internal_revenue_service number release date index number ------------------- ---------------------------------------- ------------------------------- ---------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact -------------------------- id no ------------ telephone number -------------------- refer reply to cc tege eb hw plr-130420-15 date november legend taxpayer ---------------------- ------------------------------------------------- state ------------- statute -------------------------------------- --------------------------------------------------------- plans ------------------------------------------------------------ ------------------------------------------------------------------------------------------ dear ----------------- this is in reply to your letter dated date for a ruling concerning whether certain disability benefits paid_by the plans under sec_806 of the statute are excludable from the gross_income of members under sec_104 of the internal_revenue_code the code the statute requires employers in state to provide the pension benefits of the statewide defined_benefit_plan established by the statute however the statute permits employers to withdraw from the statewide pension_plan if they establish and maintain a locally administered and financed alternative pension_plan that is subject_to sec_601 of the statute sec_601 of the statute provides that the members of such plan hired before on or after date shall be covered by the provisions of sections plr-130420-15 and in lieu of any other defined disability and preretirement death_benefits sec_803 and of the statute provide that a member who is not eligible for the normal retirement pension described in sec_403 or a local defined benefit retirement pension selected pursuant to sec_704 or provided pursuant to article of the statute and who becomes totally or occupationally disabled shall be retired from active_service for disability and shall be eligible to receive disability benefits under sec_803 or sec_806 of the statute the annual disability benefits provided are based on a certain percentage of a member’s annual base salary paid to the member immediately preceding retirement and an additional_amount if the member had a spouse and dependent_children at the time of the disability sec_803 and b a and b and of the statute sec_806 of the statute provides that if a member who is otherwise eligible to apply for the disability retirement benefits under section is required to terminate the member’s regular employment due to a total or occupational injury that is the result of an injury received while performing official duties or an occupational disease arising out of and in the course of the member’s employment the member is eligible for a disability benefit in an amount provided for in section sec_806 of the statute states that the board shall promulgate rules that specify standards for determining whether a member’s disability is the result of an injury received while performing official duties or an occupational disease arising out of or in the course of employment sec_804 of the statute states that the benefits payable under section or to any member who at the time of the award of such benefits is a member of a money purchase plan pursuant to this article shall be reduced by an amount that is the actuarial equivalent of the benefits such member receives from any such money purchase plan whether the benefits received from the money purchase plan are paid on a periodic basis or in a lump sum sec_61 of the code provides that except as otherwise provided by law gross_income means all income from whatever source derived including compensation_for services sec_104 of the code provides that gross_income does not include amounts received under workmen’s compensation acts as compensation_for personal injuries or sickness sec_1_104-1 of the income_tax regulations states that sec_104 of the code excludes from gross_income amounts received by an employee under a workmen’s compensation act or under a statute in the nature of a workmen’s compensation act that provides compensation to the employee for personal_injury_or_sickness incurred in the course of employment sec_1_104-1 of the regulations plr-130420-15 also states that this exclusion does not apply to the amount received either to the extent that it is determined by reference to the employee’s age or length of service or the employee’s prior contributions even though the employee’s retirement is occasioned by an occupational injury or sickness or to the extent that it is in excess of the amount provided in the applicable workmen’s compensation act or acts the fact that the amount received as a disability retirement pension is computed with regard to the employee’s salary prior to retirement does not disqualify the payment from being in the nature of workmen’s compensation see revrul_85_104 c b revrul_68_10 1968_1_cb_50 based on the information submitted representations made and authorities cited we conclude as follows sec_806 of the statute limits benefits to a class of employees with service-incurred injuries or disease and the benefits are not determined with reference to the employee’s age length of service or prior contributions accordingly sec_806 of the statute is a statute in the nature of a workmen’s compensation act benefits paid_by the plans under sec_806 of the statute as offset by the benefits funded pursuant to sec_804 of the statute are excludable from the member’s gross_income under sec_104 of the code no opinion is expressed as to the federal tax consequences of the transaction under any other section of the code or statute other than those specifically stated above this ruling is directed only to the taxpayer requesting it sec_6110 of the code provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representatives sincerely s harry beker chief health welfare branch office of associate chief_counsel tax exempt government entities cc


internal_revenue_service number release date index number ------------------------------------- ------------------ ----------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact --------------------------- id no ------------- telephone number --------------------- refer reply to cc psi b01 plr-143775-11 date date legend ---------------------- taxpayers ---------------------------------------------------- ------------------------------------------------------ ------------------------- year --------- dear -------------------------- this responds to a letter dated date and subsequent correspondence submitted on behalf of taxpayers by your authorized representative requesting an extension of time under sec_301_9100-3 of the procedure and administration regulations for taxpayers to file an election under sec_469 of the internal_revenue_code and sec_1_469-9 of the income_tax regulations to treat all interests in rental real_estate as a single rental real_estate activity facts according to the information submitted taxpayers were married individuals who filed their tax returns jointly taxpayers represent that in year they were in a real_property business as defined by sec_469 and were qualified under sec_469 to make an election to treat all interests in rental real_estate as a single rental real_estate activity however taxpayers inadvertently filed their joint_return for year without the statement required under sec_1_469-9 law and analysis under sec_469 the term passive_activity generally includes any rental_activity sec_469 provides a limited exception to this rule for taxpayers in a real_property_trade_or_business specifically sec_469 indicates that if a taxpayer meets the requirements of sec_469 the taxpayer's rental real_estate activity will no plr-143775-11 longer be presumptively passive by its terms the exception under sec_469 is to be applied as if each interest of the taxpayer in rental real_estate were a separate activity however a taxpayer may elect to treat all interests in rental real_estate as a single activity sec_1_469-9 provides that a qualifying taxpayer makes the election to treat all interests in rental real_estate as a single rental real_estate activity by filing a statement with the taxpayer's original income_tax return for the taxable_year sec_1_469-9 describes the information that must be contained in the statement 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 months except in the case of a taxpayer who is abroad under all subtitles of the internal_revenue_code except subtitles e g h and i sec_301_9100-1 defines the term regulatory election as including an election whose due_date is prescribed by a regulation published in the internal_revenue_bulletin 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 the rules governing automatic extensions of time for making certain elections sec_301_9100-3 provides the standards the commissioner will use to determine whether to grant an extension of time for regulatory elections that do not meet the requirements of sec_301_9100-2 sec_301_9100-3 provides that requests for relief under sec_301_9100-3 will be granted when the taxpayer provides evidence to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and that the grant of relief will not prejudice the interests of the government sec_301_9100-3 provides that subject_to paragraphs b i through iii of sec_301_9100-3 when a taxpayer reasonably relied on a qualified_tax professional including a tax professional employed by the taxpayer and the tax professional failed to make or advise the taxpayer to make the election the taxpayer will be deemed to have acted reasonably and in good_faith conclusion based solely on the information submitted and the representations made we conclude that the requirements of sec_301_9100-1 and sec_301_9100-3 have been satisfied as a result taxpayers are granted an extension of time of days from the date of this letter to make an election under sec_469 to treat all their interests in rental real_estate as a single rental real_estate activity effective year the election must be plr-143775-11 in the form of the statement required by sec_1_469-9 and attached to an amended_return for year a copy of this letter should be attached to the election a copy is enclosed for that purpose except as specifically set forth above no opinion is expressed concerning the federal tax consequences of the facts described above under any other provision of the code specifically no opinion is expressed concerning whether taxpayers satisfy the requirements under sec_469 or whether taxpayers materially participated in any activity this ruling is directed only to the taxpayers requesting it sec_6110 of the code provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative sincerely david r haglund david r haglund chief branch office of associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes


department of the treasury internal_revenue_service washington d c tax_exempt_and_government_entities_division uniform issue list nov se tep rats legend taxpayer a taxpayer b_trust t financial advisor c date date state e amount f amount h amount g date date date date date date institution institution institution ira ira ira ira non-ira amount amount - amount amount amount amount amount amount amount os dear i this letter is in response to a ruling_request dated supplemented by correspondence dated ’ and ' --y and submitted by your authorized representative in which you request a letter_ruling that a proposed rollover or rollovers of a distribution or distributions from ira_annuities by you as the surviving_spouse will comply with the requirements of sec_408 of the internal_revenue_code code you also ask for a waiver of the 60-day rollover requirement contained in sec_408 of the code and you request rulings that deposits and transfers of certain amounts do not constitute excess_contributions to an ira under code sec_4973 the following facts and representations have been submitted under penalty of perjury in support of the ruling requested - taxpayer a is the surviving_spouse of taxpayer b taxpayer b whose date of birth was date died on date at the age of taxpayer a's date of birth is date taxpayer b owned three individual retirement annuities ira maintained with institution ira maintained with institution and ira maintained with institution the iras the minimum_required_distribution to taxpayer b for the calendar_year ending pursuant to code sec_408 and sec_408 was amount f amount g was distributed from the iras to taxpayer b in prior to his death as of the end of calendar_year amount h amount f less amount g represented the remaining minimum distribution required to be made to taxpayer b for calendar_year on date taxpayer b executed trust t trust t which your authorized representative has certified is a valid trust under the laws of state e is the named beneficiary of the iras your authorized representative has asserted that trust t at article v a provides that upon the death of taxpayer b the residue will be transferred and paid over to taxpayer a outright and free of trust article ill of trust t also provides that after the death of taxpayer b taxpayer a becomes the sole trustee of trust t with the power authority and obligation to distribute all of the principal and income of trust t to herself as an individual article xvi g of trust t expressly authorizes taxpayer a to make direct trustee- to-trustee transfers direct rollovers and similar types of transfers with respect to any ira owned by taxpayer b at his death your authorized representative has asserted that taxpayer a and taxpayer b had a long-term relationship with financial advisor c who managed the iras and other accounts for taxpayer a and taxpayer b taxpayer a relied on financial advisor c to provide sound financial advice and followed said advice without question until taxpayer a’s attorney and family members concluded that the advice given was incorrect especially with regard to the tax effect of certain transactions involving the ira ira and ira annuities your authorized representative has asserted that the transactions were and arguably remain of absolutely no benefit to taxpayer a but that taxpayer a trusted financial advisor c and followed his instructions to her detriment ' your authorized representative asserted that in a series of transactions regarding ira maintained by taxpayer b with institution taxpayer a signed a beneficiary claim form that your authorized representative asserts may have resulted in an unnecessary acceleration of the income taxes payable with respect to ira specifically on or about date institution transferred ira proceeds to an institution non-ira regular money market account non- ira account financial advisor c did not explain to her that the transfer was from an ira did not explain other available options to her did not explain the effect of the transfer and did not explain the rollover rules and deadlines the transfer was in the amount of amount the proceeds of ira totaling amount were received by financial advisor c acting on behalf of taxpayer a on or about date the proceeds of ira totaling amount were received by financial advisor c no later than date with regard to ira and ira when taxpayer a’s attorney and family members became aware of the transfer of the proceeds of ira into non-ira they advised taxpayer a to deposit the proceeds of both ira and ira into ira an ira set up in taxpayer a’s name and under taxpayer a’s social_security_number the proceeds of both ira and ira amount sec_2 and respectively were deposited into ira on or about date which was after the 60-day rollover period applicable to the distributions from ira sec_2 and had expired because as asserted by your authorized representative taxpayer a was still grieving over her spouse's unexpected death and was relying on the incomplete and inadequate advice of financial advisor c with respect to ira your authorized representative has asserted to the service that a distribution intended to comply with the requirements of code sec_401 and sec_408 was made with respect to calendar_year by date your authorized representative has presented documentation to the service which indicates that each account represented to be an ira account is in fact an ira furthermore your authorized representative has asserted that taxpayer a did not execute a qualified_disclaimer with respect to either ira ira or ira as a result the entire trust estate including the iras was properly transferred and paid over to taxpayer a outright and free of trust your authorized representative has asserted that no distributions or withdrawals have been made from non-ira account additionally ira which holds the assets distributed from ira and ira remain intact your authorized representative proposes to transfer a rollover amount from the non-ira account to ira the rollover amount will be equal to the value of the non-ira account as of the date of transfer less the amount allocable to the remaining calendar_year required_distribution amount h the rollover amount’ will not include either the required_distribution for calendar_year the required_distribution for calendar_year or the required_distribution for calendar_year in addition the required_distribution for calendar_year will be computed by dividing amount the date value of non-ira account less amount h by taxpayer a’s life expectancy computed using the single life table found at sec_1_401_a_9_-9 of the final income_tax regulations which required amount is approximately amount the required_distribution for calendar_year will be computed by dividing amount the date value of non-ira account less amount h and less amount by taxpayer a’s life expectancy computed using the single life table found at sec_1_401_a_9_-9 of the final income_tax regulations which required amount is approximately amount the required_distribution for calendar_year will be computed by dividing amount the date value of non-ira account less amount h less amount and less amount by taxpayer a's life expectancy computed using the single life table found at sec_1_401_a_9_-9 of the final income_tax regulations which required amount is approximately amount based on the above facts and representations you request that the internal_revenue_service issue the following rulings that ira ira and ira the iras are not inherited iras as that term is defined in code sec_408 with respect to taxpayer a that taxpayer a may be treated as a distributee or payee of ira ira and ira under code sec_408 and is eligible to roll over the assets distributed from those iras to an ira maintained in her own name that the deposit of the institution check and the institution check into ira will be treated as rollover_contributions within the meaning of code sec_408 pursuant to code sec_408 that the transfer of rollover amount from the non-ira account to ira within days of the date of this ruling letter will constitute a rollover_contribution within the meaning of code sec_408 by virtue of a waiver of the 60-day rollover requirement by the secretary pursuant to code sec_408 that pursuant to this request the taxpayer will not be required to include in gross_income for federal_income_tax purposes for the tax_year the amounts distributed from ira ira and ira to the extent rolled over into ira pursuant to this letter_ruling that the deposits of the institution check and the institution check to ira do not constitute excess_contributions within the meaning of code sec_4973 and that the transfer of the rollover amount to ira will not constitute an excess_contribution within the meaning of code sec_4973 with respect to your ruling requests code sec_408 provides the general requirements applicable to iras code sec_408 in summary provides that the minimum_required_distribution rules of code sec_401 apply to iras sec_408 of the code provides that except as otherwise provided in sec_408 any amount_paid or distributed out of an ira shall be included in gross_income by the payee or distributee as the case may be in the manner provided under sec_72 of the code sec_408 of the code defines and provides the rules applicable to ira_rollovers sec_408 of the code provides that sec_408 of the code does not apply to any amount_paid or distributed out of an ira to the individual for whose benefit the ira is maintained if - i the entire amount received including money and any other_property is paid into an ira for the benefit of such individual not later than the day after the day on which the individual receives the payment or distribution or ii the entire amount received including money and any other_property is paid into an eligible_retirement_plan for the benefit of such individual not later than the day after the date on which the payment or distribution is received except that the maximum amount which may be paid into such plan may not exceed the portion of the amount received which is includible in gross_income determined without regard to this paragraph for purposes of clause ii the term eligible_retirement_plan means an eligible_retirement_plan described in clause iii iv v or vi of sec_402 sec_408 of the code provides that sec_408 does not apply to any amount described in sec_408 received by an individual from an ira if at any time during the 1-year period ending on the day of such receipt such individual received any other amount described in sec_408 from an ira which was not includible in gross_income because of the application of this paragraph sec_408 of the code provides in general that the ira rollover rules do not apply to inherited accounts the term inherited account does not apply to an ira that is acquired by the surviving_spouse of an ira owner by reason of the death of the ira owner sec_408 of the code provides that the secretary may waive the day requirement under sec_408 and sec_408 of the code where the failure to waive such requirement would be against equity or good conscience including casualty disaster or other events beyond the reasonable control of the individual subject_to such requirement only distributions that occurred after date are eligible for the waiver under sec_408 of the code sec_1_408-8 of the final income_tax regulations under code sec_401 and sec_408 question and answer-5 a see federal_register date provides in relevant part that the surviving_spouse of an individual may elect to treat the spouse’s entire_interest as a beneficiary in an individual's ira or the remaining part of such interest if distribution has commenced to the spouse as the spouse’s own ira this election is permitted to be made at any time after the individual’s date of death if the surviving_spouse makes such an election the required_minimum_distribution for the calendar_year of the election and each subsequent calendar_year is determined under code sec_401 with the spouse as the ira owner and not code sec_401 with the surviving_spouse as the deceased irs owner’s beneficiary ’ sec_1_408-8 of the final regulations q a-5 a provides in relevant part that in order to make this election the spouse must be the sole beneficiary of the ira and have an unlimited right to withdraw amounts from the ira if a_trust is named as beneficiary of the ira this requirement is not satisfied even if the spouse is the sole beneficiary of the trust sec_1_408-8 of the final regulations q a-5 c provides that if the surviving_spouse makes such an election the surviving_spouse shall then be considered the ira owner for whose benefit the trust is maintained for purposes under the code sec_1_408-8 of the final regulations q a-9 provides that separately calculated required minimum distributions with respect to more than one ira may be totaled and the total_distribution may be taken from any one or more of an individual’s ira accounts in general a surviving_spouse who actually receives a distribution from an ira is permitted to roll that distribution over into his or her own ira as long as the rollover is accomplished within the requisite 60-day period a rollover may be accomplished even if the ira assets pass through either a_trust or an estate sec_4973 of the code imposes a excise_tax on the amount of an excess_contribution to an ira code sec_4973 provides that the term excess_contribution is the difference between the amount actually contributed to an ira over the amount eligible to be contributed to said ira in accordance with the requirements of various code sections including code sec_408 with respect to your initial two ruling requests generally if the proceeds of a decedent’s ira are payable to a_trust and are paid to the trustee of the trust who then pays them to the decedent’s surviving_spouse as beneficiary of the trust said surviving_spouse shall be treated as having received the ira proceeds from the trust and not from the decedent accordingly such surviving_spouse generally shall not be eligible to roll over or have transferred said distributed ira proceeds into her own ira there are exceptions to this general_rule for example the general_rule will not apply in a case where the surviving_spouse is the sole trustee of the decedent's trust who pays the ira proceeds to herself _ pursuant to the terms of the trust which provide that the trust estate is to be paid to said surviving_spouse outright and free of trust upon the demand of the surviving_spouse which surviving_spouse then receives the ira proceeds and rolls them into an ira set up and maintained in her name in this case taxpayer a was the sole trustee of trust t after the death of taxpayer b and the sole beneficiary of trust t furthermore as noted above after the death of taxpayer b taxpayer a as the trustee of trust t was to pay over the trust t estate to taxpayer a outright and free of trust under this set of facts the service will not apply the general_rule set forth above thus with respect to your first two ruling requests the service concludes as follows that ira ira and ira the iras are not inherited iras as that term is defined in code sec_408 with respect to taxpayer a that taxpayer a may be treated as a distributee or payee of ira ira and ira under code sec_408 and is eligible to roll over the assets distributed from those iras to an ira maintained in her own name with specific respect to your third and fourth ruling requests 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 in response to your first two ruling requests the service has concluded that iras and were not inherited iras with respect to taxpayer a and that the proceeds of ira and were eligible for rollover treatment had taxpayer a rolled them into one or more iras on a timely basis however as noted above she did not da so in this case the service notes that the evidence produced with respect to taxpayer a’s ruling_request indicates that taxpayer a lacked sophistication with respect to iras including the tax treatment of ira_distributions and the ira rollover rules furthermore taxpayer a relied on her investment_advisor financial advisor c who essentially advised her to deposit the ira proceeds into a non-ira account additionally it was only after taxpayer a's attorney and members of taxpayer a's family became aware of the advice taxpayer a had been given by financial advisor c did taxpayer a understand the ramifications of the actions she had taken with respect to the three iras referenced herein also the proceeds of ira and ira were contributed into ira a short time after the expiration of the 60-day rollover period applicable to the distributions from ira and ira have not been spent or otherwise_disposed_of under these circumstances the service concludes that a waiver of the 60-day requirement in this case is appropriate finally the proceeds of ira sec_1 and therefore pursuant to code sec_408 with respect to your third and fourth ruling requests the service concludes as follows that the deposit of the institution check ira- and the institution check ira totaling amount and amount respectively into ira will be treated as rollover_contributions within the meaning of code sec_408 - pursuant to code sec_408 and that the transfer of rollover amount from the non-ira to ira within days of the date of this ruling letter will constitute a rollover_contribution within the meaning of code sec_408 by virtue of a waiver of the 60-day rollover requirement pursuant to code sec_408 with specific respect to your fifth ruling_request the service has ruled that the distributions of the proceeds of ira sec_1 and were eligible to be rolled over into one or more iras set up and maintained in the name of taxpayer a and that code sec_408 either authorized or authorizes taxpayer a to roll over said proceeds into one or more iras set up and maintained in the name of taxpayer a even after the expiration of the 60-day rollover period applicable to said ira accounts based on the service’s previous conclusions the actions taken with respect to ira sec_2 and or to be taken with respect to ira will result in tax deferred treatment attaching to the amounts rolled over thus with respect to your fifth ruling_request we conclude as follows that taxpayer a will not income_tax purposes for the to the extent it does not exceed the rollover amount’ ira or ira - uired to include in her gross_income for federal tax_year the amounts distributed from ira with specific respect to your sixth and seventh ruling_request taxpayer a’s contributions of amount sec_2 and into ira constituted rollover_contributions within the meaning of code sec_408 furthermore if taxpayer a contributes the rollover amount the amount distributed from ira during calendar_year less all required distributions into one or more iras set up and maintained in her name said contribution will also be treated as a rollover_contribution within the meaning of code sec_408 contributions will not constitute excess_contributions within the meaning of code sec_4973 therefore the percent excise_tax imposed by code sec_4973 will not apply to said contributions as a result said thus with respect to your sixth and seventh ruling requests we conclude as follows a - that the deposits of the institution check and the institution check to ira did not constitute excess_contributions within the meaning of code sec_4973 and that the proposed rollover_contribution or transfer of the rollover amount’ to ira will not constitute an excess_contribution within the meaning of code sec_4973 additionally please note that our ruling letter does not authorize the rollover of any amounts required to be distributed under code sec_401 and sec_408 with respect to calendar_year sec_2002 and additionally please also note that taxpayer a attained age during calendar_year and reached her required_beginning_date rbd as that term is defined in code sec_401 on date in this regard the service notes that amounts currently in ira set up and maintained in the name of taxpayer a amounts formerly in ira sec_2 and have been and are currently subject_to the applicable mandatory distribution_requirements of code sec_408 since this ruling letter concludes in part that the contribution to ira of amounts distributed on or about date from taxpayer b’s ira treated as a rollover_contribution to said ira required distributions with respect to said rolled over ira amounts must be made in accordance with the applicable mandatory distribution_requirements of code sec_408 and must begin no later than the end of the calendar_year following the calendar_year in which contributed to ira 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 is to be pursuant to the power_of_attorney on file with this office you are receiving the original of this letter_ruling and your representative is receiving a copy of the letter_ruling if you wish to inquire about this ruling please contact esquire se t ep ra t3 i d - at - sincerely yours frances v sloan manager employee_plans technical group enclosures deleted copy of this letter notice of intention to disclose notice copy of notification letter form to authorized representative


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 intl b2 plr-118008-12 date may internal_revenue_service number release date index number ------------------------ ---------------------------- -------------------------------------- ty ------- legend taxpayer fc country a year year date x r s -------------------- ------------------ ------------------------- ------------ ----- -- ---- ---- ------------------- ------- ----- tax professional q ----------------------- dear ---------------- this is in response to a letter dated date and subsequent documentation submitted by taxpayer that requested the consent of the commissioner of the internal_revenue_service commissioner for taxpayer to make a retroactive qualified_electing_fund qef election under sec_1295 of the internal_revenue_code code and sec_1_1295-3 with respect to taxpayer’s investment in fc plr-118008-12 the ruling contained in this letter is based upon information and representations submitted by taxpayer and accompanied by a penalties of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in support of this request_for_ruling such material is subject_to verification on examination the information submitted in the request is substantially as set forth below facts beginning on date x of year taxpayer purchased r shares in fc a country a corporation taxpayer continues to hold s shares in fc since before year taxpayer has relied on tax professional q a practicing cpa for tax_advice as well as the accurate preparation of tax returns tax professional q was aware of taxpayer’s investment in fc but failed to identify the investment as an interest in a passive_foreign_investment_company pfic consequently tax professional q failed to properly advise taxpayer of the availability of electing to treat stock owned by the taxpayer in fc as stock in a qef for the tax_year ended in year and subsequent tax years in year taxpayer became aware of the possibility that his investment in fc might constitute an investment in a pfic and alerted tax professional q of this concern tax professional q discovered that taxpayer’s interest in fc constituted an interest in a pfic and advised taxpayer of the need to take corrective action taxpayer has submitted an affidavit under penalties of perjury describing the events that led to the failure to make the qef election by the election due_date including the role of tax professional q taxpayer represents that he provided information regarding the investment of fc to tax professional q in year and subsequent years taxpayer represents that in year and subsequent years fc was not identified as a pfic and taxpayer did not receive any advice regarding the availability of a qef election with respect to his investment in fc in addition taxpayer submitted an affidavit from tax professional q corroborating the representations made by taxpayer with respect to the discovery of fc’s pfic status taxpayer represents that as of the date of this request_for_ruling the pfic status of fc has not been raised by the irs on audit for any of the taxable years at issue ruling requested taxpayer requests the consent of the commissioner to make a retroactive qef election with respect to fc for year under sec_1_1295-3 plr-118008-12 law sec_1295 provides that a pfic will be treated as a qef with respect to a taxpayer if an election by the taxpayer under code sec_1295 applies to such pfic for the taxable_year and the pfic complies with such requirements as the secretary may prescribe for purposes of determining the ordinary_earnings and net capital_gains of such company under sec_1295 a qef election may be made for any taxable_year at any time on or before the due_date determined with regard to extensions for filing the return for such taxable_year to the extent provided in regulations such an election may be made after such due_date if the taxpayer failed to make an election by the due_date because the taxpayer reasonably believed the company was not a pfic under sec_1_1295-3 a shareholder may request the consent of the commissioner to make a retroactive qef election for a taxable_year if the shareholder reasonably relied on a qualified_tax professional within the meaning of sec_1_1295-3 granting consent will not prejudice the interests of the united state sec_3 government as provided in sec_1_1295-3 the request is made before a representative of the internal_revenue_service raises upon audit the pfic status of the corporation for any taxable_year of the shareholder and the shareholder satisfies the procedural requirements of sec_1 f the procedural requirements include filing a request for consent to make a retroactive election with and submitting a user_fee to the office of the associate chief_counsel international sec_1_1295-3 additionally affidavits signed under penalties of perjury must be submitted that describe the events that led to the failure to make a qef election by the election due_date the discovery of such failure the engagement and responsibilities of the qualified_tax professional and the extent to which the shareholder relied on such professional sec_1_1295-3 and iii conclusion based on the information submitted and representations made with taxpayer’s ruling_request we conclude that taxpayer has satisfied sec_1_1295-3 plr-118008-12 accordingly consent is granted to taxpayer to make a retroactive qef election with respect to fc for year provided that taxpayer complies with the rules under sec_1_1295-3 regarding the time and manner for making the retroactive qef election except as specifically set forth above no opinion is expressed or implied concerning the u s federal tax consequences of the facts described above under any other provision of the code this private_letter_ruling is directed only to the taxpayer who requested it sec_6110 provides that it may not be used or cited as precedent a copy of this letter_ruling must be attached to any federal_income_tax return to which it is relevant alternatively taxpayers filing their returns electronically may satisfy this requirement by attaching a statement to their return that provides the date and control number of the letter_ruling in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative sincerely jeffery g mitchell chief branch international cc


internal_revenue_service department of the treasury number release date index number washington dc person to contact telephone number refer reply to cc corp plr-130747-02 date date legend parent purchaser purchaser partnership target sellers date a date b date c plr-130747-02 company official tax professionals dear this letter responds to a letter dated date submitted on behalf of parent requesting a second extension of time under sec_301_9100-1 through of the procedure and administration regulations to file an election parent previously received an extension of time in a letter dated date plr-110197-02 publication parent is requesting a second extension to file a sec_338 election under sec_338 with respect to the acquisition of the stock of target sometimes hereinafter referred to as the election on date a all citations in this letter to regulations under sec_338 are to regulations in effect on date a parent failed to file the election by the extended due_date date b the material information is summarized below parent is the common parent of a consolidated_group purchaser is a wholly owned subsidiary of parent purchaser is an llc wholly owned by purchaser and disregarded as an entity separate from purchaser for federal_income_tax purposes target is a foreign_corporation wholly owned by partnership a domestic_partnership sellers were the only partners of partnership on date a pursuant to a purchase agreement of the same date purchaser and purchaser acquired all of sellers’ partnership interests in partnership in exchange for cash it is represented that the acquisition of target by means of the acquisition of all of the partnership interests in partnership qualified as a qualified_stock_purchase as defined in sec_338 prior to the acquisition target did not file a united_states income_tax return was not subject_to united_states income_taxation nor was required under sec_1_6012-2 to file a united_states income_tax return target is a controlled_foreign_corporation within the meaning of sec_957 target is not a passive_foreign_investment_company for which an election under sec_1295 was in effect or foreign_investment_company or foreign_corporation the stock ownership which is described in sec_552 plr-130747-02 parent intended to file the election pursuant to sec_1_338-2t d the election was due on date b however for various reasons a valid election was not filed after date b it was discovered that the election had not been filed subsequently a request was submitted under sec_301_9100-1 for an extension of time to file the election plr- granted an extension until date c to file the election however for various reasons the extended due_date was missed and this second request was submitted the period of limitations on assessment under sec_6501 has not expired for parent’s consolidated group’s or target’s taxable_year in which the acquisition occurred the taxable_year in which the election should have been filed or any taxable_year that would have been affected by the election had it been timely filed sec_338 permits certain stock purchases to be treated as asset acquisitions if the purchasing_corporation makes or is treated as having made a sec_338 election or a sec_338 election and the acquisition is a qualified_stock_purchase under sec_301_9100-1 the commissioner has discretion to grant a reasonable extension of time to make a regulatory election or a statutory election but no more than six months except in the case of a taxpayer who is abroad under all subtitles of the internal_revenue_code except subtitles e g h and i sec_301_9100-1 through provide the standards the commissioner will use to determine whether to grant an extension of time to make a regulatory election sec_301_9100-1 sec_301_9100-2 provides automatic extensions of time for making certain elections requests for relief under sec_301_9100-3 will be granted when the taxpayer provides evidence to establish that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government sec_301_9100-3 in this case the time for filing the election is fixed by the regulations ie sec_1 2t d therefore the commissioner has discretionary authority under sec_301_9100-1 to grant an extension of time for parent to file the election provided parent acted reasonably and in good_faith the requirements of sec_301_9100-1 and sec_301_9100-3 are satisfied and granting relief will not prejudice the interests of the government information affidavits and representations submitted by the parent company official and tax professionals explain the circumstances that resulted in the failure to timely file a valid election the information establishes that parent reasonably relied on a qualified_tax professional who failed to make or advise parent to make the election and that the government will not be prejudiced if relief is granted see sec_301 b v based on the facts and information submitted including the representations made we conclude that parent has shown it acted reasonably and in good_faith the requirements of sec_301_9100-1 and sec_301_9100-3 are satisfied and granting relief will not prejudice the plr-130747-02 interests of the government accordingly a second extension of time is granted under sec_301_9100-1 until days from the date on this letter for parent to file the election with respect to the acquisition of the stock of target as described above within days of the date on this letter parent must file the election on form_8023 in accordance with sec_1_338-2t d and the instructions to the form a copy of this letter must be attached to form_8023 within days of the date on this letter all relevant parties must file or amend as applicable all returns and amended returns if any necessary to report the transaction as a sec_338 transaction for the taxable_year in which the transaction was consummated and for any other affected_taxable_year a copy of this letter and a copy of form_8023 must be attached to the returns the above extension of time is conditioned on the taxpayers' parent’s consolidated group’s and target’s tax_liability if any being not lower in the aggregate for all years to which the election applies than it would have been if the election had been timely made taking into account the time_value_of_money no opinion is expressed as to the taxpayers’ tax_liability for the years involved a determination thereof will be made by the applicable director’s office upon audit of the federal_income_tax returns involved further no opinion is expressed as to the federal_income_tax effect if any if it is determined that the taxpayers’ tax_liability is lower sec_301_9100-3 we express no opinion as to whether the acquisition of target’s stock qualifies as a qualified_stock_purchase under sec_338 or any other tax consequences arising from the election in addition we express no opinion as to the tax consequences of filing the election late under the provisions of any other section of the code and regulations or as to the tax treatment of any conditions existing at the time of or resulting from filing the election late that are not specifically set forth in the above ruling for purposes of granting relief under sec_301_9100-1 to file the election we relied on certain statements and representations made by the taxpayers however the director should verify all essential facts in addition notwithstanding that an extension is granted under sec_301_9100-1 to file the election penalties and interest that would otherwise be applicable if any continue to apply this letter is directed only to the taxpayer s who requested it sec_6110 provides that it may not be used or cited as precedent plr-130747-02 pursuant to the power_of_attorney on file in this office a copy of this letter is being sent to your authorized representative sincerely yours ken cohen senior technician reviewer branch office of associate chief_counsel corporate


department of the treasury internal_revenue_service washington d c tax_exempt_and_government_entities_division u i l jun legend taxpayer a company m ira x n n amount d dear this is in response to your letter dated date as supplemented by correspondence dated date date and date in which you request a ruling to waive the 60-day rollover requirement contained in sec_408 of the internal_revenue_code code the following facts and representations have been submitted under penalties of perjury in support of the ruling requested in order to meet increasing financial withdrew amount d from ira x he taxpayer a lost his job in obligations taxpayer a on maintained with company m simultaneously with the withdrawal taxpayer a applied for a home mortgage loan intending to repay the distribution from ira x but his application_for such a loan was not approved within days of the receipt of the distribution of amount d from ira x taxpayer a subsequently applied for and received another mortgage loan in - and wants to use some of the proceeds of that loan to redeposit amount d back into ira x company m refused to redeposit amount d into ira x because the 60-day rollover period had expired based on the above facts and representations you request a ruling that the internal_revenue_service waive the 60-day rollover requirement with respect to the distribution of amount d from ira x sec_408 of the code provides that except as otherwise provided in sec_408 any amount_paid or distributed out of an ra shall be included in gross_income by the payee or distributee as the case may be in the manner provided under sec_72 of the code sec_408 of the code defines and provides the rules applicable to ira_rollovers sec_408 of the code provides that sec_408 of the code does not apply to any amount_paid or distributed out of an ira to the individual for whose benefit the ira is maintained if-- i ii the entire amount received including money and any other_property is paid into an ira for the benefit of such individual not later than the day after the day on which the individual receives the payment or distribution or the entire property received including money and any other_property is paid into an eligible_retirement_plan other than an ira for the benefit of such individual not later than the day after the date on which the payment or distribution is received except that the maximum amount which may be paid into such plan may not exceed the portion of the amount received which is includable in gross_income determined without regard to sec_408 sec_408 of the code provides that sec_408 does not apply to any amount described in sec_408 received by an individual from an ira if at any time during the 1-year period ending on the day of such receipt such individual received any other amount described in sec_408 from an ira which was not includable in gross_income because of the application of sec_408 sec_408 of the code provides that the secretary may waive the day requirement under sec_408 and sec_408 of the code where 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 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 from the facts submitted it appears that you used amount d as a personal loan to pay personal financial obligations it also appears from the facts submitted that at the time amount d was distributed from ira x you did not have the intent to rollover amount d to another ira the committee reports describing the legislative intent indicates that congress enacted the rollover provisions to allow portability between eligible retirement plans including iras using a distribution from an ira to settle personal financial obligations or as a temporary personal loan is not consistent with the intent of congress to allow portability between eligible retirement plans under the circumstances presented in this case the failure to waive the 60-day rollover requirement would not be against equity or good conscience therefore the request to waive the 60-day rollover period with respect to the distribution of amount d from ira x is denied and amount d will not be considered a valid rollover_contribution under code sec_408 because the 60-day requirement was not satisfied 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 ruling is directed only to the taxpayer that requested it sec_61 k of the code provides that it may not be used or cited by others as precedent if you have any questions about this ruling please contact se t ep ra t2 sincerely yours signed joyce eb floyd joyce e floyd manager employee_plans technical group enclosures deleted copy of this ruling notice of intention to disclose


department of the treasury internal_revenue_service washington d c q q tax_exempt_and_government_entities_division jul qe tie ri ad dear taxpayer this letter constitutes notice that approval has been granted for your request for a 5-year automatic_extension for amortizing the unfunded liabilities as of date for the above-named plan which are described in sec_431 b b and b of the internal_revenue_code code and sec_304 b b and b of the employee_retirement_income_security_act_of_1974 erisa’ this extension is effective with the plan_year beginning date this extension applies to the eligible amortization charge bases as identified in your application submission established as of date plan's funding status the extension of the amortization periods of the unfunded liabilities of the plan was granted in accordance with sec_431 of the code sec_431 of the code requires the secretary to extend the period of time required to amortize any unfunded_liability of a plan for a period of time not in excess of years if the plan submits an application meeting the criteria stated in sec_431 the plan has submitted the required information to meet the criteria in sec_431 including a certification from the plan’s actuary that absent the extension under subparagraph a the plan would have an accumulated_funding_deficiency in the current plan_year or any of the succeeding plan years ii the plan_sponsor has adopted a plan to improve the i iii the plan is projected to have sufficient assets to timely pay expected benefits and anticipated expenditures over the amortization period as extended and iv the notice required under paragraph a has been provided we have sent a copy of this letter to the to the oo and to your authorized representative pursuant to a power_of_attorney on file in this office this ruling is directed only to the taxpayer that requested it sec_6110 k of the internal_revenue_code provides that it may not be used or cited by others as precedent if you require further assistance in this matter please contact sincerely yours os sig david m ziegler manager ep actuarial group


t c memo united_states tax_court patricia barranco petitioner v commissioner of internal revenue respondent docket nos filed date neil v birkhoff for petitioner dustin m starbuck for respondent memorandum findings_of_fact and opinion thornton judge in these consolidated cases petitioner seeks relief from joint_and_several_liability under sec_6015 and f with respect to joint returns that she and her husband filed for through references to sec_6015 and sec_7491 are to those sections as added to the internal_revenue_code by the internal_revenue_service restructuring and reform act of rra publaw_105_206 secs a and 112_stat_726 unless continued - - findings_of_fact the parties have stipulated some facts which we incorporate herein by this reference when she petitioned this court petitioner resided in blacksburg virginia with her husband dr salvatore d barranco dr barranco rt personal history household management petitioner and dr barranco were married during all the years at issue as well as up through the trial of this case they have three daughters anda son when petitioner married dr barranco in she was in her second year of nursing school he was in medical school since getting married she has not received other formal education or gainfully worked outside the home during the years at issue dr barranco was a financially successful orthopedic surgeon in private practice in blacksburg virginia in he was a 50-percent_shareholder of the medical practice corporation in which he practiced during the remaining years at issue he was the sole shareholder of the corporation petitioner was not involved in dr barranco’s medical practice and he did not usually discuss it with her t continued otherwise indicated all other section references are to the internal_revenue_code in effect for the years at issue and all rule references are to the tax_court rules_of_practice and procedure for the first years of the barrancos’ marriage petitioner handled family financial matters paying the family bills out of a checking account about dr barranco assumed a large part of this responsibility and eventually engaged the services of various accountants to assist him he began having family bills sent directly to his office where he would write checks to pay them he also began providing petitioner a monthly stipend to cover household expenses such as for groceries clothing and incidentals petitioner might use any residual amount of the stipends to pay other charges on her own credit cards otherwise dr barranco would pay her credit card charges along with other family bills during the years at issue the stipend ranged from dollar_figure to dollar_figure a month fach year dr barranco also gave petitioner an additional monthly stipend payment of like amount to buy christmas gifts for their children the barrancos’ discussions of family finances related primarily to the adequacy of petitioner’s stipend and on occasion to the financing of the various real_estate purchases discussed below - - il the barrancos’ major financial expenditures a real_estate purchases beginning before and continuing into the years at issue petitioner and dr barranco purchased with funds provided by dr barranco various parcels of virginia real_estate as follows date property purchased acres in woodland hill estates two lakeside lots of undisclosed acreage at smith mountain lake for about dollar_figure acres in mountain view estate sec_12 acres in woodland hill estates acres in woodland hill estate sec_11 acres in woodland hill estates in the barrancos built a vacation home on one of the lakeside lots at smith mountain lake in they constructed their primary residence on one of their woodland hill estates parcels initially the barrancos held title to all these properties both acreage and improvements as tenants_by_the_entirety on date dr barranco gave petitioner his interest in all these properties meanwhile in date petitioner had purchased in her own name with funds that dr barranco had provided an additional acres of land adjacent to the 29-plus acres they unless otherwise noted in the chart the record does not reveal the cost of these properties the record is silent as to the barrancos’ personal_residence before - - had previously acquired in woodland hill estates and mountain view estates in the mortgage on the smith mountain lake vacation home was paid off in at an undisclosed cost the barrancos remodeled the vacation home b family vacations in or the barrancos took their son to scandinavia for a couple of weeks also during the years at issue the barrancos took three of their children on a bus tour of italy and petitioner and dr barranco took a snow-skiing trip to france with the atlanta ski club in addition during the years at issue dr barranco took a couple of snow-skiing trips to switzerland with his son and he also took annual week-long snow- skiing vacations in colorado cc daughters’ weddings during the years at issue each of the barrancos’ daughters got married dr barranco spent approximately dollar_figure to dollar_figure on each wedding petitioner helped plan these weddings but did not know the total cost d gifts for each year at issue petitioner generally spent at least dollar_figure to dollar_figure for christmas presents on each of the barrancos’ four children dr barranco also made gifts to the children during the years at issue including these significant gifts all - - made with petitioner’s knowledge in or a fiat sports car for one daughter in a mazda automobile for another daughter in a horse for one daughter and in a ford probe automobile for the son dr barranco’s christmas gifts to petitioner during the years at issue included what she describes as nice jewelry and a fox jacket his anniversary gifts to her during these years included a diamond engagement ring and another piece of diamond jewelry br other cars and boats every or years dr barranco bought petitioner a new station wagon from until dr barranco drove a porsche automobile provided by his medical practice corporation about he began driving a mercedes also provided by his medical practice corporation in dr barranco bought himself a mazda miata during the mid-1970s the barrancos used funds earned by dr barranco to acquire a boat titled in both their names in the early 1980s the barrancos traded in this boat and with funds earned by dr barranco bought another one titled only in petitioner’s name f college tuition during each year from to inclusive at least one of the barranco children was in college during of the years - j- at issue two or more of the barranco children were concurrently enrolled in college two of the children attended public universities out of state one attended a private university out of state and one attended an in-state university dr barranco paid the tuition room board and related fees for each child petitioner knew that dr barranco was paying these expenses although she was unaware of the exact amounts iii dr barranco’s tax_evasion scheme for each year at issue dr barranco sought to evade income taxes by diverting income generated by his medical practice his means of this attempted tax_evasion was to write checks payable to various fictitious individuals or organizations set up by his new york city accountant these fraudulent payments were then claimed as deductions on the corporate tax_return after taking percent of the fraudulent payments as a fee the new york city accountant would apply the remaining percent of the proceeds as dr barranco directed making deposits into checking accounts and funds that dr barranco could draw from as needed or else into an escrow account that dr barranco used for investment purposes dr barranco carried out these acts of tax_evasion without petitioner’s knowledge consent or acquiescence iv the barrancos’ tax returns for each year at issue petitioner and dr barranco filed a joint federal_income_tax return on these joint returns they reported taxable_income and adjusted_gross_income as indicated below omitting certain amounts of gross_income as a result of dr barranco’s tax_evasion scheme and thereby giving rise to additional tax due adjusted taxable gross gross_income income income additional tax_year reported reported omitted tax due dollar_figure dollar_figure dollar_figure big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number dollar_figure big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number --- big_number big_number big_number big_number big_number big_number big_number big_number as also indicated below ’ big_number big_number for there is no evidence in the record from which the adjusted_gross_income reported by petitioner and dr barranco can be determined petitioner neither reviewed these joint income_tax returns nor questioned dr barranco about any entries on them v dr barranco’s guilty plea and incarceration in date dr barranco pleaded guilty to conspiring to defraud the internal_revenue_service and evade taxes with respect to his medical practice corporation for the years through and to willfully evading taxes on omitted taxable_income in excess of dollar_figure million for the years through as far as the record reveals on the barrancos’ originally filed individual income_tax returns for the years at issue dr barranco’s medical practice earnings were reported apparently incorrectly on schedule c profit or loss from business these amounts of reported schedule c earnings were apparently net of the fraudulent deductions claimed on the corporate returns for dr barranco’s medical practice corporation --- - in conjunction with his plea arrangement dr barranco filed amended individual income_tax returns reporting his previously omitted gross_income for the tax years at issue petitioner did not participate in preparing the amended tax returns filed pursuant to dr barranco’s plea arrangement only the amended tax_return bears a signature purported to be petitioner’s in date dr barranco was sentenced to months’ incarceration which he began serving in date while dr barranco was incarcerated his medical practice corporation continued to pay him a dollar_figure monthly salary vi petitioner’s transfer of property to children as previously discussed in the 1980s petitioner became the sole titleholder of several real properties that had been acquired with funds provided by dr barranco these real properties included about acres in or adjacent to woodland hill estates the barrancos’ primary residence situated therein and the smith mountain lake vacation home and lots in date petitioner deeded all these real properties to a newly established limited_liability_company that her four children owned in exchange petitioner received the children’s note in the principal sum of dollar_figure payable pincite-percent interest in equal payments of dollar_figure each and a final balloon payment of dollar_figure due_date -- - in date the limited_liability_company transferred back to petitioner for no consideration the primary residence and the 024-acre woodland hill estates parcel on which it was situated vii dr barranco’s release in date dr barranco was released from prison after serving months of his 27-month sentence he has since resumed his medical practice at the time of trial he resided with petitioner in their primary residence viii petitioner’s request for administrative relief on or about date petitioner submitted to respondent a form_8857 request for innocent spouse relief requesting relief from joint_and_several_liability for the tax years through for additional tax that was not shown on the joint tax returns that she and dr barranco had originally filed on date respondent issued petitioner a notice_of_determination denying the requested relief for the tax_year on that same date with respect to all the remaining tax years at issue ie and respondent issued petitioner a notice_of_deficiency determining therein that petitioner’s taxable_income for those years should be increased to include the income diverted through dr barranco’s tax_evasion scheme - li - opinion for petitioner has filed a stand-alone petition pursuant to sec_6015 contesting respondent’s final_determination denying her claim for relief from joint_and_several_liability for that year for all other years at issue petitioner seeks relief from joint_and_several_liability by raising the matter as an affirmative defense in her petition for redetermination invoking this court’s deficiency jurisdiction pursuant to sec_6213 for all years at issue in these consolidated cases petitioner requests relief from joint_and_several_liability under subsections b and f of sec_6015 i statutory background as a general_rule spouses filing a joint federal_income_tax return are jointly and severally liable for the full tax_liability sec_6013 sec_6015 contains various exceptions to this general_rule sec_6015 provides as follows sec_6015 procedures for relief from liability applicable to all joint filers --- in general ---under procedures prescribed by the secretary if-- a a joint_return has been made for a taxable_year sec_6015 applies to any_tax liability that was unpaid as of date rra sec_3201 112_stat_740 b on such return there is an understatement_of_tax attributable to erroneous items of one individual filing the joint_return c the other individual filing the joint_return establishes that in signing the return he or she did not know and had no reason to know that there was such understatement d taking into account all the facts and circumstances it is inequitable to hold the other individual liable for the deficiency in tax for such taxable_year attributable to such understatement and eb the other individual elects in such form as the secretary may prescribe the benefits of this subsection not later than the date which i sec_2 years after the date the secretary has begun collection activities with respect to the individual making the election then the other individual shall be relieved of liability for tax including interest penalties and other_amounts for such taxable_year to the extent such liability is attributable to such understatement failure to meet any of the sec_6015 requirements precludes the granting of relief in the instant cases the parties dispute the following two reguirements whether petitioner knew or had reason to know of the understatements when signing the joint returns for the tax years at issue and whether it is inequitable to hold petitioner liable for the tax - - deficiencies attributable to the understatements petitioner bears the burden_of_proof see rule a 182_f3d_275 4th cir affg t c memo ’ it actual or constructive knowledge to qualify for relief under sec_6015 petitioner must establish that she did not know and had no reason to know that on the joint returns there were understatements of tax attributable to dr barranco’s omitted medical practice income see sec_6015 b c we are convinced that petitioner had no actual knowledge of the understatements accordingly we focus on the issue of whether she had reason to know of the understatements respondent also argues that petitioner is ineligible for relief under sec_6015 with respect to the tax_year because she signed the amended_return with dr barranco consequently respondent contends there is no understatement within the meaning of sec_6015 b petitioner disputes that she signed the amended_return because we decide that petitioner has failed to satisfy other statutory requirements for relief under sec_6015 it is unnecessary to reach this issue and we do not ’ effective for court proceedings arising in connection with examinations commencing after date if certain requirements are met sec_7491 shifts the burden_of_proof to the commissioner rra sec a 112_stat_726 petitioner has neither alleged that sec_7491 applies nor established that the preconditions to its applicability have been met moreover because sec_6015 c specifically requires the relief-seeking spouse to establish that he or she did not have actual or constructive knowledge of the understatement the provisions of sec_7491 are inapplicable with respect to this issue see sec_7491 a spouse has reason to know of an understatement if a reasonably prudent taxpayer in her position at the time x she signed the return could be expected to know that the return contained an understatement or that further investigation was warranted the spouse seeking relief has a ‘duty of ay inguiry’ 114_tc_276 citations omitted in deciding whether a spouse had reason to know of an understatement a key factor is the extent to which family expenditures of which the spouse had knowledge exceeded reported income see 72_tc_356 hammond v commissioner tcmemo_1990_22 affd 938_f2d_185 8th cir other_relevant_factors include the spouse’s education level her involvement in the family’s business and financial affairs the presence of lavish or unusual expenditures as compared to the family’s past income levels income standards and spending patterns and the culpable spouse’s evasiveness and deceit concerning the couple’s finances see butler v commissioner supra pincite although petitioner did not review the joint returns before signing them she is charged with knowledge of their contents ’ cases interpreting former sec_6013 remain instructive as to our analysis of whether a taxpayer ‘knew or had reason to know’ of an understatement pursuant to new sec_6015 114_tc_276 -- - see 992_f2d_1256 2d cir affg tcmemo_1992_228 72_tc_1164 petitioner is thus deemed to have known for example the amounts of taxable_income and adjusted_gross_income reported on the joint returns although the record does not reveal with specificity the total amount of adjusted_gross_income the barrancos reported over the years at issue it does reveal that the total_amounts reported were understated by dollar_figure the annual shortfalls ranged from a low of dollar_figure in to a high of dollar_figure in for the years the only years for which the record reveals the amounts of gross_income reported on the barrancos’ joint returns the omitted gross_income exceeded the amounts of reported adjusted_gross_income by an annual average of over percent on the basis of the limited evidence in the record it appears that the pattern of underreporting for the years was similar ’ what became of these large amounts of omitted income from the limited evidence in the record we can only conclude that they were used largely to finance the barrancos’ substantial the barrancos’ joint returns reported total adjusted_gross_income of dollar_figure and omitted gross_income of dollar_figure the record does not contain the barrancos’ joint returns or otherwise reveal the amount of adjusted_gross_income they reported for those years the record does indicate however that for those years the barrancos reported total taxable_income of dollar_figure while omitting gross_income of dollar_figure -- - family expenditures during the years at issue ’ these expenditures included in addition to the basic living_expenses required for the barrancos to live what dr barranco described as a nice life the purchase of over acres the construction of their primary residence the payoff of the mortgage on their vacation home after about years the remodeling of their vacation home several european vacations college tuition room and board for each of their four children weddings for their three daughters diamond jewelry and the barrancos’ purchase of several cars and a boat for themselves as well as at least three cars and a horse for their children ‘0 the only direct evidence that petitioner offered on this score came from dr barranco’s testimony although dr barranco testified that none of the omitted income was used to benefit the family his testimony fails to account for the disposition of at least dollar_figure of omitted income more particularly dr barranco testified that percent of the dollar_figure of omitted income ie about dollar_figure went to the new york city accountant and that the remaining percent e about dollar_figure was placed--- in checking accounts and funds that i could draw from if i needed it and an escrow type of account which could be used for investment purposes and it was available so it was an account that was there if it was needed i could tap into it dr barranco testified that when the authorities uncovered his tax_evasion scheme there was dollar_figure or dollar_figure in the escrow account which was seized pursuant to the criminal investigation assuming for sake of argument that this representation is true it means that at least dollar_figure dollar_figure minus dollar_figure of the omitted income is unaccounted for petitioner was aware of all these expenditures although she may not have been aware of the exact dollar amounts of some of these expenditures we believe she was generally aware of what things cost after all she had managed the family’s personal finances for the first years of the barrancos’ marriage throughout the years at issue she managed the monthly stipend that she used to pay for the family’s groceries clothing and incidental_expenses she also maintained her own credit card account she participated in discussions with dr barranco about their sizeable real_estate acquisitions she had completed a year of nursing school it is true that petitioner was excluded from dr barranco’s business affairs and was unaware of his fraudulent tax scheme these considerations weigh in petitioner’s favor nevertheless in light of the totality of facts and circumstances petitioner has failed to convince us that a reasonably prudent person in her position at the time she signed the return for each year at issue would not have had reason to know that the family expenditures greatly exceeded reported income for example in the barrancos reported adjusted_gross_income of dollar_figure omitting gross_income of dollar_figure that same year petitioner received from dr barranco monthly stipends totaling at least dollar_figure to cover household expenses and christmas gifts in order for the barrancos to have subsisted on -- - the dollar_figure of adjusted_gross_income reported on the joint_return the remaining dollar_figure would have had to cover all the other expenditures the barrancos made that year basic living_expenses not covered by the monthly stipend eg mortgage payments insurance and taxes tuition room and board expenses associated with two of their children’s college attendance one of whom was at a private university the dollar_figure-dollar_figure wedding expenses for one of their daughters a ford probe for their son and all the other items that allowed the barrancos to live well as petitioner states on brief we are unpersuaded that a reasonably prudent person in petitioner’s position would have thought that the dollar_figure of gross_income reported on the barrancos’ joint_return was sufficient to cover all these expenditures the record does not suggest that the barrancos had available to them resources other than the omitted income to support their lifestyle on brief petitioner contends that the barrancos’ lifestyle was not lavish or unusual but it was simply the lifestyle of a hard-working orthopedic surgeon’s family in support of this contention petitioner states on brief that orthopedic surgeons generally do have very good incomes therein lies the rub although the barrancos were enjoying the lifestyle of a hard- working orthopedic surgeon’s family during the years at issue dr barranco and petitioner were reporting much less than the very good incomes that orthopedic surgeons might generally be expected to earn to support such a lifestyle on the basis of all the evidence we believe that petitioner should have been aware of this discrepancy petitioner testified that after dr barranco commenced his medical practice sometime well before their lifestyle kept getting better and better because he was making more money as far as i was concerned yet in the barrancos’ reported income dropped precipitously we surmise for in that year their joint_return omitted dollar_figure of gross_income as previously discussed petitioner is charged with knowledge of the amounts of income reported on the joint returns see hayman v commissioner f 2d pincite terzian v commissioner t c pincite the pattern persisted for the next years the barrancos’ joint returns continued to omit very large amounts of gross_income even as their lifestyle kept getting better and better they acquired parcels of real_property substantially greater than the amounts they had acquired before the tax years at issue they ‘ the record does not reveal how much gross_income the barrancos reported for any year before the evidence does indicate however that dr barranco’s tax_evasion activities commenced in at a time when the barrancos’ lifestyle had been steadily improving accordingly we infer that in there was a falling off in the barrancos’ reported income more or less commensurate with the dollar_figure of gross_income that was omitted from the barrancos’ joint_return - - constructed their personal_residence and remodeled their vacation home they paid college expenses for four children they vacationed in europe several times and they bought numerous new cars for themselves and their children we believe that the ostensible falling off of the barrancos’ reported income in and subsequent years was so great and the discrepancy between their reported income and their ever- improving lifestyle so pronounced as to reasonably put petitioner on notice of the need to make further inquiry cf 887_f2d_959 9th cir petitioner argues that she had no constructive knowledge of the omitted income because she never reviewed the tax returns before signing them petitioner however cannot be excused for her failure to review a return she signed under penalties of perjury even though it was her habit all during her married life to sign any document her husband asked her to sign terzian v commissioner supra pincite in sum petitioner has failed to establish that a reasonably prudent person in her position at the time she signed any of the joint returns could not be expected to know that they contained understatements or that further investigation was warranted til sec_6015 d equity analysis notwithstanding our foregoing conclusions if we were to assume for sake of argument that petitioner had neither actual --- - nor constructive knowledge of the understatements her claim for relief pursuant to sec_6015 must still fail as discussed below the evidence indicates that pursuant to sec_6015 d it would not be inequitable to hold petitioner liable for the deficiencies attributable to the understatements in question a material factor that informs our analysis under sec_6015 d is whether there has been a significant benefit to the spouse claiming relief 118_tc_106 citing hayman v commissioner supra pincite ' petitioner alleges that she did not benefit from the understatements in question on brief petitioner states the money that should have been paid to the internal_revenue_service was taken by dr barranco’s accountant or was eventually seized petitioner however fails to account for at least dollar_figure of the dollar_figure total understatements the equity test of sec_6015 d is virtually identical to the equity test of former sec_6013 d therefore cases interpreting former sec_6013 d inform our analysis pursuant to sec_6015 d 118_tc_106 ‘3 as previously noted dr barranco testified that his accountant withheld percent e approximately dollar_figure of the dollar_figure of income omitted during the years at issue and that an estimated dollar_figure or dollar_figure was seized from his investment accounts pursuant to the criminal investigation of his tax_fraud the understatements for the years at issue total dollar_figure thus dr barranco’s testimony fails to account for at least dollar_figure of the total understatements dollar_figure minus dollar_figure plus dollar_figure continued - we have previously concluded that the barrancos’ lifestyle during the years at issue was in all probability financed in significant part by income omitted from the joint returns money being fungible it follows in the absence of contrary evidence that their lifestyle was also financed directly or indirectly by the understatements for each year at issue petitioner enjoyed the lifestyle afforded directly or indirectly by the tax savings and petitioner thereby benefited from the tax savings more particularly in dr barranco gave petitioner his interest in their personal_residence which they constructed in more than acres underlying or adjacent to their personal_residence and their lakeside vacation home ’ in continued in doing these mathematics we give petitioner the benefit of the doubt by assuming without deciding that the accounted- for omitted income ie the dollar_figure paid to the accountant and the dollar_figure or dollar_figure allegedly seized from dr barranco’s investment accounts should be counted entirely against the understatements in determining the dollar_figure amount of understatements we have assumed consistent with petitioner’s position in this proceeding but have not decided that she did not sign the amended_return ‘4 both petitioner and dr barranco testified that dr barranco made these transfers to protect his property interests from potential malpractice claimants respondent argues that under virginia law because petitioner and dr barranco formerly held the real_estate as tenants_by_the_entirety these properties would have been exempt from the claims of creditors who did not have joint judgments against petitioner and dr barranco see rogers v rogers s e 2d va citing vasilion v vasilion s e 2d va we need not continued - - petitioner also acquired--with funds provided by dr barranco--over acres contrary to petitioner’s suggestion on brief we do not believe that such items represented mere normal support on the basis of all the evidence we conclude that petitioner significantly benefited from the understatements in tax see clevenger v commissioner tcmemo_1986_149 holding it was not inequitable to deny relief under former sec_6013 where understatements improved a couple’s jointly owned home sole title to which the relief-seeking taxpayer received in a divorce settlement affd 826_f2d_1379 4th cir see also 93_tc_672 requiring specific facts regarding lifestyle expenditures asset acquisitions and dispositions of tax savings to prove no significant benefit von kalinowski v commissioner tcmemo_2001_21 receiving dollar_figure over years was a significant benefit french v commissioner tcmemo_1996_38 rejecting the taxpayer’s argument that dollar_figure in certificates of deposit sourced to understatement merely amounted to normal support where the taxpayer could not account for how it was spent moreover since dr barranco’s release from prison he has resided with petitioner in the barrancos’ primary residence of continued decide this hypothetical issue of virginia law whatever dr barranco’s motives might have been in making the transfers the fact remains that he made them furthermore petitioner clearly benefited from these transfers as illustrated by her subsequent transfer of the properties to her children in in return for their note to her in the principal sum of dollar_figure -- - which petitioner was sole owner at the time of trial and has resumed his medical practice which is the couple’s primary source_of_income petitioner continues to enjoy the lifestyle and financial security that are largely attributable to her husband’s assets and income von kalinowski v commissioner supra see lauer v commissioner tcmemo_1994_579 on the basis of all the evidence we conclude that denial of relief from joint_and_several_liability will not result in economic hardship for petitioner there is no suggestion in the record of spousal abuse or duress these considerations support our conclusion that it would not be inequitable to deny petitioner the requested relief from joint_and_several_liability accordingly we hold that petitioner is not entitled to relief under sec_6015 iv relief under sec_6015 petitioner contends that respondent abused his discretion in denying her request for relief from joint_and_several_liability under sec_6015 where relief is unavailable to an individual under sec_6015 the secretary may provide relief under sec_6015 f if taking into account all the facts and circumstances it is inequitable to hold the individual liable for any unpaid tax or any deficiency or any portion of either sec_6015 essentially the same language appears in the equities test of sec_6015 d butler v commissioner t c pincite having concluded in light of all the facts and circumstances - - that it is not inequitable to deny petitioner the requested relief under sec_6015 d it follows that respondent did not abuse his discretion in denying relief under sec_6015 see alt v commissioner t c _ in reaching our holdings we have considered all arguments the parties have made arguments not addressed herein we have concluded are irrelevant or without merit to reflect the foregoing decisions will be entered for respondent


internal_revenue_service department of the treasury washington dc person to contact telephone number refer reply to cc intl plr-105123-00 date date legend index number number release date in re taxpayer date a individual a dear this replies to a letter dated date submitted on behalf of taxpayer in which an extension of time is requested under sec_301_9100-3 to permit taxpayer to file form_8279 election to be treated as a fsc or as a small_fsc as provided by temp sec_1_921-1t q a effective for the tax_year beginning on date a additional information was submitted in a letter dated date the information submitted for consideration is substantially as set forth below the ruling contained in this letter is predicated upon facts and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party this office has not verified any of the material submitted in support of the request for a ruling verification of the factual information representations and other data may be required as a part of the audit process on date the i r s granted taxpayer an extension of time under sec_301_9100-3 to file form_8279 effective for the tax_year beginning on date a taxpayer had days from date to file form_8279 with the i r s individual a was the vice president-tax director of the parent of taxpayer and was responsible for forwarding form_8279 to the i r s within the 30-day period however individual a failed to file form_8279 within the 30-day period the irs has not discovered taxpayer’s failure to timely file form_8279 sec_301_9100-1 provides that the commissioner may grant a taxpayer a reasonable extension of time to make a regulatory election under all subtitles of the internal_revenue_code except subtitles e g h and i under the standards set forth in in re plr-105123-00 sec_301_9100-3 sec_301 -1 b defines a regulatory election as an election whose due_date is prescribed by a regulation a revenue_ruling revenue_procedure notice or announcement sec_301_9100-3 provides standards for extensions of time for making regulatory elections sec_301_9100-3 provides that requests for relief subject_to this section will be granted when the taxpayer provides the evidence including affidavits described in sec_301_9100-3 to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and the grant of relief will not prejudice the interests of the government in the present situation sec_1_921-1t q a fixes the time to elect treatment as an fsc or small_fsc thus the commissioner has discretionary authority pursuant to sec_301_9100-1 to grant taxpayer an extension of time provided that taxpayer acted reasonably and in good_faith and the grant of relief will not prejudice the interests of the government based on the facts and circumstances of this case we conclude that taxpayer satisfies sec_301_9100-3 accordingly taxpayer is granted an extension of time until days from the date of this ruling letter to file form_8279 effective for the tax_year beginning on date a the granting of an extension of time to file form_8279 is not a determination that taxpayer is otherwise eligible to make the election sec_301_9100-1 this ruling is directed only to the taxpayer who requested it sec_6110 provides that it may not be used or cited as precedent no ruling has been requested and none is expressed as to the application of any other section of the code or regulations to the facts presented pursuant to a power_of_attorney on file in this office a copy of this letter is being sent to your authorized representatives sincerely allen goldstein reviewer office of the associate chief_counsel international