t c memo united_states tax_court ricky l ward petitioner v commissioner of internal revenue respondent docket no 4807-15l filed date ricky l ward pro_se diana n wells and denise a diloreto for respondent memorandum opinion nega judge petitioner seeks review pursuant to sec_6320 and sec_6330 of respondent’s determination to sustain the filing of a notice of all section references are to the internal_revenue_code in effect at all relevant times and all rule references are to the tax_court rules_of_practice and procedure we round all dollar amounts to the nearest dollar federal_tax_lien with respect to petitioner’s unpaid federal_income_tax liabilities for tax years respondent has moved for summary_judgment for the reasons explained below we will grant the motion background the following uncontroverted facts are derived from the petition the exhibits attached to respondent’s motion for summary_judgment and first amendment to motion for summary_judgment and the parties’ other filings in this case petitioner resided in kentucky when he petitioned this court for tax years petitioner filed untimely income_tax returns the reported tax_liabilities were assessed but petitioner failed to pay all the liabilities reported on the returns the unpaid tax_liabilities stem from insufficient federal withholding and or not making the necessary estimated_tax payments on petitioner’s earned_income reported on his tax returns on date respondent sent petitioner a notice_of_federal_tax_lien filing and your right to a hearing under sec_6320 with respect to his unpaid federal_income_tax liabilities for these years as of date petitioner’s income_tax_liability for tax_year has been fully satisfied therefore respondent’s determination with respect to this tax_year is moot see 130_tc_79 aff’d 444_fedappx_950 9th cir in response petitioner timely submitted form request for a collection_due_process or equivalent_hearing the form permitted petitioner to indicate the nature of his cdp hearing request by checking boxes selectively petitioner checked boxes for offer_in_compromise and i cannot pay balance on his form petitioner did not dispute the underlying tax_liabilities on form and did not request withdrawal of the notice_of_federal_tax_lien or release of the lien on date a settlement officer so from the internal_revenue_service irs appeals_office sent petitioner a letter setting date for a telephone collection_due_process cdp hearing and requested that he complete and submit form 433-a collection information statement for wage earners and self-employed individuals with supporting documentation to assist in the hearing process on date the so mailed petitioner a letter rescheduling the cdp hearing for date because the so could not attend the originally scheduled conference petitioner provided no documentation and did not make a specific proposal for a collection alternative before the scheduled cdp hearing on date the so called petitioner to initiate the cdp hearing but he did not answer the so left a voice message asking that petitioner contact him to reschedule the hearing on date the so mailed petitioner a last chance letter requesting that he submit financial information within days from the date of the letter if he wished the irs to consider collection alternatives petitioner submitted no information and failed to contact the irs regarding his case on date the irs issued petitioner a notice_of_determination sustaining the notice_of_federal_tax_lien filing petitioner timely sought review in this court and vaguely asserted in his amended petition that he did not owe this much tax on wages earned on all years on date respondent moved for summary_judgment on date petitioner responded to the motion for summary_judgment in his response petitioner stated that he disagreed with the alleged facts set forth by the irs in his case and that he believed that the irs must have computed his tax_liabilities without taking into account deductions petitioner went on to say that the tax_rate was excessive for my filing_status and that all of the irs’ correspondence looked like words on paper to him the court set respondent’s motion for summary_judgment for hearing for date petitioner failed to appear for the hearing discussion this case was called from the calendar for the trial session of the court at louisville kentucky on date there was no appearance by or on behalf of petitioner counsel for respondent appeared and filed with the court a motion to dismiss for lack of prosecution that same day the court ordered petitioner to show cause in writing on or before date why respondent’s motion to dismiss for lack of prosecution should not be granted no response has been received from or on behalf of petitioner the court could simply enter a decision against petitioner for his failure to appear at the scheduled hearing on respondent’s motion for summary_judgment or failure to comply with the court’s order see rule sec_123 sec_149 nevertheless for the sake of clarity and completeness we consider respondent’s motion for summary_judgment on its merits the purpose of summary_judgment is to expedite litigation and avoid unnecessary and time-consuming trials fla peach corp v commissioner 90_tc_678 the court may grant summary_judgment when there is no genuine dispute as to any material fact and a decision may be rendered as a matter of law rule b 98_tc_518 aff’d 17_f3d_965 7th cir if a moving party properly makes and supports a motion for summary_judgment an adverse_party may not rest upon the mere allegations or denials of such party’s pleading but must set forth specific facts by affidavit or otherwise showing that there is a genuine dispute for trial rule d sec_6321 imposes a lien in favor of the united_states on all property and property rights of a person who is liable for and fails to pay tax after demand for payment has been made the lien arises when assessment is made and generally continues until the assessed liability is paid see sec_6322 the irs files a notice_of_federal_tax_lien to preserve priority and put other creditors on notice see sec_6323 sec_6320 requires the secretary to send written notice to the taxpayer of the filing of a notice of lien and of the taxpayer’s right to an administrative hearing on the matter at the hearing a taxpayer may raise any relevant issue including challenges to the appropriateness of the collection action and possible collection alternatives see sec_6320 sec_6330 taxpayers are to provide all relevant information requested by appeals sec_301_6320-1 sec_301_6330-1 proced admin regs petitioner has failed to set forth specific facts showing that there is a genuine dispute for trial he does not argue that the appeals settlement officer failed to satisfy the verification requirements of sec_6330 he simply asserts that the irs must have computed his tax_liabilities without taking into account deductions and that the tax_rate was excessive for his filing_status the court cannot review petitioner’s challenge to his underlying tax_liabilities because he did not properly raise the issue at his cdp hearing see sec_301_6320-1 q a-f3 proced admin regs see also 140_tc_173 moreover even if petitioner had requested consideration of his underlying liabilities at his cdp hearing which he did not he failed to present any evidence to support his position even after the so gave him a generous amount of time to do so see sec_301_6320-1 q a-f3 proced admin regs as a result we cannot review petitioner’s underlying liabilities in this proceeding and we will accordingly review the so’s determination for abuse_of_discretion only see 114_tc_176 to prevail petitioner must establish that the issuance of the notice_of_determination sustaining the notice of lien filing was an abuse_of_discretion abuse_of_discretion is shown only if the action of the appeals officer was arbitrary capricious or without sound basis in fact or law see 129_tc_107 a request for a collection alternative such as an offer-in-compromise is generally based on a taxpayer’s ability to pay the outstanding liabilities see sec_7122 similarly a taxpayer’s request that his account be placed in currently not collectible status is dependent upon on his showing that he has no apparent ability to make payments on the outstanding liability see foley v commissioner tcmemo_2007_242 in this vein taxpayers are expected to provide all relevant information requested by the appeals_office including financial statements for the appeals office’s consideration of the facts and issues involved in the hearing see sec_301_6320-1 proced admin regs petitioner’s failure to provide complete financial information impaired the so’s ability to effectively evaluate his claims the so’s determination to sustain the notice of lien filing was not an abuse_of_discretion under these circumstances see giamelli v commissioner t c pincite tucker v commissioner tcmemo_2014_103 on the basis of the record we conclude that the so verified that the requirements of any applicable law or administrative procedure were followed and that in sustaining the notice of lien filing the so properly balanced the need for the efficient collection_of_taxes with the legitimate concern that any collection action be no more intrusive than necessary see sec_6330 sec_6320 in the absence of a valid issue for review we conclude that there is no genuine dispute as to a material fact and that respondent is entitled to judgment as a matter of law to reflect the foregoing an appropriate order and decision will be entered


internal_revenue_service vepartment of the treasury washington dc ea uil contact person telephone number in reference to daleeo ra t may e ln legend x y z dear sir or madam this is in response to a ruling_request dated date submitted on your behalf by your you are seeking rulings on the federal_income_tax consequences of certain authorized representatives rental income that you will receive as more fully set forth below you are an organization that has been recognized as exempt from federal_income_tax under sec_501 of the internal_revenue_code and has been classified as a publicly_supported_organization described in sec_509 and sec_170 your stated mission is to act as a catalyst in order to contribute to the long-range development of a successful black entrepreneurial and business class in x with emphasis on the z area in y you promote the creation of jobs for african-americans specifically z residents promote the development of new businesses and industries and the expansion of existing businesses and industries within z and foster the establishment of black-owned and operated business enterprises among your many achievements over the past years you have i disbursed over dollar_figure million in loans or equity funds to african-american enterprises in x ii assisted in creating over new african- american enterprises iii provided offices and incubator space for over minority-owned firms and iv procured over dollar_figure million worth of new business contracts for over black-owned enterprises in order to facilitate economic development in the x enterprise zone wherein z is located you submitted a proposal to the board_of county commissioners of x to develop design construct and manage an office complex in z located near a y rapid transit system station the project the project will consist of approximately big_number square feet of office space the primary tenant will be the x government which will use the office facility to accommodate certain of its administrative offices it is estimated that x will lease approximately of the project's available space for these administrative offices any remaining space available will be leased to either minority-owned businesses at below-market tates or other sec_501 organizations you expect that the project will have the following economic impact on and benefits to the african- american inner city community in excess of direct temporary construction jobs will be created by the project over of which jobs are expected to be filled by minorities the relocation of x's administrative offices to z will provide z residents with potential employers in their community making it possible for those residents without their own method of transportation to obtain jobs which were previously geographically unreachable x indicates that one of its administrative offices will have approximately job openings after its relocation to the project's office complex in be located in one of x's enterprise zones located the office complex will x's empowerment_zone which is one of the most economically depressed areas of x the enterprise empowerment_zone the zone contains many of x's poorest communities the poverty rate within the zone has grown at three times the poverty rate of x as a whole and now stands pincite the african-american poverty rate in particular within the zone i sec_53 the unemployment rate within the zone is estimated to be -twice the rate of unemployment in in order to improve the economic conditions and employment opportunities of the residents within the zone new businesses need to be brought in to the area to generate jobs these new businesses would need a critical mass of customers in order to prosper in addition to the project's contribution to the area's image and beautification the estimated employees it will house will contribute to the economy through their consumption demands thus the project's office complex would become the critical mass that will not only facilitate a clean and safe environment but will foster economic growth and development the project will contribute to the zone’s image and economic revitalization and generate employment opportunities x as a whole an african-american owned property management company will be formed to manage the facilities of the project and its financing and an african-american owned asset management company will be formed to manage your real_estate portfolio of which the project will be the greatest asset it is anticipated that the project will give these new companies the experience necessary for them to seek similar opportunities in the future the project will be constructed on land that is leased to you by x pursuant to a year ground lease substantially_all of the construction of the project will be funded by the sale of industrial_development_bonds by the industrial development authority the bonds you will receive rental income from the lease of the project's office space to x initially at dollar_figure per square foot of that amount initially dollar_figure per square foot will go to the maintenance and operation of the facility based on the parties' best estimate as to the actual costs of such maintenance and operation and dollar_figure per square foot will go to you to pay the debt-service on the bonds and for use by you for your other exempt_activities after the first year x will be charged a rent equal to the sum of i dollar_figure per square foot plus ii the actual costs of operating and maintaining the facility the rent expected to be charged to x for the rental space is below the market rate for such a facility in addition the cost to you with respect to the development and construction of the project will be less than the costs x would have incurred if x were directly involved in the development and construction of the project moreover the present_value over years of the total cost incurred by x with respect to the project the total lease os aa payments and the cost of relocation is less than the present_value of what x currently pays to lease the present locations of the relocating administrative offices you expect to charge any minority-owned businesses a rental rate of less than dollar_figure per square foot for any space leased in the project that is below market rate the gross rental revenue that you expect to receive from the project will constitute a substantial portion of your total annual revenue and the net revenue expected to be derived will constitute a substantial portion of your annual net revenue which net revenue will in tum be used to further your exempt purposes supplemental information submitted in support of your ruling_request includes a copy of the proposal that you submitted to x with respect to the project you also included a copy of a feasibility analysis on relocating x's offices the feasibility of x relocating its office facilities was estimated based on the following factors costs x's ability to finance a new office building effect on x's operations effect on employee commuting and safety the zoning and land use at the site and the compatibility of an office development with adjacent land uses and the environmental conditions at the site the feasibility analysis concluded that relocation to the new site would be less costly to x than remaining at the present site under virtually all circumstances x's costs would be reduced by as much as one-third below the current level x's overall operations would not be materially affected by relocating to the new site also included in your supplemental submission was a letter from x containing x's assessment of your proposal indicating that the project would produce intangible benefits including economic stimulation in the communities through temporary and permanent jobs potential increased use of mass transit thereby reducing the subsidies paid_by x for its operations and the retention by x of a major asset at the expiration of the lease sec_501 of the code provides an exemption from federal_income_tax for organizations organized and operated exclusively for charitable educational and other purposes sec_1_501_c_3_-1 of the income_tax regulations provides that the term charitable as used in sec_501 of the code is used in its generally accepted legal sense and is not limited by the separate enumeration in sec_501 of purposes that fall within the broad outline of charity as developed by judicial decisions thus the term charitable includes relieving the poor distressed or underprivileged lessening the burdens of government and promotion of social welfare by organizations designed to iessen neighborhood tensions eliminate prejudice and discrimination defend human and civil rights secured_by law or combat community deterioration and juvenile delinquency sec_51 a of the code imposes a tax on the unrelated_business_taxable_income of organizations exempt under sec_501 sec_512 of the code defines unrelated_business_taxable_income as the gross_income an organization derives from any unrelated_trade_or_business defined in sec_513 it regularly carries on less allowable deductions with certain modifications sec_1_512_b_-1 of the regulations provides with certain exceptions not here relevant that tents from real_property including personal_property leased with the real_property and the deductions directly connected therewith shall also be excluded in computing unrelated_business_taxable_income sec_513 of the code defines unrelated_trade_or_business as any trade_or_business the conduct of which is not substantially related aside from the organization's need for funds or the use it makes of the profits derived to the organization's exercise or performance of the purpose or function constituting the basis for its exemption under sec_501 sec_1_513-1 d of the regulations delineates when trade_or_business is substantially related to an organization's exempt purposes the regulation provides that for the conduct of trade_or_business to be substantially related to purposes for which exemption is granted producing or distributing the goods or performing the services must contribute importantly to accomplishing those purposes sec_514 of the code says that in computing unrelated_business_taxable_income under sec_512 there shall be included certain amounts of income less allowable deductions derived from debt- financed property sec_514 of the code excludes from the definition of debt-financed_property for purposes of sec_514 any property substantially_all the use of which is substantially related aside from the organization's need for income or funds to the organization's exercise or performance of its exempt_purpose revrul_76_419 1976_2_cb_146 holds that an organization that encouraged businesses to locate new facilities in an economically depressed area to provide more employment opportunities for low-income residents in the area was organized and operated for the charitable purpose of promoting social welfare by organizations designed to relieve the poor and distressed to lessen neighborhood tensions or to combat community deterioration revrul_74_587 1974_2_cb_162 holds that an organization that devoted its resources to programs to stimulate economic development in high density urban areas inhabited mainly by low income minority or other disadvantaged groups qualified for exemption under sec_501 of the code the organization made loans to and purchased equity interests in businesses unable to obtain funds from conventional sources the organization established that its investments were not undertaken for profit or gain but to advance its charitable goals funds for its program were obtained from foundation grants and public contributions rev ruls and 1985_1_cb_178 describe organizations that are lessening the burdens of government and therefore qualify for exemption under sec_501 of the code the rev ruls identify the following criteria to determine whether an organization's activities are lessening the burdens of government whether the governmental_unit considers the organization's activities to be its burden and whether these activities actually lessen the burden of the governmental_unit an activity is a burden of the government if there is an objective manifestation by the governmental_unit that it considers the activities to be its burden one of your major purposes is the stimulation of economic development and the creation of jobs in an economically depressed area like the organizations discussed in rev ruls and both cited above the development construction ownership leasing and operation of the project in z will combat community deterioration and stimulate the creation of jobs for residents of the area in a number of ways such as by inducing businesses to relocate to the area based on all the information submitted we conclude that the project contributes importantly to your exempt charitable purposes under sec_501 of the code and therefore is substantially related to your exempt purposes as required by sec_513 in addition the supplemental information you provided such as the feasibility analysis and x's assessment of the proposal indicates that your activities in association with the project are something that x itself would do and that your undertaking this project relieves x of the responsibility of conducting the activity under these circumstances and in accordance with rev ruls and supra we conclude that you are relieving a burden of government within the meaning of sec_1_501_c_3_-1 of the regulations since the project relieves a burden of government and otherwise contributes importantly to your other exempt purposes it will not adversely affect your exempt status under sec_501 of the code likewise your activities in connection with the project will not constitute an unrelated_trade_or_business within the meaning of sec_513 furthermore since the use of the office building is substantially related to your exempt purposes the building is excluded from the definition of debt-financed_property pursuant to sec_514 based on the information submitted and the representations made therein we rule as follows your development construction ownership leasing and operation of the project does not constitute unrelated_trade_or_business within the meaning of sec_513 of the code the gross_income derived from the lease of the project's office space does not constitute unrelated_business_taxable_income within the meaning of sec_512 of the code the construction ownership and jeasing of the project will not adversely affect your exempt status under sec_501 of the code 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 sec_6110 of the 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 rat g they dh robert c harper jr manager exempt_organizations technical group sec_37


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 b4 plr-138341-15 date date legend taxpayer trustor ------------------------------ ------------------------------- trust ------------------------------------------------------------------------------------------ --------------------------------------------------------------------------------------------------------------------- a b c d e --------------------------- ------------------ ------------------------------ ----------------------------- -------------------------------- bank ---------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------- date date date date date --------------------------- ---------------------- ------------------------ -------------------------- --------------------------- plr-138341-15 date ---------------------- state court ----------------------------------------------------------- dear -------------- this responds to the letter dated date and subsequent correspondence submitted on your behalf by your authorized representative concerning the generation-skipping_transfer gst tax consequences of the proposed modification of a_trust the facts and representations submitted are summarized as follows on date a date prior to date trustor created trust an irrevocable inter_vivos_trust for the benefit of taxpayer and taxpayer’s issue trust named as initial trustees a and b who are unrelated to taxpayer and c who is taxpayer’s mother it is represented that no additions actual or constructive have been made to trust since date paragraph of trust provides in part that if any trustee fails or ceases to act trustor or if trustor is not then living d will appoint a successor trustee if neither trustor nor d is then living bank shall become trustee in place of the trustee who failed or ceased to serve thereafter no successor trustee is to be appointed to act in the place of the next individual trustee who fails or ceases to act the remaining individual trustee may thereafter appoint a trustee to act in his or her place and may also revoke that appointment if there is no individual trustee able and willing to act bank may appoint an individual as a co-trustee if at any time there is no trustee willing and able to act one or more trustees may be appointed by or on behalf of the beneficiary or beneficiaries of at least two thirds of the current trust income paragraph of trust provides in part for discretionary distributions of the income and principal to taxpayer and taxpayer’s issue during taxpayer’s life paragraph provides that upon the death of taxpayer the trust estate will be distributed to the issue of trustor’s parents and or the spouses of such issue but if none of such issue is then living to such one or more persons and corporations all in such shares manner and proportions as taxpayer may appoint by will provided however that no such appointment may be made in favor of taxpayer taxpayer’s estate the creditors of taxpayer or the creditors of taxpayer’s estate any portion of the trust estate not effectively appointed will be distributed to taxpayer’s issue but if none of taxpayer’s issue is then living to trustor’s issue but if none of trustor’s issue is then living to taxpayer’s heirs-at-law paragraph of trust provides in part that any discretionary distribution to be made to or for the benefit of any individual who is acting as a trustee including plr-138341-15 distributions to such individual’s spouse and distributions in discharge of any legal_obligation of such individual must be made in the discretion of a trustee for whom distributions may not be made if no such trustee is then acting such distribution will not be made on date a resigned his position as co-trustee and trustor appointed e taxpayer’s sibling as successor co-trustee to serve with b and c on date bank declined to serve as successor trustee and on date b resigned his position as co-trustee it is represented that in accordance with paragraph of trust for so long as e and c continue to serve no additional co-trustee may be appointed to serve with them and furthermore no successor trustee can be appointed for or by e or c it is further represented that paragraph only authorizes a corporate trustee to appoint a co-trustee in the event that no individual trustee is then serving and only permits a sole trustee to appoint one or more successor trustees with no provision for the appointment of a co-trustee in addition in accordance with paragraph if any beneficiary of trust including taxpayer serves as a sole trustee of trust that beneficiary will be unable to make distributions to him or herself on date e in his capacity as successor co-trustee and taxpayer petitioned state court for an order approving modifications to paragraph trustee succession modifications and paragraph sec_2 and19 distribution modifications of trust on date state court approved the modifications state court’s order is contingent upon receipt of a favorable ruling from the internal_revenue_service as a result of the modifications to paragraph trustee succession modifications i each of the current co-trustees may appoint a successor at any time and may revoke the appointment with or without cause at any time until the appointment becomes effective ii once a successor trustee’s appointment becomes effective the successor trustee may appoint his or her successor only if authorized to do so in the appointment made by his or her predecessor iii the trustee or co-trustees may appoint as a co-trustee any person or entity may remove that co-trustee with or without cause and without appointing a successor and may restrict the powers of that co-trustee iv taxpayer may remove any trustee or co-trustee provided taxpayer simultaneously appoints another trustee who must be an independent_trustee as defined in the distribution modifications to succeed the removed trustee or co-trustee and v taxpayer may transfer taxpayer’s removal and appointment power as well as taxpayer’s power to transfer these powers to any one or more of trustor’s issue as a result of the modifications to paragraph sec_2 and distribution modifications i a beneficiary serving as a sole trustee may make discretionary distributions of trust income and principal subject_to a standard of health education maintenance and support to or for the beneficiary’s own benefit ii such distributions cannot be in discharge of any legal_obligation of the beneficiary iii no trustee can plr-138341-15 make a distribution in satisfaction of any legal_obligation of such trustee or in satisfaction of any legal_obligation of a person who appointed the trustee and iv a trustee or co-trustee appointed by a beneficiary cannot make distributions to the beneficiary appointing the trustee or co-trustee unless the distributions are subject_to a standard of health education maintenance and support or unless the trustee is an independent_trustee an independent_trustee means any trustee who is not trustor a descendant of trustor any beneficiary or possible distributee of trust any parent or spouse of any such person or any related_or_subordinate_party to any of such persons or entities as such terms are used in sec_672 of the code rulings requested the trustee succession modifications will not cause a beneficial_interest in trust to be shifted to a beneficiary who occupies a lower generation as defined in sec_2651 than the beneficiaries who held the interests prior to the modifications and will not extend the time for vesting of any beneficial_interest in trust beyond the period provided for in the original trust agreement accordingly trust will remain exempt from the gst tax under sec_2601 the distribution modifications will not cause a beneficial_interest in trust to be shifted to a beneficiary who occupies a lower generation as defined in sec_2651 than the beneficiaries who held the interests prior to the modifications and will not extend the time for vesting of any beneficial_interest in trust beyond the period provided for in the original trust agreement accordingly trust will remain exempt from the gst tax under sec_2601 the powers given to taxpayer under the trustee succession modifications and the distribution modifications do not result in taxpayer having a general_power_of_appointment under sec_2041 or sec_2514 law and analysis ruling sec_1 and sec_2601 imposes a tax on every generation-skipping_transfer gst which is defined under sec_2611 as a taxable_distribution a taxable_termination and a direct_skip under of the tax_reform_act_of_1986 the act gst tax is generally applicable to generation-skipping transfers made after date however under b a of the act and sec_26_2601-1 of the generation-skipping_transfer_tax regulations the provisions of chapter do not apply to a transfer under a_trust that was irrevocable on date except to the extent the transfer is plr-138341-15 made out of corpus added to the trust by an actual or constructive_addition after date sec_26_2601-1 provides rules for determining when a modification judicial construction settlement agreement or trustee action with respect to a_trust that is exempt from the gst tax under sec_26_2601-1 will not cause the trust to lose its exempt status these rules are applicable only for purposes of determining whether an exempt trust retains exempt status for gst tax purposes the rules do not apply in determining for example whether the transaction results in a gift subject_to gift_tax or may cause the trust to be included in the gross_estate of a beneficiary or may result in the realization of capital_gain for purposes of sec_1001 sec_26_2601-1 provides that a modification of the governing instrument of an exempt trust including a trustee distribution settlement or construction that does not satisfy sec_26_2601-1 b or c by judicial reformation or nonjudicial reformation that is valid under applicable state law will not cause an exempt trust to be subject_to the provisions of chapter if the modification does not shift a beneficial_interest in the trust to any beneficiary who occupies a lower generation as defined in sec_2651 than the person or persons who held the beneficial_interest prior to the modification and the modification does not extend the time for vesting of any beneficial_interest in the trust beyond the period provided for in the original trust a modification of an exempt trust will result in a shift in beneficial_interest to a lower generation beneficiary if the modification can result in either an increase in the amount of a gst or the creation of a new gst in the present case trust was irrevocable on date it is represented that no additions actual or constructive were made to trust after that date based upon the facts submitted and the representations made we conclude that neither the trustee succession modifications nor the distribution modifications will cause a beneficial_interest to be shifted to a beneficiary who occupies a generation lower than the beneficiaries who held the interests prior to the termination or extend the time for vesting of any beneficial_interest in trust beyond the period provided for in the original trust agreement accordingly we rule that trust will remain exempt from the gst tax under sec_2601 ruling sec_2041 provides that the value of the gross_estate shall include the value of all property to the extent of any property with respect to which the decedent has at the time of his death a general_power_of_appointment created after date or with respect to which the decedent has at any time exercised or released such a power_of_appointment by a disposition which is of such nature that if it were a transfer of property owned by the decedent such property would be includible in the decedent’s gross_estate under sec_2035 to inclusive plr-138341-15 sec_2041 provides that the term general_power_of_appointment means a power which is exercisable in favor of the decedent his estate his creditors or the creditors of his estate except that a power to consume invade or appropriate property for the benefit of the decedent which is limited by an ascertainable_standard relating to the health education support or maintenance of the decedent shall not be deemed a general_power_of_appointment sec_20_2041-1 of the estate_tax regulations provides in part that a power in a donee to remove or discharge a trustee and appoint himself may be a power_of_appointment for example if under the terms of a_trust instrument the trustee or his successor has the power to appoint the principal of the trust for the benefit of individuals including himself and the decedent has the unrestricted power to remove or discharge the trustee at any time and appoint any other person including himself the decedent is considered as having a power_of_appointment sec_20_2041-1 provides in part that a power to consume invade or appropriate income or corpus or both for the benefit of the decedent which is limited by an ascertainable_standard relating to the health education support or maintenance of the decedent is by reason of sec_2041 not a general_power_of_appointment sec_2514 provides that for purposes of that section the term general_power_of_appointment means a power which is exercisable in favor of the individual possessing the power the possessor his estate his creditors or the creditors of his estate except that a power to consume invade or appropriate property for the benefit of the possessor which is limited by an ascertainable_standard relating to the health education support or maintenance of the possessor shall not be deemed a general_power_of_appointment sec_25_2514-1 provides in part that a donee may have a power_of_appointment if he has the power to remove or discharge a trustee and appoint himself for example if under the terms of a_trust instrument the trustee or his successor has the power to appoint the principal of the trust for the benefit of individuals including himself and a has the unrestricted power to remove or discharge the trustee at any time and appoint any other person including himself a is considered as having a power_of_appointment sec_25_2514-1 of the gift_tax regulations provides that a power to consume invade or appropriate income or corpus or both for the benefit of the possessor which is limited by an ascertainable_standard relating to the health education support or maintenance of the possessor is by reason of sec_2514 not a general_power_of_appointment plr-138341-15 in revrul_95_58 1995_2_cb_191 the internal_revenue_service ruled that a decedent grantor’s reservation of an unqualified power to remove a trustee and to appoint an individual or corporate successor trustee that is not related or subordinate to the decedent within the meaning of sec_672 is not considered a reservation of the trustee’s discretionary powers of distribution over the property transferred by the decedent grantor to the trust accordingly the trust corpus is not included in the decedent’s gross_estate under sec_2036 or sec_2038 sec_672 defines the term related_or_subordinate_party to mean any nonadverse_party who is the grantor’s spouse if living with the grantor or any one of the following the grantor’s father mother issue brother or sister an employee of the grantor a corporation or any employee of a corporation in which the stock holdings of the grantor and the trust are significant from the viewpoint of voting control a subordinate employee of a corporation in the which the grantor is an executive in the present case the power of taxpayer if and when serving as a trustee of trust to make distributions to or for the benefit of taxpayer is limited by an ascertainable_standard relating to the health education support and maintenance of taxpayer in addition although taxpayer may remove and replace a trustee or co-trustee any trustee or co-trustee appointed by taxpayer pursuant to the removal and replacement power cannot be related or subordinate to taxpayer within the meaning of sec_672 based on the facts submitted and the representations made we rule that the powers given to taxpayer under the trustee succession modifications and the distribution modifications do not result in taxpayer having a general_power_of_appointment under sec_2041 or sec_2514 the rulings contained in this letter are based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in support of the request for rulings it is subject_to verification on examination except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter this ruling is directed only to the taxpayer requesting it sec_6110 of the code provides that it may not be used or cited as precedent plr-138341-15 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 leslie h finlow leslie h finlow senior technician reviewer branch office of the associate chief_counsel passthroughs special industries enclosures copy of letter copy for sec_6110 purposes cc


t c summary opinion united_states tax_court micheal and chantel davis petitioners v commissioner of internal revenue respondent docket no 10199-07s filed date gwendolyn baptist-hewlett for petitioners caroline r krivacka for respondent kroupa judge this case was heard pursuant to the provisions of section of the internal_revenue_code in effect at the time the petition was filed pursuant to sec_7463 the decision to be entered is not reviewable by any 1all section references are to the internal_revenue_code for the years at issue and all rule references are to the tax_court rules_of_practice and procedure unless otherwise indicated other court and this opinion shall not be treated as precedent for any other case respondent determined a dollar_figure deficiency in petitioners’ federal_income_tax for a dollar_figure deficiency for and a dollar_figure deficiency for respondent also determined a dollar_figure accuracy-related_penalty under sec_6662 for a dollar_figure accuracy-related_penalty for and a dollar_figure accuracy-related_penalty for we must decide three issues first we determine whether petitioners are entitled to deduct certain unreimbursed employee business_expenses and a casualty_loss claimed on schedules a itemized_deductions beyond those respondent already allowed we hold that they are not second we decide whether petitioners received but failed to report self-employment_income for and the years at issue finally we decide whether petitioners are liable for the accuracy-related_penalties for the years at issue we hold that they are background some of the facts have been stipulated and are so found the stipulation of facts and the accompanying exhibits are incorporated by this reference petitioners resided in tennessee at the time they filed the petition petitioners were both full-time employees during each of the years at issue petitioner wife was employed by the u s department of agriculture and petitioner husband was employed by bellsouth petitioner husband also did some freelance work in the music business and petitioner wife did some freelance printing work petitioners timely filed their joint federal_income_tax return for each of the years at issue petitioners reported dollar_figure of income for and claimed dollar_figure of schedule a expenses petitioners reported dollar_figure of income for and claimed dollar_figure of schedule a expenses petitioners reported dollar_figure in income for and claimed dollar_figure of schedule a expenses petitioners’ wages from the department of agriculture and bellsouth were directly deposited into their joint bank account petitioners also deposited significant non-wage amounts of money cash or checks into their account the non-wage deposits included at least dollar_figure during dollar_figure during and dollar_figure during petitioners each claimed substantial expenses for the years at issue relating to their freelance work petitioner wife claimed expenses of dollar_figure for and dollar_figure for for her printing business petitioner husband claimed expenses of dollar_figure for and dollar_figure for in freelance dj and music producing activities petitioner wife reported no income from the printing business for any of the years but her own records reflect that she received at least dollar_figure in dollar_figure in and dollar_figure in the dollar_figure expense amount claimed for consists of dollar_figure in vehicle expenses for big_number business miles dollar_figure for parking fees tolls and transportation dollar_figure for overnight travel_expenses dollar_figure for other business_expenses and dollar_figure for meals and entertainment the dollar_figure expense amount claimed for consists of dollar_figure in vehicle expenses for big_number business miles dollar_figure in parking fees toll transportation_expenses dollar_figure on overnight travel_expenses dollar_figure on other business_expenses and dollar_figure in meals and entertainment petitioner husband reported no income from his freelance business yet he admitted to the appeals officer that he had earned some income the dollar_figure expense amount claimed for consists of dollar_figure in vehicle expenses for big_number business miles dollar_figure in parking fees toll and transportation dollar_figure for overnight travel_expenses dollar_figure for other business_expenses and dollar_figure for meals and entertainment the dollar_figure expense amount claimed for consists of dollar_figure in vehicle expenses for big_number business miles dollar_figure in parking fees toll and transportation dollar_figure for overnight travel_expenses dollar_figure for other business_expenses and dollar_figure for meals and entertainment a house fire destroyed many of petitioners’ belongings in petitioners provided as evidence a list of the destroyed items that they submitted to their insurance_company many of the items listed had been purchased during the two years before the fire petitioners received dollar_figure in insurance proceeds after the fire respondent issued a deficiency_notice disallowing the claimed expenses and casualty_loss while increasing petitioners’ income and determining that they are liable for accuracy-related_penalties petitioners timely filed a petition discussion this is primarily a substantiation case in which we are asked to decide whether petitioners may deduct certain expenses from their freelance businesses to essentially offset their wage income and whether they may claim a casualty_loss we also decide whether petitioners earned but failed to report self- employment income and whether they are liable for accuracy- related penalties for negligence the parties resolved the other issues before trial burden_of_proof we begin with the burden_of_proof generally the commissioner’s determinations in a deficiency_notice are presumed correct and the taxpayer has the burden of proving the 2petitioners argue on brief that this court lacks jurisdiction with respect to claiming that the deficiency_notice was mailed after the expiration of the period of limitations for that year see sec_6501 this argument is without merit as the deficiency_notice was mailed within years of petitioners’ filing the return for commissioner’s determinations to be in error rule a 290_us_111 the burden_of_proof may shift to the commissioner in certain circumstances however if the taxpayer introduces credible_evidence and establishes that he or she substantiated items maintained required records and fully cooperated with the commissioner’s reasonable requests sec_7491 and a and b we find that petitioners failed to provide credible_evidence failed to substantiate the claimed expenses and failed to maintain adequate_records we acknowledge that some of their records may have been destroyed in the house fire but petitioners failed to show how the lack of records for was attributable to the fire the burden_of_proof therefore remains on petitioners substantiation petitioners claimed substantial vehicle overnight travel and meals and entertainment_expenses from their freelance businesses that essentially offset their dollar_figure joint wage income petitioners claimed these expenses on form sec_2106 employee business_expenses petitioners improperly claimed these expenses as unreimbursed employee business_expenses petitioner wife was a federal employee but she failed to prove that any of the expenses were attributable to her federal job these expenses are more properly reported on a schedule c profit or loss from business as business_expenses if petitioners incurred them in a trade_or_business petitioners failed to prove that they incurred these expenses in a trade_or_business and also failed to prove that they were entitled to deductions for these expenses petitioners failed to substantiate any of the expenses other than by providing self-serving testimony we are not required to accept a taxpayer’s self-serving testimony when it is uncorroborated by other evidence beam v commissioner tcmemo_1990_304 citing 87_tc_74 affd without published opinion 956_f2d_1166 9th cir we therefore sustain respondent’s adjustments with respect to these expenses casualty_loss deduction we next address whether petitioners are entitled to a casualty_loss deduction a taxpayer is allowed a deduction for any loss sustained during the taxable_year and not_compensated_for_by_insurance_or_otherwise sec_165 a taxpayer may deduct a loss from fire storm shipwreck or other_casualty or from theft sec_165 a taxpayer’s basis in the damaged or destroyed property must be known to determine a casualty_loss deduction where a taxpayer fails to prove his or her basis we are unable to determine the amount of the casualty_loss that i sec_3a taxpayer is generally permitted to deduct all ordinary and necessary expenses paid_or_incurred in carrying_on_a_trade_or_business sec_162 deductible 79_tc_714 affd 731_f2d_1417 9th cir sec_1_165-1 income_tax regs petitioners presented no evidence that they are entitled to the casualty_loss that they claimed for after the fire petitioners never provided the complete insurance reimbursement record they included no information to support their claimed losses other than their own testimony and a chart that they prepared themselves the chart included a disproportionately high number of items that were purchased during and the years immediately before the fire petitioners also presented no receipts for these items moreover we fail to see how petitioners could have purchased these items during and when they had so little disposable income after their expenses additionally petitioners received insurance proceeds from the fire yet failed to prove that the damages they sustained exceeded the amount of insurance proceeds we do not find the evidence or any of the testimony credible and accordingly we sustain respondent’s determination regarding the casualty_loss deduction unreported income respondent also determined that petitioners received unreported self-employment_income by comparing the amounts deposited into their bank account in excess of their wage income bank_deposits are prima facie evidence of income tokarski v commissioner supra petitioners bear the burden of proving that respondent’s bank_deposits analysis is incorrect see 94_tc_654 petitioners argue that some unexplained deposits were gifts from petitioner wife’s mother to help pay for petitioners’ son’s private school tuition although petitioner wife’s mother testified and corroborated their story the record is vague regarding the amount and frequency of her deposits in addition petitioners did not produce checks or receipts to corroborate any gifts exceeding the gift amounts respondent already allowed other_amounts were attributed to what petitioners characterized as using their account as a conduit between a family friend ms mckay and her parents for the amounts of dollar_figure in dollar_figure in and dollar_figure in petitioner wife and ms mckay testified that ms mckay’s parents used petitioners’ bank account to get money to ms mckay because ms mckay did not have a bank locally there were cash amounts shown deposited to petitioners’ bank account in addition petitioners provided some checks made payable to ms mckay to prove that they were acting as a conduit we give no weight to this evidence however because ms mckay provided child care services for petitioners during and they purchased goods from her also the amounts of the checks made payable to ms mckay were not the same as amounts deposited into petitioners’ account it is unclear whether ms mckay’s parents used petitioners’ account for the purposes petitioners claim or in the amounts they claim moreover we did not find petitioner wife or ms mckay credible we sustain respondent’s determination regarding unreported self-employment_income petitioners received accuracy-related_penalties we finally consider whether petitioners are liable for the accuracy-related_penalties under sec_6662 petitioners conceded the issue of the penalties because they failed to challenge the accuracy-related_penalties in the petition see 118_tc_358 even if petitioners had raised the issue in their petition however we would still find them liable for the penalties respondent has the burden of production under sec_7491 and must come forward with sufficient evidence that it is appropriate to impose the accuracy-related_penalties see 116_tc_438 a taxpayer is liable for an accuracy-related_penalty for any portion of an underpayment attributable to negligence or disregard of rules and regulations unless he establishes that there was reasonable_cause for the underpayment and that he acted in good_faith sec_6662 and b c negligence is defined as any failure to make a reasonable attempt to comply with the provisions of the code and includes any failure by the taxpayer to keep adequate books_and_records or to substantiate items properly sec_6662 sec_1_6662-3 income_tax regs negligence is the lack of due care or failure to do what a reasonable and ordinarily prudent person would do under the circumstances 85_tc_934 disregard is characterized as any careless reckless or intentional disregard sec_6662 sec_1_6662-3 income_tax regs disregard of rules and regulations is careless if the taxpayer does not exercise reasonable diligence to determine the correctness of a return position that is contrary to the rule_or_regulation kooyers v commissioner tcmemo_2004_281 we find that respondent has met his burden of production petitioners failed to report taxable_income they received and claimed deductions for expenses without proving how they were entitled to deduct these expenses petitioners aggressively and unreasonably claimed expenses that essentially offset their joint income of dollar_figure for each of the years at issue moreover if petitioners had actually paid the claimed expenses they would not have had sufficient income to provide food and shelter for their family of five we therefore conclude that petitioners failed to exercise reasonable diligence to determine the correctness of their return positions and accordingly they are liable for the accuracy-related_penalty for each of the years at issue petitioners also failed to prove that any reasonable_cause existed for the foregoing reasons and because of the concessions of the parties decision will be entered under rule


internal_revenue_service number release date index numbers ---------------------------------------- ----------------------------------------------------------- ----------------------------------- ---------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact -------------------- id no ------------- telephone number --------------------- refer reply to cc psi plr-116991-11 date date legend partnership ----------------------------------------------------------- ------------------------------------------ state year -------- ------- dear --------------------------------------- this letter responds to a letter dated date and subsequent correspondence requesting an extension of time under sec_301_9100-3 of the procedure and administration regulations to file an election under sec_754 of the internal_revenue_code code facts the information submitted states that partnership is a state limited_partnership partnership’s tax_return for year was timely filed but a sec_754 election to adjust the basis of partnership property was inadvertently not filed with the return law and analysis sec_754 provides that if a partnership files an election in accordance with the regulations prescribed by the secretary the basis of partnership property is adjusted in the case of a transfer of a partnership_interest in the manner provided in sec_743 such an election shall apply with respect to all distributions of property by the partnership and plr-116991-11 to all transfers of interests in the partnership during the taxable_year with respect to which the election was filed and all subsequent taxable years sec_1_754-1 of the income_tax regulations provides that an election under sec_754 to adjust the basis of partnership property under sec_734 and sec_743 with respect to a distribution_of_property to a partner or a transfer of an interest in a partnership shall be made in a written_statement filed with the partnership return for the taxable_year during which the distribution or transfer occurs for the election to be valid the return must be filed not later than the time prescribed by sec_1 e including extensions thereof for filing the return for that taxable_year sec_301_9100-1 provides that the commissioner may grant a reasonable extension of time under sec_301_9100-2 and sec_301_9100-3 to make a regulatory election or a statutory election but no more than six months except in the case of a taxpayer who is abroad under all subtitles of the code except subtitles e g h and i sec_301_9100-1 defines a regulatory election to include an election whose due_date is prescribed by a regulation published in the federal_register sec_301_9100-1 through provide the standards the commissioner will use to determine whether to grant an extension of time to make an election sec_301_9100-2 provides automatic extensions of time for making certain elections sec_301_9100-3 provides extensions of time for regulatory elections that do not meet the requirements of sec_301_9100-2 requests for relief under sec_301_9100-3 will be granted when the taxpayer provides the evidence including affidavits described in sec_301_9100-3 to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and the grant of relief will not prejudice the interests of the government conclusion based on the facts 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 partnership is granted an extension of time of days from the date of this letter to make an election under sec_754 effective for its year taxable_year and thereafter the election should be made in a written_statement filed with the applicable service_center for association with partnership’s year tax_return a copy of this letter should be attached to the statement filed plr-116991-11 except as specifically set forth above we express or imply no opinion concerning the federal tax consequences of any aspect of any transaction or item discussed or referenced in this letter specifically we express or imply no opinion as to whether partnership is a partnership for federal tax purposes 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 pursuant to a power_of_attorney on file with this office we are sending a copy of this ruling to your authorized representative sincerely associate chief_counsel passthroughs special industries by _____________________________________ mary beth carchia senior technician reviewer branch office of associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes


t c memo united_states tax_court jerry wayne green and ramona kaye green petitioners v commissioner of internal revenue respondent docket no 26494-12l filed date jerry wayne green and ramona kaye green pro sese john r bampfield for respondent memorandum findings_of_fact and opinion cohen judge this proceeding was commenced in response to a notice_of_determination concerning collection action s under sec_6320 and or with respect to petitioners’ federal_income_tax liabilities for and the issue for decision is whether the settlement officer abused his discretion in sustaining the lien filings unless otherwise indicated all section references are to the internal_revenue_code in effect at all relevant times findings_of_fact material facts are contained in the administrative record of the exchanges between petitioners and the internal_revenue_service irs office of appeals appeals_office that record has been stipulated the stipulated facts are incorporated in this opinion by this reference petitioners resided in arkansas at the time they filed their petition jerry wayne green petitioner owed federal_income_tax assessed for and petitioners owed federal_income_tax assessed for and the irs had placed these three tax years in currently not collectible status nevertheless on date the irs sent to petitioners two letters notice_of_federal_tax_lien filing and your right to a hearing under sec_6320 with respect to these years in response to the lien notices petitioners filed form request for a collection_due_process or equivalent_hearing sec_6320 hearing request dated date in their sec_6320 hearing request petitioners indicated among other things that they could not pay the tax balance due they wanted an offer-in-compromise and they wanted a subordination discharge or withdrawal with respect to the liens petitioners explained that they cannot borrow money or refinance mortgage to pay as lien is on property and asked for the liens to be removed on their home as they only have social_security income to live on and no job prospects the appeals_office settlement officer assigned to petitioners’ case determined that petitioners did not meet lien withdrawal criteria because they had been warned of the lien filings through previous notices the settlement officer sent to petitioners a letter dated date scheduling a telephone conference for date this conference would be the primary opportunity of the sec_6320 hearing for petitioners to explain why they disagree with the collection action and to discuss possible collection alternatives one paragraph of the letter read you have stated that you would like a lien subordination or discharge to possibly take out a home equity loan or to refinance your mortgage you may access publications and on our website www irs gov which explains how to apply for both you have also stated that you would like the lien withdrawn a lien may be filed at any time to secure the government’s interest against other creditors you have also had past warnings of a lien being filed the lien was appropriately filed additionally the letter requested that petitioners complete and return within days the enclosed form 433-a collection information statement for wage earners and self-employed individuals and form_656 offer_in_compromise with all applicable fees and schedules the telephone conference took place on date between the settlement officer and petitioner when asked petitioner stated that he had not accessed irs publications certificate of discharge from federal_tax_lien and certificate of subordination of federal_tax_lien petitioners did not provide form 433-a form_656 or any other information with respect to the issues they raised in their sec_6320 hearing request petitioner stated that he had negative monthly disposable income but equity in his home and that he would try to borrow money from his family to have the liens withdrawn the settlement officer concluded the conference by advising petitioner of his determination to sustain the filing of the liens the settlement officer verified that the requirements of all applicable laws and administrative procedures had been met on date the appeals_office sent to each petitioner a notice_of_determination concerning collection actions s under sec_6320 and or sustaining the lien filings petitioner’s tax_year liability was discharged in bankruptcy and the federal_tax_lien for that year has been released the petition will be dismissed for mootness insofar as it relates to opinion sec_6321 imposes a lien in favor of the united_states on all property and property rights of a taxpayer who is liable for taxes after a demand for payment of the taxes has been made and the taxpayer fails to pay the lien arises when the assessment is made see sec_6322 the irs files a notice_of_federal_tax_lien to preserve priority and put other creditors on notice see sec_6323 sec_6320 requires the secretary to send written notice to the taxpayer of the filing of a notice of lien and of the taxpayer’s right to an administrative hearing on the matter the sec_6320 hearing generally shall be conducted consistent with procedures set forth in sec_6330 d e and g sec_6320 at the hearing a taxpayer may raise any relevant issue including challenges to the appropriateness of the collection action and possible collection alternatives sec_6330 a taxpayer is expected to provide all relevant information requested by the appeals_office for its consideration of the facts and issues involved in the hearing see sec_301_6320-1 proced admin regs where there is no dispute as to the underlying liabilities we review the actions of the appeals_office for abuse_of_discretion see 121_tc_111 abuse_of_discretion may be found if an action is arbitrary capricious or without sound basis in fact or law 129_tc_107 112_tc_19 we do not consider issues that were not properly raised in the sec_6320 hearing see giamelli v commissioner t c pincite petitioners have not disputed their underlying tax_liability or that the appeals_office performed the necessary verification under sec_6330 instead petitioners chiefly contend that they want to refinance or to sell their house to pay their outstanding tax_liabilities but cannot do so because of the remaining federal_tax_lien petitioners argue that the irs’ refusal to withdraw the notice_of_federal_tax_lien or to subordinate the lien or to discharge the subject property will result in a windfall for the government as penalties and interest will accumulate against petitioners who have no other way of currently paying their tax_liabilities in drafting the notice_of_determination the settlement officer did not address petitioners’ core issue regarding the lien however the record indicates that the settlement officer did consider lien relief measures and discussed steps for petitioners to take to apply for such relief petitioners did not follow the settlement officer’s advice did not provide any requested information to the settlement officer and did not establish the appropriateness of a withdrawal of the notice of tax_lien or a subordination of the lien or a discharge of the property subject_to the lien when a federal_tax_lien is in place the irs is permitted to withdraw the notice_of_federal_tax_lien under four situations including where the withdrawal of such notice will facilitate the collection of the tax_liability or the withdrawal of such notice would be in the best interests of the taxpayer and the united_states sec_6323 the irs may also subordinate a tax_lien on specific property by issuing a certificate of subordination sec_6325 somewhat similarly the irs may also issue a certificate of discharge of any part of a property subject_to a federal_tax_lien and without full payment being required sec_6325 - all three of these lien relief measures as expressed in statutes and regulations are permissive and the irs is not generally required to withdraw subordinate or discharge even if the conditions of a measure are fully met see eg taggart v commissioner tcmemo_2013_113 at sec_6323 uses discretionary not mandatory language and respondent is not required to withdraw the lien even for one of the reasons stated in sec_6323 sec_301_6325-1 proced admin regs providing that an appropriate_official may in her or his discretion issue a certificate of discharge of any part of a subject property under certain circumstances sec_301_6325-1 proced admin regs providing that an appropriate_official may in her or his discretion issue a certificate of subordination of a lien under certain circumstances accordingly we cannot conclude that the settlement officer abused his discretion with regard to these permissive lien relief measures especially in the light of petitioners’ failure to take the necessary steps to apply for such measures and to provide relevant information during the sec_6320 hearing in reaching our decision we have considered all arguments made and to the extent not mentioned we conclude that they are moot irrelevant or without merit to reflect the foregoing the petition will be dismissed as moot as to and decision will be entered for respondent with respect to petitioners’ and tax years


office_of_chief_counsel internal_revenue_service memorandum number release date cc tege eoeg et1 postn-130162-08 uilc date september to director submission processing cincinnati oh attn entity unit from office of division counsel associate chief_counsel tax exempt government entities subject railroad_retirement_tax_act status in accordance with the coordination procedure established between the service and the railroad retirement board rrb the rrb has provided us with its opinion that the following business became a covered employer under the railroad retirement act and the railroad unemployment insurance act effective ---------------- ----------------------------------------------- ------------------------------- ----------------------------------------- ----------------------------------- we have reviewed the opinion of the rrb and based upon the information submitted to us by the rrb we also conclude that ---------------------------------------------- became a covered employer under the railroad_retirement_tax_act effective ---------------- the date it began operations please take the appropriate action regarding this business cc _____________________________ janine cook


department of the treasury washington dc third party communication none date of communication not applicable_person to contact ------------------------ id no -------------- telephone number ---------------------- refer reply to cc psi b04 plr-128347-16 date february internal_revenue_service number release date index number ------------------------------------ ------------------------- ------------------------------------ re e re --------------------------------------------------- ------------------------------------------------------ legend decedent -------------------------------------- ----------------------------------------------------- -- ------------------------------------------------------------ spouse ------------------------------- date ---------------------------- date ------------------------------- dear --------------------------- this letter responds to your representative’s letter of date requesting an extension of time pursuant to sec_301_9100-3 of the procedure and administration regulations to make the portability election under sec_2010 of the internal_revenue_code code to allow a decedent's surviving_spouse to take into account that decedent's deceased spousal unused exclusion dsue amount the facts and representations submitted are as follows decedent died on date survived by spouse date is a date after the effective date of the amendment to sec_2010 which provides for portability of a dsue amount to a surviving_spouse to obtain the benefit of portability of decedent's dsue amount to spouse decedent's_estate was required to file form_706 united_states estate and generation-skipping_transfer_tax return on or before the date that is months after decedent's date of death or the last day of the period covered by an extension decedent's form_706 was due on date but the estate did not file a form_706 to make the portability election the failure to elect portability was discovered after the due_date for making the election plr-128347-16 spouse as the executor of decedent's_estate represents that the value of decedent's gross_estate is less than the basic exclusion amount in the year of decedent's death and that during his lifetime decedent made no taxable_gifts as executor spouse requests an extension of time pursuant to sec_301_9100-3 to elect portability of decedent's dsue amount pursuant to sec_2010 law and analysis sec_2001 imposes a tax on the transfer of the taxable_estate of every decedent who is a citizen or resident_of_the_united_states sec_2010 provides that a credit of the applicable credit_amount shall be allowed to the estate of every decedent against the tax imposed by sec_2001 sec_2010 provides that the applicable credit_amount is the amount of the tentative_tax that would be determined under sec_2001 if the amount with respect to which such tentative_tax is to be computed were equal to the applicable_exclusion_amount on date congress amended sec_2010 effective for estates of decedents dying and gifts made after date to allow portability of a decedent’s unused applicable_exclusion_amount between spouses tax relief unemployment insurance reauthorization and job creation act of pub_l_no sec_303 124_stat_3296 sec_2010 provides that the applicable_exclusion_amount is the sum of the basic exclusion amount and in the case of a surviving_spouse the dsue amount sec_2010 generally provides that the basic exclusion amount is dollar_figure to be adjusted for inflation annually after calendar_year sec_2010 defines the dsue amount to mean the lesser_of a the basic exclusion amount or b the excess of -- i the applicable_exclusion_amount of the last deceased spouse of the surviving_spouse over ii the amount with respect to which the tentative_tax is determined under sec_2001 on the estate of such deceased spouse sec_2010 provides that a dsue amount may not be taken into account by a surviving_spouse under sec_2010 unless the executor of the estate of the deceased spouse files an estate_tax_return on which such amount is computed and makes an election on such return that such amount may be so taken into account the election once made shall be irrevocable no election may be made if such return is filed after the time prescribed by law including extensions for filing such return plr-128347-16 sec_2010 provides that the secretary shall prescribe regulations as may be necessary or appropriate to implement sec_2010 sec_20_2010-2t a of the estate_tax regulations as in effect on date provides that to allow a decedent’s surviving_spouse to take into account that decedent’s dsue amount the executor of the decedent’s estate must elect portability of the dsue amount on a timely filed form_706 under sec_20_2010-2t a the due_date of an estate_tax_return required to elect portability is nine months after the decedent’s date of death or the last day of the period covered by an extension if an extension of time for filing has been granted under sec_20_2010-2t a the portability election is made by timely filing a complete and properly prepared estate_tax_return unless the executor satisfies the requirements for the election not to apply in sec_20_2010-2t a i sec_301_9100-1 provides that the commissioner may grant a reasonable extension of time under the rules set forth in sec_301_9100-2 and sec_301_9100-3 to make a regulatory election or a statutory election but no more than six months except in the case of taxpayer who is abroad under all subtitles of the code except subtitles e g h and i sec_301_9100-1 provides that the term statutory election means an election whose due_date is prescribed by statute the term regulatory election means 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_9100-3 provides the standards the commissioner will use to determine whether to grant an extension of time to make an election whose due_date is prescribed by a regulation and not expressly provided by statute a request 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 granting relief will not prejudice the interests of the government sec_301_9100-3 provides that a taxpayer is deemed to have acted reasonably and in good_faith if the taxpayer reasonably relied on a qualified_tax professional including a tax professional employed by the taxpayer and the tax professional failed to make or advise the taxpayer to make the election the due_date for the portability election is prescribed by statute in the case of an estate required to file an estate_tax_return under sec_6018 see sec_2010 sec_6075 and sec_6018 in the case of an estate that is not required to file an estate_tax_return plr-128347-16 under sec_6018 the due_date is prescribed by regulation see sec_20_2010-2t a see also sec_20_2010-2 and revproc_2014_18 2014_7_irb_513 sec_2 accordingly in the latter case a taxpayer may seek an extension of time to elect portability under the provisions of sec_301_9100-3 sec_6018 requires the filing of an estate_tax_return in all cases where the gross_estate exceeds the basic exclusion amount in effect under sec_2010 for the calendar_year which includes the date of death for purposes of this determination under sec_6018 the basic exclusion amount is reduced but not below zero by the sum of -- a the amount of the adjusted_taxable_gifts within the meaning of sec_2001 made by the decedent after date plus b the aggregate amount allowed as a specific exemption under sec_2521 as in effect before its repeal by the tax reform act of with respect to gifts made by the decedent after date as executor spouse represents that based on the value of the gross_estate and taking into account any taxable_gifts decedent’s estate is not required to file an estate_tax_return under sec_6018 under these facts the commissioner has discretionary authority under sec_301_9100-3 to grant to decedent’s estate an extension of time to elect portability based on the facts submitted and the representations made we conclude that the requirements of sec_301_9100-3 have been satisfied accordingly we grant an extension of time of days from the date of this letter in which to elect portability under sec_2010 the election should be made by filing a complete and properly prepared form_706 and a copy of this letter within days from the date of this letter to the cincinnati service_center at the following address internal_revenue_service cincinnati service_center stop cincinnati oh for purposes of electing portability a form_706 filed by decedent’s estate within days from the date of this letter will be considered to be timely filed the rulings contained in this letter are based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in support of the request for rulings it is subject_to verification on examination if it is later determined that based on the value of the gross_estate and taking into account any taxable_gifts decedent’s estate is required to file an estate_tax_return pursuant to sec_6018 the commissioner is without authority under sec_301_9100-3 to grant to decedent’s estate an extension of time to elect portability and the grant of the extension referred to in this letter is deemed null and void this ruling is directed only to the taxpayer requesting it sec_6110 provides that it may not be used or cited as precedent plr-128347-16 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 associate chief_counsel passthroughs and special industries karlene lesho karlene lesho senior technician reviewer branch office of associate chief_counsel passthroughs and special industries enclosure copy of letter for sec_6110 purposes


department of the treasury internal_revenue_service washington d c date number release date uil cc psi cam-101339-98 memorandum for from industry director natural_resources and construction lm nrc senior technician reviewer branch cc psi passthroughs and special industries subject denial of consent for change in accounting_method in accordance with a of revproc_2001_1 2001_1_irb_1 this chief_counsel_advice advises you that consent for a change in accounting_method has been denied to a taxpayer within your jurisdiction pursuant to sec_6110 k this chief_counsel_advice is not to be cited as precedent legend taxpayer date amount taxpayer filed the form_3115 application_for change in accounting_method to request permission to change its method of computing depreciation for certain assets relating to its hydroelectric and nuclear power plants under revproc_97_27 c b because this change was under a revenue_procedure taxpayer may have already made this change taxpayer is an electric utility that engages in the production and sale of electricity to the general_public taxpayer previously treated this property as included in asset classe sec_49 electric utility hydraulic production plant electric utility nuclear production plant and electric utility transmission and distribution plant under revproc_87_56 c b and revproc_83_35 c b taxpayer believes these classifications were improper specifically taxpayer believes that this property belongs in asset class office furniture fixtures and equipment or asset class information systems or as qualified_technological_equipment under sec_168 cam-101339-98 the class lives of property subject_to depreciation under sec_168 are set forth in revproc_87_56 this revenue_procedure divides assets into two broad categories asset classes dollar_figure through that consist of specific depreciable assets used in all business activities and asset classes through that consist of depreciable assets used in specific business activities an asset that falls within both an asset group that is asset classes dollar_figure through and an activity group that is asset classes through is classified in the asset group see 111_tc_105 specifically asset class office furniture fixtures and equipment includes furniture and fixtures that are not a structural_component of a building it includes such assets as desks files safes and communications equipment asset class information systems includes computers and their peripheral equipment used in administering normal business transactions and the maintenance of business records their retrieval and analysis sec_168 defines the term qualified_technological_equipment as including any computer or related_peripheral_equipment the term computer is defined as a programmable electronically activated device which is capable of accepting information applying prescribed processes to the information and supplying the results of these processes with or without human intervention and consists of a central processing unit containing extensive storage logic arithmetic and control capabilities the term related_peripheral_equipment means any auxiliary machine whether on-line or off-line which is designed to be placed under the control of the central processing unit of a computer however it does not include any equipment which is an integral part of other_property which is not a computer typewriters calculators adding and accounting machines copiers duplicating equipment and equipment of a kind used primarily for amusement or entertainment of the user taxpayer’s business activity is described in electric utility asset classe sec_49 dollar_figure and dollar_figure of revproc_87_56 and rev_proc taxpayer’s assets relating to its nuclear power plants such as a remote viewing system annunciation system and plant security system that taxpayer wishes to include in asset class office furniture fixtures and equipment are not the type of specific depreciable assets used in all business activities rather they are included in taxpayer’s business activity asset classes further taxpayer wishes to include assets relating to its hydroelectric and nuclear power plants such as control and or monitoring systems nuclear simulator computer complex radiation measurement and detection equipment dispatch boards supervisory control units relays and meters training simulator and pilot wire protection either in asset class information systems or as qualified_technological_equipment under sec_168 these assets cannot be included in asset class dollar_figure because they are not used in administering normal business transactions and the maintenance of business records their retrieval and analysis additionally these assets do not cam-101339-98 constitute qualified_technological_equipment because they characterize equipment which is an integral part of other_property which is not a computer the method changes would have been effective with the taxable_year beginning date and would have resulted in a negative sec_481 adjustment decrease in taxable_income of amount if you have any questions on this matter do not hesitate to call me at _________________________ peter c friedman senior technician reviewer branch office of associate chief_counsel passthroughs special industries cc