t c memo united_states tax_court jeffrey s and susan l duffield petitioners v commissioner of internal revenue respondent docket no 3716-o0l filed date joyce griggs for petitioners ross m greenberg and joanne b minsky for respondent memorandum opinion foley judge the issues in this case are whether respondent has met the requirements of sec_6330' and whether petitioners are liable for the sec_6673 penalty background jeffrey and susan duffield resided in bear delaware when they filed their petition the assessments relate to liabilitie sec_1 unless otherwise indicated all section references are to the internal_revenue_code as amended - - that petitioners reported on and federal_income_tax returns on date respondent issued a notice_of_intent_to_levy and notice of your right to a hearing on date petitioners’ representative filed a request for a collection_due_process_hearing e form and requested a copy of the assessments ina letter dated date respondent’s appeals officer asked petitioners to ratify the hearing request in a letter dated date petitioners’ representative provided the ratification and questioned the existence of a valid assessment document in an undated letter the appeals officer replied our office believes the information provided is sufficient to determine that the necessary statutory and administrative requirements have been met the appeals officer wrote further if however you wish to present relevant issues relating to the unpaid tax in accordance with my earlier correspondence i have scheduled time on date pincite p m at the office address above neither petitioners nor their representative appeared at that time or requested that the hearing be rescheduled on date the appeals officer obtained computer transcripts transcripts of petitioners’ accounts the transcripts contained petitioners’ social_security_number and the first four letters of their last name monetary figures representing amounts assessed identified by respondent’s transaction codes and petitioners’ adjusted gross and taxable_income on date respondent issued a notice_of_determination concerning collection action s under sec_6320 and or determination sustaining the proposed collection action in making the determination respondent relied on the transcripts to verify the assessments respondent prior to making his determination did not give petitioners copies of these transcripts or forms certificates of assessments payments and other specified matters forms on date respondent’s counsel provided petitioners with a copy of the transcripts at trial on date respondent provided petitioner and introduced into the record forms respondent also requested that the court impose a sec_6673 penalty discussion sec_6330 provides that if a taxpayer requests a hearing such hearing shall be held by the internal_revenue_service office of appeals sec_6330 states the appeals officer shall at the hearing obtain verification from the secretary that the requirements of any applicable law or administrative procedure have been met sec_6330 c b allows challenges to the existence or amount of the underlying q4e- liability only if petitioners did not receive a notice_of_deficiency or have an opportunity to dispute the liability sec_6330 provides for tax_court review of the commissioner’s determination petitioners do not contest the underlying liabilities but contend that sec_6330 requires the production of form 23c respondent contends that the appeals officer did not abuse her discretion by relying on the transcripts to verify the assessments we agree with respondent the transcripts contained the requisite information 1ie identification of the taxpayer the character of the liability assessed the taxable_period if applicable and the amount of the assessment sec_301_6203-1 proced admin regs kuglin v commissioner tcmemo_2002_51 where the commissioner provides the taxpayer with forms e proof of assessment after the hearing and before trial and the taxpayer does not show at trial any irregularity in the assessment procedure that would raise a question about the validity of the assessments the taxpayer is not prejudiced nestor v commissioner t c __ ___-s - slip op pincite at trial petitioners did not show any irregularity in the assessment procedure accordingly we sustain the respondent’s determination - - respondent contends that petitioners’ position is frivolous and instituted primarily for delay and that pursuant to sec_6673 the court should impose a penalty on petitioners we decline however to impose such a penalty in this case contentions we have not addressed are irrelevant moot or meritless to reflect the foregoing an appropriate order and decision will be entered


significant index number at tax exempt ando government entities division department of the treasury i u internal_revenue_service washington d c feb se’ tera al re taxpayer dear 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 and sec_431 of the internal_revenue_code code and sec_304 and sec_304 of the employee_retirement_income_security_act_of_1974 erisa this extension is effective with the plan_year beginning date this extension applies to the eligible amortization charge bases established as of date which result in a net unfunded_liability of dollar_figure as of that date 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 i 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 plan's funding status iii the plan is projected to have sufficient assets to timely pay expected benefits and anticipated expenditures over the amortization period as extended and iv the notice required under paragraph a has been provided we have sent a copy of this letter to the and to the this ruling is directed only to the taxpayer that requested it sec_6110 of the internal_revenue_code provides that it may not be used or cited by others as precedent if you require further assistance in this matter please contact sincerely yours david m ziegler manager ep actuarial group


uil department of the treasury internal_revenue_service j washington d c u contact person id number telephone number ope zb legend employer_identification_number f o dear sir or madam this is in response to a ruling_request dated date submitted on your behalf by your authorized representatives you are seeking rulings on whether certain investments are program-related investments under sec_4944 of the internal_revenue_code and your obligations to exercise expenditure_responsibility under sec_4945 in connection with certain grants and program-related investments jf3 x is an organization that has been recognized as exempt from federal_income_tax under sec_501 of the code and as a private_foundation described in sec_509 x's principal activity has since its inception been to make grants to various charitable organizations nearly all of x’s grants both in terms of number of grants and dollar volume of grants are made directly to organizations that have received determination letters from the internal_revenue_service that they are public_charities described in sec_501 and sec_509 or while a number of x’s grants are general support grants to public_charities that may be used by the grantees for any charitable purpose most of x's grants are designated to be used for a specific purpose project or program for example to construct a building on a university campus to support a specific research project being conducted by the grantee to purchase specific property for conservation to start a new youth program etc normally in such cases the grant would not be made but for the fact that the grantee requested a grant for a specific purpose project or program and the request was approved sometimes x issues a request for proposals to a group of organizations such as to public school districts for reading programs or to community colleges to strengthen their educational programs x then awards grants in stated amounts for specified purposes that could be designated either for general support or for particular projects or programs each grant award letter describes the purpose of the grant and limits use of the grant funds to that purpose unless the grantee receives x's consent to use the grant for a different purpose the grantee is required to submit a report on the use of the grant funds and a description of the progress made toward achieving the purpose of the grant further if a grantee were to use grant funds tor any purpose other than the purpose for which the grant was made x would consider requesting a refund of the grant withholding future payments if any and not making any additional grants to that grantee program-related investments generally more than years ago x determined that it could in addition to making direct charitable grants leverage the use of its endowment to make program-related investments pris described in sec_4944 of the code as of date x had an outstanding portfolio of adollar_figure in pris consisting of approximately bdollar_figure in a social deposit cdollar_figure in direct loans for charitable purposes and ddollar_figure in foan guaranties if loans and loan guaranties being considered as of that date are added the outstanding total pris in loan form would increase to edollar_figure and pris in the form of guaranties will increase to fdollar_figure x has expanded its pris into new areas and forms of investments different from the direct investments in entities that help to achieve the charitable goals of x rather the new type of investment is in a business_enterprise which is financially secure and the stock of which is listed and traded on a national exchange such as a commercial bank where the investment is to induce the other entity the bank to take action that it otherwise would not take one of x's major emphases is upon a program that seeks to promote the health development and economic security of vulnerable children to protect them from violence and to strengthen the capacity of families communities and the nation to care for all of america's children the program places children at the center of its efforts but views children in the context of their families their communities and the broader state and national policy environment the program's grant-making approach and strategic investments focus on access to quality health care the development of children and youth the economic security of families the reduction of violence in homes and communities the transformation of jocal communities and the building of a national capacity and will to support children the program places a high priority on investing resources as strategically as possible to achieve and sustain long-term change the program's grant-making is guided by the realization that such change requires multiple and overlapping strategies a program subdivision has a grant-making budget of about gdollar_figure the program subdivision staff spends much of its time on efforts to improve the quantity and quality of care and education for children ages while parents and other family members have traditionally supplied most of this nurturing for children either by themselves or through family-based child care center-based care is the only option for many today's working parents affordability and accessibility are real issues for many working parents the nonprofit public charity child care providers meet this need for families of modest means throughout the country experts have told the program subdivision staff that the need for center-based child care in this state alone is such that it could take billions of investment dollars to meet the need for facilities personnel and training and much of that need is currently met by the nonprofit child care providers welfare-to-work requirements are increasing this demand daily since x's grant funds available to this program are only a smail fraction of this money the program subdivision staff has been forced to seek innovative approaches to involve the commercial sector in closing the gap these approaches have begun to manifest themselves through program related investments that seek to maximize the leverage that could be obtained by x's resources these pris use commercial banks and banking tools to assist with the financing of child care facilities for use by nonprofit public charity child care providers - guaranties under these arrangements a public charity borrows money in the form of either an instaliment loan or a line of credit from a commercial bank and depending upon the circumstances pays interest at either a market or below-market rate the loan proceeds are used for exclusively charitable purposes and x either wholly or partially guarantees repayment x does not give guaranties solely to reduce the interest rate paid_by borrowers even though a lower rate often is the result instead x's policy is that its guaranty must be required-that is but for x's guaranty a borrower would not qualify for the loan or line of credit this is the rule and not the exception for nonprofit child care providers which generally lack the amount of assets or cash_flow to secure loans for capital projects under commercial underwriting norms pursuant to written agreements between x or the fending financial intermediary and the charitable borrower borrowed funds may be used solely to achieve the stated charitable purposes x does not give guaranties expecting that they will called although obviously that might happen if it does and depending upon the circumstances a reimbursement agreement between the public charity and x or the loan agreement between the charity and the bank will require the charity to reimburse x similar default provisions cover prohibited uses of the funds such as use for a non-charitable purpose or taxable_expenditure in all guaranty arrangements the charity is obligated to monitor the charitable use of the funds and report the use to the bank at least annually x traditionally has given guaranties either by simple signature alone on a contract or by purchasing a letter_of_credit from its bank to back its promise but the annual cost at least dollar_figure percent of the amount of the loan and paperwork associated with letters of credit make them too costly and cumbersome for use in the nonprofit child care facilities program x's signature on a partial or full guaranty agreement by and of itself makes these borrowers creditworthy but does not in all cases lower the cost of funds to the point of affordability for them or actually get them into the commercial credit market because of these factors xs child development program staff has decided to utilize compensating balances or encumbered deposits to bridge the gap and get the most bank capital into the sector in some cases as part of the guaranty arrangement or as an alternative to a signature guaranty x may be required to deposit funds with the bank in an account in the name of x if this is required the bank bars x from withdrawing funds below the level of x's liabilities on the guaranties the banks require that these funds be invested in very high quality highly liquid fixed income instruments currently yielding approximately five percent or less the rate of retum thus does not reflect the added risk arising from the real possibility that some or all of such a deposit may be forfeited if a charity borrower fails to make its required_payments to the bank x would insist upon a substantially higher return on a portfolio investment with similar default risks single purpose deposit guaranty program the encumbered deposit guaranty strategy has resulted in two variations that x is considering as models for the foreseeable future one variation is exemplified by a deposit of approximately hdollar_figure to be made to induce a commercial bank to lend an identical amount to a commercial sector developer in the form of a construction loan this developer will use all the funds to build a dedicated child care center for use by y a public charity child care center operator on land owned by y ina shopping center being built in a neighborhood that is home to about percent of the welfare recipients in the county x's guaranty is required for the bank fo make the construction loan on this project has a strong operational record but insufficient credit to support the financing of the hdollar_figure needed for the construction of the new facility the construction financing is being used by the developer to build the facility pursuant to a purchase contract with y and under y's supervision y has provided detailed specifications for the construction_project and has retained engineering consultants to supervise the work in progress including the processing and approval of progress payment requests and the periodic inspections to assure compliance with the intent of the construction plans the developer was unwilling to undertake the project without assurances that it would not be left with construction debt in the event y failed to purchase the building therefore x has agreed to guarantee the construction financing to enable y to contract with the developer to build a facility that meet its specific needs to provide collateral in support of the construction financing x has agreed to keep hdollar_figure on deposit with the lending bank for the one-year term of the loan x will earn interest at a rate of percent on the restricted deposit which is substantially less than it otherwise could earn on this sum of money if it were free to invest it elsewhere in addition to the loan guarantee x also has agreed to provide an interest rate subsidy to the developer by applying its earnings on the collateral deposit against the percent interest the developer will owe on the construction loan x also has made related grants to y to retain consultants to assist y with fundraising and to retain a technical assistance provider to assist y with analysis of financing alternatives in addition x has agreed to participate in arranging permanent financing for y after the new facility is built effectively guaranteeing that y will be able to purchase the building that meets its specifications the loan guarantee is specifically earmarked for such use in building y's facility and was designed to enable y to undertake a construction that otherwise would not have been possible the loan agreement between the bank and the developer requires that the funds are to be used only for this project and x's guaranty agreement with the bank requires the bank to monitor this restriction the development agreement between the developer and y also restricts the use of the funds to the construction specified by y as does x's reimbursement agreement with y under this reimbursement agreement y has the duty to confirm that the funds are used to build the facility to y's charitable purpose specifications loan quaranty and interest rate subsidy program as an alternative to a single-purpose deposit guaranty or possibly in combination with such a guaranty x is making deposits in one or more for-profit commercial banks to induce the banks to lend money to one or more public_charities depending on the circumstances a deposit may bear interest as described above or at a lower rate either way x will not be permitted to withdraw any portion of the deposit subject_to liability on the guaranties one form of such a loan guaranty and interest rate subsidy arrangement is a program whereby x has agreed to provide guarantees of up to jdollar_figure to cover a loan poo that will assist child care providers in certain counties with financing for construction and tenant improvements on child care facilities and purchase of equipment guarantees will cover between and of each loan the investment account supports the signature guarantees that x will provide on individual loans in certain instances in addition to the guaranty x will provide an interest rate subsidy to the public charity whereby x applies its earnings on the collateral deposit against the interest the borrower has to pay on the loan z will administer the program borrowers must be sec_501 public_charities and will be eligible for the program only if they would not qualify for the loans they are seeking without a guarantee or similar credit enhancement x has the right to approve each borrower the percentage of the loan being guaranteed and any interest rate subsidy being provided before providing a guarantee z or x will find third parties to offer technical assistance to borrawers and to monitor the quality of the services they are providing to meet the lending bank's requirements x had to set_aside js in an investment account with a third-party bank a member of the same banking family as the lending bank although the investment account is encumbered with the restrictions on withdrawal of funds that are used to support the loan guarantees the eamings are no higher than the eamings x receives on its unrestricted investment accounts with the bank which x uses for its overnight cash needs x retains title to the investment account _ under the z program the bank will identify public charity borrowers and process the loan applications because x's guaranty of any particular loan will be for an amount less than the percent of the amount borrowed generally in the percent to percent range it is expected that x's jdollar_figure deposit will generate kdollar_figure in loans to be used by public_charities for charitable purposes in the z program the contract between z and the borrower will limit the borrower's use of the borrowed funds to the specific charitable purposes for which they were borrowed and will require periodic reports from the charitable borrower on the use of the funds as normally required for commercial loans copies of which will be supplied to x there will be no reimbursement agreements between x and the borrowers nor will there be any reports by the borrowers to x aside from the copies of the reports to z however pending receipt of the response to this request for rulings x is taking all necessary steps to ensure on an interim basis that these loans to the borrowers satisfy all of the formal sec_4945 expenditure_responsibility requirements including reporting the required information on x's annual form pf after receipt of favorable rulings it is expected that z will use its standard loan agreements with the charitable borrowers without the extra expenditure fesponsibility commitments or reporting as a practical matter this program especially if it has the potential to grow significantly to cover loans to hundreds of smal public_charities not be administrable from x's perspective if x must exercise full expenditure_responsibility with each loan in addition to the bank’s normal oversight of the loans x would not try to bring the program to scale if expenditure_responsibility were to be required will sec_170 of the code refers to organizations which are organized and operated exclusively for religious charitable scientific literary and educational_purposes sec_170 d of the code refers to the influencing of legislation and participating in political 2y sec_4944 of the cade provides generally that for the imposition of tax on the amount a private_foundation invests in a manner as to jeopardize the carrying out of any of its exempt purposes sec_4944 of the code provides that investments the primary purpose of which is to accomplish one or more of the purposes described in sec_170 and no significant purposes of which is the production_of_income or the appreciation of property shall not be considered as investments which jeopardize the carrying out of exempt purposes sec_53_4944-3 of the foundation and similar excise_taxes regulations provides in part that a program-related_investment is an investment which possesses the following characteristics i the primary purpose of the investment is to accomplish one or more of the purposes described in sec_170 ii no significant purpose of the investment is the production_of_income or the appreciation of property and iii no purpose of the investment is to accomplish one or more of the purposes described in sec_170 sec_53_4944-3 of the regulations provides that an investment shall be considered as made primarily to accomplish one or more of the purposes described in sec_170 if it significantly furthers the accomplishment of the private foundation's exempt_activities and if the investment would not have been made but for such relationship between the investment and the accomplishment of the foundation's exempt_activities sec_53_4944-3 of the regulations provides that in determining whether a significant purpose of an investment is the production_of_income or the appreciation of property it shall be relevant whether investors solely engaged in the investment for profit would be likely to make the investment on the same terms as the private_foundation however the fact that an investment produces significant income or capita appreciation shall not in the absence of other factors be conclusive evidence of a significant purpose involving the production_of_income or the appreciation of property sec_53_4944-3 of the regulations provides that once it has been determined that an investment is program-related it shall not cease to qualify as a program-related_investment provided that changes if any in the form or terms of the investment are made primarily for exempt purposes and not for any significant purpose involving the production_of_income or the appreciation of property a change made in the form or terms of a program-related_investment for the prudent protection of the foundation's investment shail not ordinarily cause the investment to cease to qualify as program-related under certain conditions a program-telated investment may cease to be program-related because of a critical change_in_circumstances as for example where it is serving an illegal purpose or the private purpose of the foundation or its managers for purposes of the preceding sentence an investment which ceases to be program-related because of a critical change_in_circumstances shail in no event subject the foundation making the investment to the tax imposed by sec_4944 before the 30th day after the date on which such foundation or any of its managers has actual knowledge of such critical change_in_circumstances example of sec_53_4944-3 of the regulations provides as follows x is a business_enterprise which is financially secure and the stock of which is listed and traded on a national exchange y a private_foundation makes a loan to x at an interest rate below the market rate in order to induce x to establish a new plant in a deteriorated urban_area which because of the high risks involved x would be unwilling to establish absent such inducement the loan is made pursuant to a program tun by y to enhance the economic development of the area by for example providing employment opportunities for low-income persons at the new plant and no significant purpose involves the production_of_income or the appreciation of property the loan significantly furthers the accomplishment of y's exempt_activities and would not have been made but for such relationship between the loan and y's exempt_activities accordingly even though x is large and established the investment is program-related sec_4945 of the code imposes a tax on each taxable_expenditure of a private_foundation sec_4945 of the code provides that a private_foundation must exercise expenditure_responsibility in connection with any grant to an organization unless the grantee organization is described in sec_509 or failure to comply with this requirement will cause the grant to be a taxable_expenditure within the meaning of sec_4945 sec_4945 of the code provides that expenditure_responsibility referred to in sec_4945 means that a private_foundation is responsible to exert all reasonable efforts and to establish adequate procedures- to see that the grant is spent solely for the purpose for which made to obtain full and compiete reports from the grantee on how the funds are spent and to make full and detailed reports with respect to such expenditures to the secretary sec_53_4945-5 of the regulations generally provides that under sec_4945 the term taxable_expenditure includes any amount_paid or incurred by a private_foundation as a grant to an organization other than an organization described in sec_509 or unless the private_foundation exercises expenditure_responsibility with respect to such grant in accordance with sec_4945 sec_53_4945-5 of the regulations provides that for purposes of sec_4945 of the code an organization will be treated as a sec_509 organization if it is an organization described in sec_170 even if it is not described in sec_501 or if itis a foreign government or any agency_or_instrumentality thereof even if is not described in sec_501 however any grant to such organizations must be made exclusively for charitable purposes as described in sec_470 b it sec_53_4945-5 of the regulations certain earmarked grants provides that a grant by a private_foundation to a grantee organization which the grantee organization uses to make payments to another organization the secondary grantee shall not be regarded as a grant by the private_foundation to the secondary grantee if the foundation does not earmark the use of the grant for any named secondary grantee and there does not exist an agreement oral or written whereby such grantor foundation may cause the selection of the secondary grantee by the organization to which it has given the grant for purposes of this subdivision a grant described herein shall not be regarded as a grant by the foundation to the secondary grantee even though such foundation has reason to believe that certain organizations would derive benefits from such grant so long as the original grantee organization exercises control in fact over the selection off process and actually makes the selection completely independently of the private_foundation _ sec_53_4945-5 of the regulations expenditure_responsibility provides that a private_foundation is not an insurer of the activity of the organization to which it makes a grant thus satisfaction of the requirements of sec_4945 and h and of subparagraph or of this paragraph will ordinarily mean that the grantor foundation will not have violated sec_4945 or a private_foundation will be considered to be exercising expenditure_responsibility under sec_4945 as long as it exerts all reasonable efforts and establishes adequate procedures- i to see that the grant is spent soiely for the purpose for which made ii to obtain full and complete reports from the grantee on how the funds are spent and iii to make full and detailed reports with respect to such expenditures to the commissioner in cases in which pursuant to paragraph a of this section a grant is considered made to a secondary grantee rather than the primary grantee the grantor foundation's obligation to obtain reports from the grantee pursuant to sec_4945 and this section will be satisfied if appropriate reports are obtained from the secondary grantee for rules relating to expenditure_responsibility with respect to transfers of assets described in sec_507 see sec_507 and the regulations thereunder - section sec_3 b of the regulations provides that in order to meet the expenditure_responsibility requirements of sec_4945 with regard to the making of a program-related_investment as defined in sec_4944 and the regulations thereunder a private_foundation must require that each such investment with respect to which expenditure_responsibility must be exercised under sec_4945 and h and this section be made subject_to a written commitment signed by an appropriate officer director or trustee of the recipient organization such commitment must specify the purpose of the investment and must inctude an agreement by the organization- i to use all the funds received from the private_foundation as determined under paragraph c of this section only for the purposes of the investment and to repay any portion not used for such purposes provided that with respect to equity investments such repayment shall be made only to the extent permitted by applicable law concerning distributions to holders of equity interests ii at least once a year during the existence of the program-related_investment to submit full and complete financial reports of the type ordinarily required by commercial investors under similar circumstances and a statement that it has complied with the terms of the investment iii to maintain books_and_records adequate to provide information ordinarily required by commercial investors under similar circumstances and to make such books_and_records available to the private_foundation at reasonable times and iv not to use any of the funds a to carry on propaganda or otherwise to attempt to influence legistation within the meaning of sec_4945 b to influence the outcome of any specific public election or to carry on directly or indirectly and voter registration drive within the meaning of sec_4945 or c with respect to any recipient which is a private_foundation as defined in sec_509 to make any grant which does not comply with the requirements of sec_4945 d or x's general support grants to public_charities described in sec_501 and sec_509 or of the code which are used by those public_charities in furtherance of their charitable goals are not taxable_expenditures because such grants are described in sec_4945 to which the expenditure_responsibility requirements of sec_4945 are not applicable in order for x's deposit guaranty program to qualify as a program related investment the primary purpose of the program must be to accomplish one or more of the purposes described in sec_170 with no significant purpose which is the production_of_income or the appreciation of property the limitation on borrowers to organizations described in sec_501 and limitation on the use of borrowed funds to exclusively for charitable purposes satisfies the first part of this test ordinary investors for profit would be highly unlikely to invest or make deposits on terms similar to those agreed to by x under the guaranty program whereby the deposits will bear interest below risk-adjusted market rate interest and the deposited funds are exposed to a greater risk and illiquidity created by the restrictions on withdrawal and investment direction these conditions demonstrate that no significant purpose of the guaranty deposits is the production_of_income or the appreciation of property therefore x's guaranty program qualifies as a program-related_investment within the meaning of sec_4944 of the code similarly x's loan guaranty and interest rate subsidy program also qualifies as a program-related_investment the primary purpose of the program is to induce the bank to make tow interest loans to certain child care organizations who are sec_501 public_charities that would not qualify for the loans they are seeking without x's guarantee or similar credit enhancement the deposits with the bank will bear interest below the risk-adjusted market rate indicating the lack of a significant purpose which is the production_of_income and presents no indication that the investment has a purpose which is to accomplish one or more of the purposes described in sec_170 ie lobbying and political activities in the event that under the guaranty program or the loan guaranty and interest rate subsidy program a borrower should not be a governmental_unit or a public charity described in sec_509 or where x through a pre-grant inquiry identifies the specific borrower before the loan is made and will not offer guarantee unless it is satisfied that it is making an investment for exclusively charitable purposes then x's agreements with the secondary grantee borrowers and the reports provided to x by such borrowers can be deemed to be reasonable efforts by x to establish adequate procedures to meet the expenditure_responsibility requirements of sec_4945 based on the information submitted and the representations made therein we rule as follows grants to public_charities for specific charitable purposes or projects grants by x to public_charities described in sec_501 and sec_509 or to be used by the grantees for specific charitable purposes or projects are described in sec_4945 and the expenditure_responsibility requirements of sec_4945 do not apply deposit quaranties_as_program-related investments the deposits with a commercial bank bearing interest below the risk-adjusted market rate made or to be made by x under the guaranty program are program-related investments described in sec_4944 and the expenditure tesponsibility requirements of sec_4945 do not apply if the borrowers are governmental units or charities described in sec_509 or guaranty and interest rate subsi loan program-related investments the deposits with a commercial bank bearing interest below the risk-adjusted market rate made or to be made by x under the loan guaranty and interest rate subsidy program are program-related investments described in sec_4944 and the expenditure_responsibility requirements of sec_4945 do not apply if the borrowers are governmental units or charities described in sec_509 or ram as non-public charity borrowers if under either the guaranty program or the loan guaranty and interest rate subsidy program a borrower should not be a governmental_unit or a public charity described in sec_509 or the expenditure_responsibility requirements of sec_4945 may be satisfied by agreement between x and the borrower and reports provided to x by the borrower rather than by agreements with and reports from the bank these rulings are based on the understanding that there will be no material changes in the facts upon which they are based these rulings are directed only to the organization that requested them séction k of the internal_revenue_code provides that they may not be used or cited by others as precedent please keep a copy of this ruling letter in your permanent records sincerely en vie pei un robert c harper jr manager exempt_organizations technical group sil


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-150811-13 date date legend x ----------------------- ----------------------------------------- y ------------------------------------------ -------------------------- z ------------------------------------------ ---------------------------------------------------- date ------------------------ date --------------------- state ------------ dear ----------------- this responds to a letter dated date submitted on behalf of x by x’s authorized representative requesting relief pursuant to sec_301_9100-3 of the procedure and administration regulations that x be granted an extension of time to elect to treat z as a qualified_subchapter_s_subsidiary qsub under section sec_1361 of the internal_revenue_code the code facts plr-150811-13 according to the information submitted and representations within x was incorporated under the laws of state on date and acquired all of the stock of y x elected to be treated as an s_corporation effective date effective date x elected to treat y a wholly owned subsidiary as a qsub as part of the restructuring it was discovered that y’s wholly owned subsidiary z inadvertently failed to have a qsub election filed for it prior to the restructuring it was intended that z a wholly owned subsidiary of y was to be treated as a qsub effective date however due to inadvertence a form_8869 qualified_subchapter_s_subsidiary election was not timely filed with regard to z x represents that it has filed consistently with being an s_corporation and that z has filed consistently as a qsub since date law and analysis sec_1362 provides that except as provided in subsection g a small_business_corporation may elect in accordance with the provisions of this section to be an s_corporation sec_1362 provides that an election under this subsection shall be valid only if all persons who are shareholders in such corporation on the day on which such election is made consent to such election sec_1361 generally provides that a qualified_subchapter_s_subsidiary shall not be treated as a separate corporation and all assets liabilities and items of income deduction and credit of a qualified_subchapter_s_subsidiary shall be treated as assets liabilities and such items as the case may be of the s_corporation sec_1361 defines a qualified_subchapter_s_subsidiary as a domestic_corporation which is not an ineligible_corporation if percent of the stock of the corporation is owned by the s_corporation and the s_corporation elects to treat the corporation as a qualified_subchapter_s_subsidiary sec_1_1361-3 of the income_tax regulations prescribes the time and manner for making an election to be classified as a qualified_subchapter_s_subsidiary sec_1_1361-3 provides that an election may be effective up to two months and days prior to the date the election is filed or not more than months after the election is filed the proper form for making the election is form_8869 qualified_subchapter_s_subsidiary election section a provides that an extension of time to make a qualified_subchapter_s_subsidiary election may be available under procedures applicable under sec_301_9100-1 and sec_301_9100-3 sec_301_9100-1 provides that the commissioner may grant a reasonable extension of time to make a regulatory election or a statutory election but no more than months except in the case of a taxpayer who is abroad under all subtitles of the plr-150811-13 code except subtitles e g h and i sec_301_9100-1 defines the term regulatory election as an election whose due_date is prescribed by a regulation published in the federal_register or a revenue_ruling revenue_procedure notice or announcement published in the internal_revenue_bulletin sec_301_9100-2 provides the rules governing automatic extensions of time for making certain elections sec_301_9100-3 provides the standards the commissioner will use to determine whether to grant an extension of time for regulatory elections that do not meet the requirements of sec_301_9100-2 under sec_301_9100-3 a request for relief 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 granting relief will not prejudice the interests of the government conclusion based solely on the facts submitted and representations made we conclude that the requirements of sec_301_9100-3 have been satisfied accordingly x is granted an extension of time of days from the date of this letter to elect to treat z as a qsub effective date the election should be made by filing form_8869 qualified_subchapter_s_subsidiary election with the appropriate service_center and a copy of this letter should be attached to the election a copy is enclosed for that purpose except as specifically set forth above we express or imply no opinion concerning the federal tax consequences of the facts described above under any other provision of the code specifically we express or imply no opinion concerning whether x is a valid s_corporation or whether z is eligible to be a qsub this ruling is directed only to the taxpayer requesting it sec_6110 provides that it may not be used or cited as precedent plr-150811-13 in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to the taxpayer’s authorized representative sincerely laura c fields laura c fields senior technician reviewer branch office of the associate chief_counsel passthroughs special industries enclosures copy of this letter copy of this letter for sec_6110 purposes cc


o f f i c e o f t h e c h i e f c o u n s e l department of the treasury i n t e r n a l r e v e n u e s e r v i c e w a s h i n g t o n d c date cc ita b02 genin-135334-18 number release date uil ----------------------------------------- ---------------- ---------------------------- ----------------- --------------------------------- attention ------------------------------- ------------------------------------------ dear ---------------- this letter responds to your request for information dated october on behalf of the ------------------------------------------------------------------------------------------------------------ --------- you requested guidance on categorizing costs for menstrual care products as qualified_medical_expenses under health_savings_accounts hsas flexible spending accounts fsas and other tax-preferred accounts although we cannot answer your specific question regarding costs for menstrual care products we can provide you with general information regarding the application of sec_213 sec_213 allows taxpayers to deduct expenses paid for medical_care of the taxpayer1 to the extent the expenses exceed percent of the taxpayer’s adjusted_gross_income as relevant here sec_213 defines medical_care as amounts paid for the diagnosis cure mitigation treatment or prevention of disease or for the purpose of affecting a structure or function of the body under sec_1_213-1 deductions under sec_213 are limited to expenses paid primarily for the prevention or alleviation of a physical or mental defect or illness in addition sec_262 and sec_1_213-1 prohibit taxpayers from deducting personal family or living_expenses as medical_care if the expenses do not fall within the sec_213 definition an expenditure that is merely beneficial to the general health of an individual is personal and is not for medical_care under sec_1_213-1 sec_213 allows deductions for the taxpayer’s spouse or dependent as well any reference to expenses of the taxpayer herein also includes expenses of the taxpayer’s spouse and the taxpayer’s dependent genin-135334-18 taxpayers should use objective factors to determine whether an expense that is typically personal in nature was incurred by the taxpayer for medical_care such factors may include the taxpayer's motive or purpose for making the expenditure a physician's diagnosis of a medical_condition and recommendation of the item as treatment or mitigation the relationship between the treatment and the illness the treatment's effectiveness the proximity in time to the onset or recurrence of a disease see eg 12_tc_409 typically a personal_expense will only be considered an expense for medical_care if the taxpayer would not have incurred the expense but for the taxpayer’s disease or illness 62_tc_813 items that have no purpose other than to treat a specific disease illness or mental defect may qualify as a deductible medical expense see eg revrul_2002_19 2002_1_cb_778 holding that the cost of a weight loss program is a deductible medical expense if the program is used to treat a specific disease or ailment cf revrul_79_151 1979_1_cb_116 holding that the cost of a weight loss program is not a deductible medical expense if the program is used for improving general health unrelated to a specific disease or ailment however amounts expended for the preservation of general health or for the alleviation of physical or mental discomfort which is unrelated to some particular disease or defect are not expenses for medical_care revrul_55_561 1955_1_cb_307 maternity clothing antiseptic diaper service wigs toothpaste held to be personal expenses in short some things to consider to determine whether the costs of menstrual products are deductible as medical_expenses are whether the menstrual products are paid for treating mitigating or diagnosing the taxpayer’s disease whether the costs are merely beneficial to the taxpayer’s general health such that they might be considered the taxpayer’s personal_expense and whether the taxpayer would not have incurred that expense but for the taxpayer’s medical_condition genin-135334-18 this letter is intended for informational purposes only and does not constitute a ruling under section dollar_figure of revproc_2018_1 2018_1_irb_1 but i hope the information is helpful if you have any additional questions please contact ------- ------------------ ------------- at sincerely bridget e tombul branch chief branch office of associate chief_counsel income_tax accounting


t c memo united_states tax_court timothy s schultz petitioner v commissioner of internal revenue respondent docket no filed date donald wills wallis for petitioner anne m craig for respondent memorandum opinion nims judge petitioner seeks review of respondent’s determination that he is not entitled to relief from joint_and_several_liability under sec_6015 for his and income_tax liabilities unless otherwise indicated all section references are to the internal_revenue_code and all rule references are to the tax_court rules_of_practice and procedure on brief petitioner abandoned his argument that respondent erred in denying him relief under the provisions of sec_6015 and c the sole issue remaining for decision is whether petitioner is entitled to relief under sec_6015 background this case was submitted fully stipulated pursuant to rule the stipulations of the parties with accompanying exhibits are incorporated herein by this reference petitioner resided in florida at the time his petition was filed and he was married to susan belle schultz susan or former spouse in during the years in issue petitioner worked in the construction industry susan worked as a cardiology technician in and as a medical transcriber during and throughout their marriage susan controlled family finances and forced petitioner to give her his paychecks denied him access to their bank account and was responsible for paying their expenses susan kept their mail from petitioner and allowed him to see their federal tax returns which were prepared by her mother only when she presented them to him for his signature because of susan’s dominance over petitioner he was largely unaware of their financial situation he did not know that susan had not timely filed their joint returns for and she filed the returns for those years and for during the first months of until an internal_revenue_service agent visited their home in the spring of petitioner was also unaware that susan had not fully paid their tax_liabilities whenever petitioner attempted to find out more about the couple’s financial situation susan would verbally or physically attack him susan often abused petitioner during the course of their marriage and he was injured on several occasions necessitating notifying the police one altercation resulted in susan’s arrest susan moved out of the family home during date and petitioner subsequently obtained a personal protection order against her susan was served with divorce papers on date on date petitioner filed a form_8857 request for innocent spouse relief and separation of liability and equitable relief seeking relief under sec_6015 c and f from 1the return was not signed by either spouse joint_and_several_liability for his and tax years at that time petitioner’s divorce from susan had not been finalized on date respondent issued a notice_of_determination denying petitioner relief under sec_6015 on date petitioner petitioned this court seeking review of respondent’s determination to deny him relief discussion in general a spouse who files a joint federal_income_tax return is jointly and severally liable for the entire income_tax_liability sec_6013 sec_1_6013-4 income_tax regs a spouse may be relieved from joint_and_several_liability under sec_6015 if taking into account all the facts and circumstances it would be inequitable to hold him liable for any unpaid tax or deficiency the commissioner has published revenue procedures listing the factors normally considered in determining whether sec_6015 relief should be granted see revproc_2003_61 2003_2_cb_296 superseding revproc_2000_15 2000_1_cb_447 this court has jurisdiction to conduct a de novo review of the commissioner’s denial of sec_6015 relief see sec_6015 132_tc_203 2the liabilities in question apart from that for a year for which no valid_return was filed are not deficiencies in tax but amounts reported on the returns and unpaid a threshold conditions for granting relief to be eligible for sec_6015 relief the requesting spouse must satisfy the following threshold conditions i he filed a joint_return for the taxable_year for which he seeks relief ii relief is not available to him under sec_6015 or c iii no assets were transferred between the spouses as part of a fraudulent scheme by the spouses iv the nonrequesting spouse did not transfer disqualified assets to him v he did not file or fail to file the returns with fraudulent intent and vi absent enumerated exceptions the income_tax_liability from which he seeks relief is attributable to an item of the nonrequesting spouse revproc_2003_61 sec_4 c b pincite petitioner is ineligible for relief from the tax_liability because he did not file a valid joint_return for that year see 119_tc_191 for the return submitted to respondent was not signed by him or his former spouse see 270_f3d_1297 10th cir affg tcmemo_1999_426 likewise unless an exception applies petitioner is ineligible for relief from most of his and tax_liabilities because he earned most of the couple’s income reported for those years the record reveals that petitioner’s former spouse was responsible for dollar_figure of the couple’s dollar_figure of income reported for those years petitioner contends that he is eligible for relief from all the tax_liabilities for those years because he satisfies two of the enumerated exceptions to the threshold condition pertaining to attribution first he claims that susan misappropriated funds intended for payment of their tax_liabilities see revproc_2003_61 sec_4 c c b pincite petitioner contends that susan used the money to pay off her individual debts considering the fact that he has not identified when in what amount or from what source any funds were earmarked for payment of tax and that susan denied him access to their financial statements and mail we find his claim to be nothing more than speculation second petitioner claims that he signed the returns with no questions asked because of the abuse he suffered from susan if the requesting spouse establishes that he was the victim of abuse before the return was signed and that he consequently did not challenge the treatment of any items on the return for fear of retaliation the internal_revenue_service will consider granting equitable relief even though the underpayment is attributable to an item of the requesting spouse revproc_2003_61 sec_4 d c b pincite while petitioner did suffer verbal and physical abuse at the hands of his former spouse he does not claim that he would have challenged the treatment of any items on the returns in fact petitioner has no grounds to challenge the treatment of the income attributed to him because the forms w-2 wage and tax statement attached to the returns show that he earned the income from his construction industry employment accordingly we find that petitioner has met the threshold criteria for relief only as to the taxes attributable to the following amounts of income dollar_figure in dollar_figure in dollar_figure in and dollar_figure in b circumstances under which relief is ordinarily granted where the threshold conditions have been met the commissioner will ordinarily grant relief from an underpayment_of_tax if the requesting spouse meets the requirements set forth under revproc_2003_61 sec_4 c b pincite to qualify for relief under revproc_2003_61 sec_4 the requesting spouse must as of the date of the request for relief no longer be married to be legally_separated from or not have been a member of the same household as the nonrequesting spouse at any time during the 12-month_period ending on the date of the request for relief have had no knowledge or reason to know when he signed the return that the nonrequesting spouse would not pay the tax_liability and suffer economic hardship if relief is not granted when petitioner filed his request for relief on date he was still married to and was not legally_separated from his former spouse the couple had also been members of the same household in the preceding months because petitioner did not move out of the marital residence until date a requesting spouse suffers economic hardship if paying the tax_liabilities would prevent him from paying reasonable basic living_expenses sec_301_6343-1 proced admin regs revproc_2003_61 sec_4 c a ii c b pincite petitioner has not provided any information as to his monthly income or expenses petitioner has thus failed to establish that denial of sec_6015 relief would cause him economic hardship accordingly petitioner is generally not entitled to relief under criteria set forth in revproc_2003_61 sec_4 c revproc_2003_61 sec dollar_figure factors where a requesting spouse fails to qualify for relief under revproc_2003_61 sec_4 a determination to grant relief may nevertheless be made under the criteria set forth in revproc_2003_61 sec_4 c b pincite revproc_2003_61 sec_4 provides a nonexclusive list of factors the irs will consider in making that determination marital status economic hardship knowledge or reason to know nonrequesting spouse’s legal_obligation significant benefit good-faith effort to comply with tax laws spousal abuse and mental or physical health no single factor is determinative and all factors are to be considered and weighed appropriately see haigh v commissioner tcmemo_2009_140 marital status under revproc_2003_61 sec_4 a i c b pincite consideration is given to whether the requesting spouse is divorced or separated whether legally_separated or living apart from the nonrequesting spouse the marital status factor favors relief because petitioner and his former spouse began living apart approximately months before petitioner filed his request for relief economic hardship as previously discussed petitioner has not demonstrated that he would suffer economic hardship if denied relief this factor therefore weighs against relief knowledge or reason to know when petitioner signed the returns he did not know and had no reason to know that his former spouse would not pay their income_tax liabilities because he did not discover the nonpayment of the liabilities until the spring of this factor thus favors relief nonrequesting spouse’s legal_obligation this factor is neutral because there is no evidence in the record that petitioner’s former spouse had a legal_obligation to pay their outstanding income_tax liabilities pursuant to a divorce decree or an agreement see revproc_2003_61 sec_4 a iv c b pincite significant benefit this factor favors relief because there is no evidence that petitioner derived any benefit beyond normal support from the nonpayment of the income_tax liabilities see magee v commissioner tcmemo_2005_263 revproc_2003_61 sec_4 a v c b pincite good-faith effort to comply with income_tax laws petitioner has not made a good-faith effort to comply with income_tax laws following his and taxable years in that he did not file a valid_return for see revproc_2003_61 sec_4 a vi c b pincite petitioner claims that he was not required to file a return for because he has earned no income of any type since the years at issue on account of the injuries caused by his former spouse’s abuse we do not find petitioner’s claim credible because the record reflects that petitioner was employed by the hamilton hotel in this factor thus weighs against relief spousal abuse petitioner was verbally and physically abused by his former spouse throughout their marriage this factor favors relief mental or physical health under revproc_2003_61 sec_4 b ii c b pincite consideration is given to whether the requesting spouse was in poor mental or physical health on the date he signed the return or at the time relief was requested petitioner claims that he is permanently disabled mentally and physically as a result of the physical abuse by his former spouse while petitioner did suffer some physical injury the record does not confirm petitioner’s claim that the injury is permanent moreover petitioner has not explained how the injury impaired his ability to meet his federal tax obligations this factor is therefore neutral see fox v commissioner tcmemo_2006_22 mental or physical health factor was neutral where the court already found the abuse factor favored relief and where the requesting spouse failed to elaborate on her claim that she suffered from mental abuse d conclusion of the factors listed in revproc_2003_61 sec_4 four favor relief marital status lack of knowledge or reason to know lack of significant benefit and spousal abuse two weigh against relief lack of economic hardship and lack of good-faith effort to comply with tax laws and two are neutral nonrequesting spouse’s legal_obligation and mental or physical health after considering and weighing all the factors we find it would be inequitable to hold petitioner liable for the portions of his and tax_liabilities which were attributable to income earned by his former spouse to reflect the foregoing decision will be entered under rule


t c summary opinion united_states tax_court lawrence k mudd petitioner v commissioner of internal revenue respondent docket no 10230-01s filed date lawrence k mudd pro_se jillena a warner for respondent goldberg special_trial_judge this case was heard pursuant to the provisions of sec_7463 of the internal_revenue_code in effect at the time the petition was filed the decision to be entered is not reviewable by any other court and this opinion should not be cited as authority unless otherwise indicated subsequent section references are to the internal_revenue_code in effect for the years in issue and all rule references are to the tax_court rules_of_practice and procedure for taxable years and respondent determined deficiencies in petitioner’s federal income taxes of dollar_figure and dollar_figure additions to tax under sec_6651 of dollar_figure and dollar_figure and additions to tax under sec_6654 of dollar_figure and dollar_figure after concessions by both parties the issues remaining for decision are whether petitioner received a distribution of dollar_figure from the first national bank of ogden in whether petitioner is entitled to a dependency_exemption deduction for his daughter amy mudd in and whether petitioner is entitled to a charitable_contribution_deduction in some of the facts have been stipulated and are so found the stipulation of facts and the attached exhibits are incorporated herein by this reference petitioner resided in fort mitchell kentucky on the date the petition was filed in this case 1in his petition petitioner states that penalties and interest are overstated based on actual taxable_income at trial petitioner did not make any further arguments or present any evidence concerning the additions to tax for failure_to_file a timely return under sec_6651 and for failure to make estimated_tax payments under sec_6654 we conclude that petitioner disputes only the underlying tax deficiencies not the applicability of the additions to tax the correct amounts of these additions to tax therefore will be calculated by the parties in the rule_155_computations required in this case during and petitioner was married to barbara j mudd mrs mudd mrs mudd filed a federal_income_tax return in each of the years on which she claimed itemized_deductions petitioner did not file a federal_income_tax return for either of the years respondent issued petitioner a separate notice_of_deficiency for each year which determined deficiencies using items reported on third-party information returns respondent determined that petitioner’s filing_status was married_filing_separately in each of the years a taxpayer generally bears the burden of proving the commissioner’s determinations in a notice_of_deficiency to be in error rule a while sec_7491 shifts the burden_of_proof to the commissioner where the taxpayer presents credible_evidence with respect to a factual issue the burden remains on the taxpayer where the taxpayer failed to comply with all statutory substantiation requirements under certain circumstances sec_6201 may place the burden of production on the commissioner with respect to disputes over items of income shown on information returns the first issue for decision is whether petitioner received a distribution of dollar_figure from the first national bank of ogden first national in ogden illinois in at some time in or prior to date petitioner established a self-directed_ira account at first national in date petitioner authorized first national to transmit dollar_figure to a bank in cincinnati ohio so that a debenture could be purchased to be held in the ira account petitioner informed first national that the investment would yield semiannual interest payments first national transmitted the funds according to petitioner’s request first national then sent petitioner a letter instructing petitioner to have the debenture issued to first national bank of ogden f b o lawrence k mudd trust and to have the debenture forwarded to first national first national never received the debenture and never received any interest payment therefrom throughout first national sent several letters addressed to petitioner requesting information about the debenture and informing him that the bank had never received the debenture or any interest payment in date first national sent a letter to petitioner informing him that the bank would be resigning as the custodian of petitioner’s ira account in date first national mailed petitioner a check in the amount of dollar_figure representing the balance remaining in petitioner’s ira account less certain fees in date after petitioner had failed to cash this check first national put a stop payment on the check and mailed in its place a cashier’s check in the amount of dollar_figure reflecting an assessed fee of dollar_figure in after the cashier’s check still had not been cashed first national remitted the amount of the cashier’s check to the state of illinois unclaimed property division three of the letters that first national sent to petitioner detailed above were mailed to petitioner by certified mail with a return receipt one of these receipts was signed by petitioner’s son and two including the receipt for the letter with the dollar_figure check were signed by mrs mudd petitioner never received either of the checks that first national mailed to him for the year first national issued petitioner a form 1099-r distributions from pensions annuities retirement or profit-sharing_plans iras insurance contracts etc this form reflected a distribution to petitioner of dollar_figure the distribution amount included the dollar_figure which first national had previously transferred at petitioner’s request as well as the dollar_figure check which first national mailed to petitioner upon closing his account as a general_rule amounts paid or distributed out of individual retirement plans including iras are included in gross_income when received by the payee or distributee under the 2the source of the dollar_figure discrepancy between the sum of these two amounts and the amount reported on the form_1099 is not clear from the record provisions of sec_72 sec_408 the regulations provide in relevant part as follows except as otherwise provided in this section any amount actually paid or distributed or deemed paid or distributed from an individual_retirement_account or individual_retirement_annuity shall be included in the gross_income of the payee or distributee for the taxable_year in which the payment or distribution is received sec_1_408-4 income_tax regs there are no exceptions applicable to the case at hand under certain circumstances a cash_basis taxpayer who does not actually receive possession of income may nevertheless be considered to have constructively received that income sec_451 sec_1_451-2 income_tax regs the relevant regulations provide that income although not actually reduced to a taxpayer’s possession is constructively received by him in the taxable_year during which it is credited to his account set apart for him or otherwise made available so that he may draw upon it at any time or so that he could have drawn upon it during the taxable_year if notice of intention to withdraw had been given sec_1_451-2 income_tax regs for income to be constructively received the taxpayer must have control_over its disposition and the income must not be subject_to substantial limitations or restrictions id single v commissioner tcmemo_1988_549 we first address the dollar_figure which petitioner authorized first national to transfer to the cincinnati bank in respondent argues that this amount is includable in petitioner’s income in the year in which first national issued the form_1099 petitioner argues that the amount is includable in income in a taxable_year that is not before this court it is clear that petitioner ultimately received the dollar_figure which was intended to be used for the purchase of the debenture respondent has provided no evidence of when petitioner received this money relying solely on the form_1099 issued by first national petitioner on the other hand testified that the debenture for his ira was never purchased and that he personally retained the dollar_figure which was taken from his ira account in this testimony is supported by corroborating evidence showing that first national never acquired the debenture nor did first national receive the anticipated interest payments which indicates that the debenture had never been issued in its name we accordingly find that the dollar_figure was in fact distributed from the ira and received by petitioner in because the dollar_figure is included in petitioner’s income when it was received in it is not included in income in as determined by respondent sec_408 we next address the dollar_figure check mailed by first national when it closed petitioner’s account in we have found that petitioner never received either of the checks that first national mailed to him in this finding is based upon the fact that the return receipts--including the receipt for the initial check--were not signed by petitioner as well as petitioner’s credible testimony that he and his wife were having some problems at that time and that if she had given petitioner either of the checks he would have cashed it we further find that petitioner was not in constructive receipt of the income because the checks were never delivered to petitioner he was deprived of the control_over their disposition that would have been necessary for constructive receipt single v commissioner supra taxpayer did not constructively receive income in the form of state tax_refund where the taxpayer’s spouse withheld the refund check until after the taxable_year sec_1_451-2 income_tax regs because petitioner neither actually nor constructively received the ira distribution during the dollar_figure is not includable in petitioner’s income in that year single v commissioner supra sec_408 sec_1_408-4 income_tax regs the second issue for decision is whether petitioner is entitled to a dependency_exemption deduction for his daughter amy mudd in although the notice_of_deficiency did not allow petitioner any dependency_exemption deductions respondent has conceded that petitioner is entitled to two such deductions for one for robert mudd and one for mara mudd petitioner argues that he is entitled to a third exemption deduction for amy amy was a full-time_student at the university of kentucky during and during that year she turned or years old petitioner and respondent have framed this issue to be whether amy claimed a personal_exemption deduction on her own income_tax return for however this fact is irrelevant in ascertaining petitioner’s entitlement to the deduction sec_151 sets forth the requirements for a dependency_exemption deduction a taxpayer generally is entitled to the deduction for a dependent who is a child of the taxpayer who is under years old and who is a full-time_student at a certain type of educational_organization sec_151 c b ii c a a child of a taxpayer is a dependent of the taxpayer if the taxpayer provides over half of the child’s support sec_152 the dependency_exemption deduction is not contingent upon the dependent’s nonentitlement to a personal_exemption deduction on her own return sec_151 we therefore hold that petitioner is entitled to the dependency_exemption deduction for amy in 3there does exist a converse restriction inapplicable to the case at hand which provides that an individual is not entitled to a personal_exemption deduction where a dependency_exemption deduction with respect that individual is allowable to another taxpayer sec_151 the third issue for decision is whether petitioner is entitled to a charitable_contribution_deduction in a deduction generally is allowed for any charitable_contribution made within the taxable_year sec_170 a taxpayer generally must keep records sufficient to establish the amounts of the items required to be shown on his federal_income_tax return sec_6001 sec_1_6001-1 e income_tax regs in the event that a taxpayer establishes that a deductible expense has been paid but is unable to substantiate the precise amount we generally may estimate the amount of the deductible expense bearing heavily against the taxpayer whose inexactitude in substantiating the amount of the expense is of his own making 39_f2d_540 2d cir we cannot estimate a deductible expense however unless the taxpayer presents evidence sufficient to provide some basis upon which an estimate may be made 85_tc_731 deductions for charitable_contributions are subject_to further substantiation requirements sec_170 generally 4while the notices of deficiency determine that petitioner is entitled to the standard_deduction in each year the parties have stipulated that during the years in issue petitioner’s spouse filed a separate_income tax_return with itemized_deductions thereby causing the standard_deduction to be zero for petitioner in both years see sec_63 and allowing petitioner to deduct any itemized_deductions to which he may be entitled such deductions must be substantiated with reliable written records reflecting the name of the donee the date of the contribution and either the amount of any cash contribution or a description of any property contributed sec_1_170a-13 and b income_tax regs deductions for contributions of dollar_figure or more are disallowed in the absence of a contemporaneous written acknowledgment of the contribution by the donee sec_170 sec_1_170a-13 income_tax regs petitioner first argues that he is entitled to deduct dollar_figure for contributions of property made to a religious children’s home petitioner purchased a number of items which he then gave directly to the home as substantiation for these contributions petitioner provided a list with the various items along with the prices that he paid for them no individual item cost more than dollar_figure petitioner also provided a letter from the charity acknowledging the receipt of new gym shoes sweaters boots and food supplies the items on petitioner’s list primarily consisting of children’s athletic shoes correspond to this description at trial respondent questioned petitioner concerning his lack of receipts for the individual items donated to the children’s home but he did not directly challenge the authenticity or accuracy of petitioner’s list of items or the letter from the charity we conclude that the list provided by petitioner and the written acknowledgment from the donee meet the sec_170 substantiation requirements despite petitioner’s failure to maintain the individual receipts sec_1_170a-13 income_tax regs petitioner next argues that he is entitled to deduct two amounts paid in connection with a religious organization’s housing development project first he made a dollar_figure cash donation to the organization petitioner provided a handwritten receipt from the charity acknowledging receipt of the dollar_figure we find that this receipt is sufficient substantiation of the contribution id second petitioner argues that he incurred mileage expenses for driving to the housing project and working there petitioner did not provide substantiation of these expenses other than his testimony that he drove approximately miles - -he did not provide a mileage log or even any corroboration that he participated in the program we find that petitioner has not substantiated the mileage expenses sec_6001 sec_1_6001-1 e income_tax regs we conclude that petitioner made deductible charitable_contributions of dollar_figure during sec_170 prescribes the standard mileage rate for purposes of computing the amount of a sec_170 charitable_contribution_deduction reviewed and adopted as the report of the small_tax_case division decision will be entered under rule