as of the date_of_acquisition and all taxable years of such corporation ending on or before the date_of_acquisition shall be treated as taxable years of the transferor_corporation the function of sec_1_1502-75 and iii is to recognize the continuity of an affiliated_group after a transaction that even though formally restructuring the group did not effect any substantial change in the composition of the group judged by reference to the underlying assets of the group it is implicit in the single economic entity_theory underlying the consolidated regulations that the group ought to continue in existence after such a transaction although the taxpayer for purposes of the election under sec_846 is company which has no loss experience it is consistent with the purpose of sec_1_1502-75 and iii to conclude that upon the completion of the merger the experience to be taken into account for purposes of determining company’s loss_payment_pattern is the experience of taxpayer based solely on the information submitted and the representations set forth above it is held as follows provided the proposed merger otherwise qualifies as a reorganization under sec_368 by reason of sec_368 of the code the merger as described above will satisfy the continuity_of_interest requirement set forth in sec_1_368-1 of the regulations taxpayer will not be entitled to a deduction under sec_832 for the transfer of assets to sub in consideration for the assumption by sub of liabilities under taxpayer’s insurance contracts sub will not take into premium income under sec_832 any amount with respect to taxpayer’s assets transferred to sub in connection with the merger provided that the transaction qualifies under sec_1_1502-75 and is a transaction to which sec_381 applies then for purposes of sec_381 a taxpayer shall not close its taxable merely because of the acquisition and all of taxpayer’s taxable years ending on or before the date of transfer shall be treated as taxable years of sub and b sub shall close its taxable_year as of the close of the date of transfer within the meaning of sec_1_381_b_-1 of the regulations and all taxable years of sub ending on or before the date of transfer shall be treated as taxable years of the taxpayer sub i will include in its estimate of unpaid_losses as of the beginning of the taxable_year in which the merger takes place ie as of the beginning of the calendar_year in which the merger takes place taxpayer’s unpaid_losses as of the end of the taxable_year immediately preceding that taxable_year and ii will include in its estimates of unpaid_losses as of the end of that taxable_year in which the merger takes place any unpaid_losses of taxpayer as of the end of that taxable_year for purposes of sec_846 after the merger sub will treat as its loss_payment_pattern the historical loss_payment_pattern of taxpayer immediately prior to the merger plr-111190-99 no opinion is expressed about the tax treatment of the transaction under any other provisions of the code and regulations of about the tax treatment of any conditions existing at the time of or effects resulting from the transaction that are not specifically covered by the above ruling specifically no opinion has been requested and none is expressed about the tax treatment of the distribution of the c common shares as described above 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 as precedent a copy of this letter should be attached to the federal_income_tax return of the taxpayers involved for the taxable_year in which the transaction covered by this ruling letter is consummated sincerely yours assistant chief_counsel corporate by __________________________ lewis k brickates assistant to the chief branch


department of the treasury internal_revenue_service washington d c cee tax_exempt_and_government_entities_division feb set ef lat u i l ke tt kk kkkkk legend order a province b directory c hospital d hospital e city f year g church r plan x committee f dear ae kk krk er xkk kk e ee ee this letter is in response to your letter dated date as supplemented by correspondence dated date and date submitted on your behalf by your authorized representative regarding the church_plan status of plan x within the meaning of sec_414 of the internal_revenue_code code the following facts and representations have been submitted on your behalf order a a religious_order of women within church r was founded in city f in year g organized within and sharing common bonds and convictions with church r order a was established to provide care for the sick poor and dying order a directory c and is an organization described in sec_501 of the code and exempt from tax under code sec_501 is listed in currently order a operates two health care facilities in the united_states and additional health care facilities in europe africa australia and new zealand health care institutions located in the united_states are operated under the auspices of province b order a founded province b in furtherance of order a’s mission within church r specifically province b was founded to establish and conduct houses for the practice and promotion of christian charity particularly to provide nurses to care for the sick and indigent according to the practice and discipline of church r province b is a tax- exempt_organization described in sec_501 of the code and is listed in directory c province b sponsors hospital d and hospital e each hospital is a charitable tax- exempt_organization under sec_501 of the code and is listed in directory c both hospitals are separately incorporated as a not-for-profit corporation in the state in which it is chartered and licensed to operate both hospitals have their own board_of directors which consists of members who are elected by province b the chairperson of the board_of each hospital is appointed by province b each board is responsible for the operation and governance of its hospital with certain powers reserved to province b particularly with regard to those matters subject_to canon law and administration of goods and property also each board must uphold the mission and philosophy of order a and its role in church r these requirements of canon law relate to matters such as limits on spending approvals for acquisitions or dispositions of property leasing and certain kinds of contracts province b also approves annual budgets for both hospitals requests to exceed budget over specified amounts and other requests related to fiscal responsibility and stewardship upon dissolution of one or both hospitals the assets of the corporations shall revert to province d or shall be transferred to such other charitable_organization as province b shall provide article sec_2 of the bylaws of province b recognize control by church r sec_3_1 and sec_3_2 of the bylaws of hospital d provide that the sole member of the corporation is province b sec_3_6 provides that certain powers are reserved to province b including the power to designate the chairperson or president of the corporation ie hospital d to approve the purchase sale transfer or encumbrance of assets constituting stable patrimony of the member in accordance with sec_5 all members of the board_of directors are elected by province b and in accordance with section of the bylaws province b elects the chairperson of the board_of directors and the president the remaining officers of the board are elected by board members and subject_to the approval of province b in addition in accordance with article ii sec_1 of the bylaws of hospital e the members of hospital e consist of the province leader and the members of the council of province b all of whom are members of order a in accordance with article ll sec_2 of the bylaws the members have the power to fix the number of directors of the corporation and to appoint and remove them the members have the power to appoint and remove the president and ceo of the corporation and the chairperson of the board_of directors the members have the power to establish or approve the mission and philosophy of hospital e to approve the acquisition of assets the incurrence of indebtedness and the lease sale transfer and assignment of encumbering of the assets the hospitals jointly established plan x for their employees effective january plan x is a defined contribution profit sharing plan intended to qualify under sec_401 of the code benefits under plan x are funded pursuant to a_trust agreement no election has been made under sec_410 to have the participation vesting and funding provisions of code sec_410 sec_411 and sec_412 apply to plan x plan x was adopted as a prototype_plan the prototype_plan was the subject of a favorable opinion letter dated september no eligible participants in plan x are or can be considered employed in connection with an unrelated_trade_or_business under sec_513 of the code additionally you _ represent that all of the eligible participants are or will be employed by an organization that is controlled by or associated with a church or a convention or association of churches as provided in sec_414 of the code the sole and exclusive purpose of committee f is and has plan x has been administered by committee f since the plan was first established effective january always been the management administration and funding of plan x and a pension_plan maintained by hospital d and e which is not covered by this ruling letter committee f was established by the provincial superior of province b members of committee f include the chief financial officer and the human resources directors of both hospitals in addition the treasurer of province b who is a member of order a is a member of committee f any recommendations that committee f may have regarding plan x are presented to both hospitals for proper approval there have been no changes to order a province b hospital d or hospital e since the internal_revenue_service issued a private_letter_ruling in on the church_plan status of the pension_plan maintained by the hospitals the hospitals’ pension_plan is not covered by this ruling letter in accordance with revproc_2011_44 notice to employees with reference to plan x was provided on january this notice explained to participants of plan x the consequences of church_plan status based on the foregoing you request rulings that plan x qualifies as a church_plan within the meaning of sec_414 of the code and plan x is exempt from the requirements of sec_410 sec_411 and sec_412 so long as the plan satisfies coverage vesting and funding requirements of the code as in effect on date sec_414 of the code generally defines a church_plan as a plan established and maintained for its employees or their beneficiaries by a church or a convention or association of churches which is exempt from taxation under sec_501 of the code sec_414 of the code provides in part that the term church_plan does not include a plan that is established and maintained primarily for the benefit of employees or their beneficiaries of such church_or_convention_or_association_of_churches who are employed in connection with one or more unrelated trades_or_businesses within the meaning of sec_513 of the code or if less than substantially_all of the individuals included in the plan are individuals described in sec_414 of the code or sec_414 of the code or their beneficiaries sec_414 of the code provides that a plan established and maintained for its employees or their beneficiaries by a church or a convention or association of churches includes a plan maintained by an organization whether a civil law corporation or otherwise the principal purpose or function of which is the administration or funding of a plan or program for the provision of retirement benefits or welfare benefits or both for the employees of a church or a convention or association of churches if such organization is controlled by or associated with a church or a convention or association of churches sec_414 of the code generally defines employee of a church or a convention or association of churches to include a duly ordained commissioned or licensed minister of a church in the exercise of his or her ministry regardless of the source of his or her compensation and an employee of an organization whether a civil law corporation or otherwise which is exempt from tax under sec_501 of the code and which is controlled by or associated with a church or a convention or association of churches sec_414 of the code provides that a church or a convention or association of churches which is exempt from tax under sec_501 of the code shall be deemed the employer of any individual included as an employee under subparagraph b sec_414 of the code provides that an organization whether a civil law corporation or otherwise is associated with a church or a convention or association of churches if it shares common religious bonds and convictions with that church_or_convention_or_association_of_churches letter_ruling under sec_414 of the code relating to church plans the revproc_2011_44 2011_39_irb_446 supplements the procedures for requesting a revenue_procedure requires that plan participants and other interested persons receive a notice in connection with a letter_ruling request under sec_414 of the code for a qualified_plan requires that a copy of the notice be submitted to the internal_revenue_service irs as part of the ruling_request and provides procedures for the irs to receive and consider comments relating to the ruling_request from interested persons in order for an organization that is not itself a church_or_convention_or_association_of_churches to have a qualified church_plan it must establish that its employees are employees or deemed employees of a church_or_convention_or_association_of_churches under sec_414 of the code by virtue of the organization’s control by or affiliation with the church_or_convention_or_association_of_churches employees of any organization maintaining a plan are considered to be church employees if the organization is exempt from tax under sec_501 of the code and is controlled by or associated with a church_or_convention_or_association_of_churches in addition in order to be a church_plan the administration or funding or both of the plan must be by an organization described in sec_414 of the code to be described in sec_414 of the code an organization must have as its principal purpose the administration or funding of the plan and must also be controlled by or associated with a church_or_convention_or_association_of_churches in view of the common religious bonds between hospital d hospital e and church r the inclusion of hospital d and hospital e in directory c of church r and the indirect control of hospital d and hospital e by church r through order a and province b we conclude that hospital d and hospital e are associated with a church_or_convention_or_association_of_churches within the meaning of sec_414 of the code that the employees of hospital d and hospital e meet the definition of employee under sec_414 of the code and that they are deemed to be employees of a church or a convention or association of churches by virtue of being employees of an organization which is exempt from tax under sec_501 of the code and which is controlled by or associated with a church or a convention or association of churches the administrative control of plan x is vested in committee f committee f is controlled by and shares common religious bonds with church r through its control by province b and the chief financial officer and human resource directors of both hospitals furthermore the involvement of the provincial superior of province b in committee f and the activities of the hospitals themselves ensure that committee f and the hospitals share common religious bonds and convictions with church r the sole function of committee f is to administer plan x and the pension_plan committee f performs all acts necessary for the administration of plan x thus the administration of plan x satisfies the requirements regarding church_plan administration under sec_414 of the code with respect to ruling_request number one we conclude that plan x is a church_plan within the meaning of sec_414 of the code and has been a church_plan within the meaning of sec_414 of the code since its establishment on january to qualify under sec_401 of the code a retirement_plan must meet the participation standards of sec_410 of the code and the minimum vesting standards of sec_411 of the code qualified_pension plans also must meet the minimum_funding standards of sec_412 of the code each of these sections however contains an exception for a church_plan as defined in sec_414 of the code unless an election has been made in accordance with sec_410 of the code hospital d and hospital e represent that to the best of their knowledge an election has never been made under sec_410 of the code to have the participation vesting and funding provisions of sec_410 sec_411 and sec_412 of the code apply therefore with respect to ruling_request number two we conclude that plan x is exempt from the requirements of sec_410 sec_411 and sec_412 so long as plan x meets the coverage vesting and funding requirements of the code as in effect on date this letter expresses no opinion as to whether plan x otherwise satisfies the requirements of sec_401 of the code this letter is directed only to the taxpayers 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_ruling is being sent to your authorized representative lf you have any questions regarding this letter please contact address all correspondence to se t ep ra t3 at please sincerely yours e laura b warshawsky manager employee_plans technical group enclosures deleted copy of letter_ruling notice cc kr krkk kakk