department of the treasury internal_revenue_service washington d c mar si lp mats tax_exempt_and_government_entities_division uics i h t i t i t t t t t i l l t i legend decedent ira w date date date date y m m a o m - r n r z z state state statute state statute sections trust t law firm u this is in response to your request for letter_ruling dated supplemented by correspondence dated as and as further supplemented by page2 correspondence dated authorized representative on your behalf in which you request a series of letter rulings under sec_401 sec_2033 and sec_2041 of the internal_revenue_code code the following facts and representations support your ruling_request submitted by your and a fax dated decedent was the owner of ira w on date decedent executed the decedent ira w inheritance trust trust t on the same date decedent executed a beneficiary designation form naming nine separate trusts d trust through m trust below established under the terms of trust t as the primary beneficiaries of ira w each trust d trust through m trust was allocated a specific percentage of ira w which allocation corresponded to the percentages allocated to each trust under the provisions of trust t see below the date beneficiary designation also provided that all above trusts established as separate shares under trust t dated date on date decedent amended trust t decedent died on date prior to his required_beginning_date as that term is defined in sec_401 of the internal_revenue_code upon decedent’s death trust t became irrevocable at the time of his death decedent was unmarried and had no children paragraph b of the section of trust t titled trustor’s power to amend and revoke this trust page of trust t provides that from and after the death of the trustor the entire trust herein shall be irrevocable and non-amendable under the trust t section captioned payment of debts expenses and taxes upon death of trustor page of trust t upon decedent’s death the trustee is authorized to pay any debts and expenses of the trust that the trustee determines to be just any inheritance estate or death taxes including interest and penalties that may be due by reason of decedent’s death however no such payments are to be made if the trustee determines that other provisions have been made for the payment of such expenses debts and taxes or other assets are readily available for such payment in addition no payments of debts expenses or taxes are to be made from any retirement assets other than those directly attributable to and the legal_obligation of a particular retirement asset if the trust or any separate trust established under trust to which the retirement assets are payable would otherwise qualify as a designated_beneficiary within the meaning of sec_401 under the trust t section captioned directions for distribution of remainder after death of trustor paragraph creation of separate shares page of trust t the trustee is to create nine separate shares under the terms of the decedent’s beneficiary designation with respect to ira w no later than september of the year following the year of decedent’s death such separate shares are to be treated as effective ab initio to the date of decedent’s death trust t further provides that it is the intention of this provision to allow the trust page dollar_figure beneficiaries where possible and appropriate keeping in mind the trustor’s dispositive wishes and the situation of the beneficiary to enjoy the benefit of distributions from any retirement assets being stretched out over their separate life expectancies under the section of trust t captioned distribution to beneficiaries paragraph a division into separate shares page of trust t each of the nine trusts is to be held for the benefit of one of nine individuals and is to be funded with a designated percentage of the value of ira w at the time of decedent’s death the nine trusts are as follows d trust for the benefit of d funded with of ira w e trust for the benefit of e funded with of ira w f trust for the benefit of f funded with of ira w g trust for the benefit of g funded with of ira w h trust for the benefit of h funded with of ira w j trust for the benefit of j funded with of ira w k trust for the benefit of k funded with of ira w l trust for the benefit of l funded with of ira w m trust for the benefit of m funded with of ira w under the distribution to beneficiaries section paragraph b administration of separate shares of named beneficiaries page of trust t the share set_aside for a surviving named beneficiary pursuant to the terms of trust t is to constitute a separate and distinct trust for such individual under paragraph b all amounts distributed to each trust from ira w and other retirement assets while the named beneficiary is alive are to be paid to or for the benefit of such individual as soon as possible following receipt of such amounts by the trustee the trust provides that it is trustor’s intent that this sentence be interpreted and to the extent necessary modified by the trustee so that the trust share constitutes a conduit trust for purposes of the required_minimum_distribution rule trust expenses may be deducted prior to any such payment to or for the benefit of the beneficiary of the trust share if the deduction does not disqualify the status of the trust as a conduit trust this paragraph may be rendered void ab initio by the trust_protector pursuant to the section of the trust agreement entitled trust_protector provisions paragraph b and b provide additional dispositive rules that it is represented are intended to apply to the assets of a_trust share that are not attributable to ira w or other retirement assets under paragraph b the net_income of a_trust share is to be accumulated and added to principal under paragraph b if at any time in the sole and absolute discretion of the trustee the beneficiary for whom the trust has been set_aside is in need of funds for the beneficiary’s proper health maintenance support and education the trustee in its sole and absolute discretion may pay to or apply for the beneficiary’s individual benefit such amounts of the accumulated income and principal up to the whole thereof as the trustee may from time to time deem necessary for the individual’s use and benefit page paragraph b further provides that the individuals to whom or for whose benefit accumulated income and principal may be paid pursuant to this paragraph may be limited ab initio by the trust_protector pursuant to the section of the trust agreement entitled trust_protector provisions paragraph b limited powers of appointment page of trust t provides that upon the death of the individual for whom the trust share is set_aside the trustee is to distribute up to one-half of the remaining balance including accumulated income and principal to any individual and or charitable_organization except for such individual’s estate creditors and or creditors of the individual’s estate either outright or in trust upon such terms and conditions and in such amounts or proportions as the individual shall appoint by will codicil or other written instrument executed prior to such individual’s death and specifically referring to the power_of_appointment paragraph b further provides that the individuals to whom or for whose benefit accumulated income and principal may be paid pursuant to this paragraph may be limited ab initio by the trust_protector pursuant to the section of the trust agreement entitled trust_protector provisions under paragraph b final disposition of trust page of trust t the balance of the corpus of the trust share not otherwise_disposed_of under paragraph b including accumulated income and principal is to be held administered and distributed pursuant to paragraph a division into separate shares of the section captioned distribution to beneficiaries page of trust t accordingly the balance of the trust share property is to be divided and added to the other remaining shares in proportion to their relative percentage to be distributed as if it had been an original part of the respective share paragraph b further provides that the individuals to whom or for whose benefit accumulated income and principal may be paid pursuant to this paragraph may be limited ab initio by the trust_protector pursuant to the section of the trust agreement entitled trust_protector provisions under distributions to beneficiaries paragraph c distributions if no other_disposition page of trust t any share or portion of a share of any trust created which is not disposed of under any other provisions of trust is to be distributed to the remaining beneficiaries of trust in such shares as are listed on schedule b attached to trust since no beneficiaries were listed on schedule b under the terms of this paragraph the trust corpus will pass to decedent’s heirs at law rage j was appointed as trustee of each of the nine trust shares established under the terms of trust t on decedent’s death in the event of the death incompetency inability or unwillingness to act of j e is to act as trustee of the nine trusts in the event of the death incompetency inability or unwillingness to act of e then m is to act as trustee of the nine trusts under the trust section captioned special co-trustee provisions page of trust t paragraph a provides that after decedent’s death except where a beneficiary is named to act as trustee of his or her own trust share or where limited by an ascertainable_standard as defined under sec_2041 of the internal_revenue_code no trustee is to participate in the exercise of any discretionary authority to allocate receipts and expenses to principal or income any discretionary authority to distribute principal or income or any discretionary authority to terminate any trust created under trust if distributions could then be made to the trustee or the trustee has any legal_obligation for the support of any persons to whom distributions could then be made ifa trustee is prohibited from participating in the exercise of any power duty or discretionary authority or should a power duty or discretionary authority granted to a trustee be absolutely void then the power duty or discretionary authority may be exercised as described first in paragraph b by an existing co-trustee or second in paragraph c by the special co- trustee j is appointed as the special co-trustee provided j is an independent_trustee as defined in sec_674 of the internal_revenue_code e is designated as the successor special co- trustee and m as the next successor provided they respectively are independent trustees within the meaning of sec_674 the last named individual to act can designate a successor special co-trustee provided that person is an independent_trustee within the meaning of sec_674 under the trust section captioned trust_protector provisions page of trust t paragraph a the purpose of the trust_protector is to perform certain functions with respect to trust and the trust shares paragraph b provides that the special co-trustee may at any time and in his or her sole discretion appoint a_trust protector of the trust or of any separate trust established under trust paragraph b provides that at no time may a_trust protector be appointed or otherwise act if such person or entity is a currently acting trustee or special co- trustee or is a current beneficiary of any separate trust established under trust or is related to any beneficiary in any of the following ways as spouse ancestor or issue brother sister employee or such beneficiary or of any corporation firm or partnership in which such beneficiary is an executive or has stock or other holdings which are significant from the viewpoint of control or is otherwise related or subordinate to such beneficiary under sec_674 and c and the regulations thereunder or any similar succeeding regulations paragraph c of the trust_protector provisions provides in relevant part that the trust_protector may a where a separate trust established hereunder contains a paragraph entitled pages distribution of ira withdrawals or otherwise provides for the payout to or for the beneficiary of all withdrawals from iras and other retirement assets void said provision so that instead all such withdrawals shall be accumulated and added to principal in such a case paragraphs b and b previously referred to shall apply paragraph c contains additional language referring to the exercise of the power referenced herein after september of the year following the calendar_year of decedent’s death paragraph c of the trust_protector provisions provides in relevant part that if a separate trust established under the provisions of trust t provides for the discretionary distribution of accumulated income and or principal to someone other than the primary beneficiary of for a power_of_appointment over accumulated income and or principal to someone other than the primary beneficiary the trust_protector may add to such provision that no such accumulated income and or principal shall be paid to or for the benefit of any person who is older than the primary beneficiary of such trust n associated with law firm u is the trust_protector of trust t on or about date which date was within nine months of date decedent’s date of death and which date predated date n in conjunction with law firm u exercised in writing the power s granted it in paragraphs c and c of the trust_protector provisions above to convert j trust set up to benefit j to an accumulation_trust and to limit potential remaindermen of j trust to persons not older than j with respect to said date action of the trust_protector your authorized additionally it has been represented on your behalf that prior to the date of this ruling representative asserts on your behalf that said action is valid under state statute sections and is treated as a disclaimer for all purposes associated with this ruling_request it has been represented that the documentation described in sec_1_401_a_9_-4 of the final regulations q a-6 was provided to the administrator custodian of ira w within the time frame specified therein it has also been represented that trust t and the trusts created pursuant to its terms are valid under the laws of state request prior to date ira w was divided by means of a series of trustee to trustee transfers into a number of separate ras set up and maintained in the name of decedent to benefit the named beneficiaries of ira w all post-death investment gains and losses contributions and forfeitures for the period up to the creation of the separate iras were allocated on a pro_rata basis in a manner intended to be reasonable and consistent among the several iras requirements of code sec_401 were made with respect to calendar_year said finally it has been represented that distributions intended to comply with the ‘page distributions were made from the separate iras referenced above based on the life expectancy of the beneficiary d through m thereof using the single life expectancy table found in sec_1_401_a_9_-9 of the final income_tax regulations distributions for subsequent calendar years will be based on the ira beneficiaries life expectancy reduced by one for each year that has elapsed since based on the above facts and representations the following letter rulings are requested that upon the death of the primary beneficiary of each separate trust trust d through trust m the trust assets will not be included in such beneficiary’s estate ’ that the provision in each trust trust d through trust m except for trust j mandating that all withdrawals from retirement assets be distributed to the trust_beneficiary as soon as possible after trust expenses are deducted will not cause the trust to be treated as if there is an accumulation of distributions from retirement accounts see sec_1_401_a_9_-5 of the final income_tax regulations question and answer-7 example that each trust trust t and trust d through trust m created under the provisions of trust t qualifies as a see-through trust as that term is used in sec_1 a - of the final income_tax regulations question and answer-5 that for purposes of calculating required minimum distributions within the meaning of code sec_401 made applicable to iras pursuant to code sec_408 with respect to trust d through trust m other than trust j the appropriate measuring life will be the life of the primary beneficiary thereof that for purposes of calculating required minimum distributions within the meaning of code sec_401 made applicable to iras pursuant to code sec_408 with respect to trust j the appropriate measuring life will be the life of j the primary beneficiary thereof and for purposes of calculating minimum required distributions within the meaning of code sec_401 made applicable to iras pursuant to code sec_408 with respect to each trust trust d through trust m the life expectancy or expectancies of the beneficiary or beneficiaries thereof may be considered without regard to the life expectancy ies of the beneficiary ies of the other trusts with respect to your initial ruling_request sec_2001 of the code imposes a tax on the transfer of the taxable_estate of every decedent who is a citizen or resident_of_the_united_states sec_2033 provides that the value of the gross_estate shall include the value of all property to the extent of the interest therein of the decedent at the time of his death sec_20_2033-1 provides that the gross_estate of a decedent who was a citizen or resident_of_the_united_states at the time of his death includes under sec_2033 the value of all ‘page property whether real or personal tangible or intangible and wherever situated beneficially owned by the decedent at the time of his death sec_2041 provides for the inclusion in the gross_estate of any property with respect to which the decedent possesses at the time of his death a general_power_of_appointment created after date sec_2041 provides that the term general_power_of_appointment means a power that is exercisable in favor of the decedent the decedent's_estate the decedent's creditors or the creditors of the decedent's_estate however a power to consume invade or appropriate property for the benefit of the decedent that is limited by an ascertainable_standard relating to health education support or maintenance of the decedent is not a general_power_of_appointment under sec_20_2041-1 of the estate_tax regulations a power_of_appointment is not a general_power_of_appointment if by its terms it is either - a exercisable only in favor of one or more designated persons or classes other than the decedent or his creditors or the decedent’s estate or the creditors of his estate or b expressly not exercisable in favor of the decedent or his creditors or the decedent’s estate or the creditors of his estate under sec_20_2041-1 a power is limited by an ascertainable_standard if the extent of the holder’s duty to exercise and not to exercise the power is reasonably measurable in terms of his needs for health education or support or any combination of them the words support and maintenance are synonymous and their meaning is not limited to the bare necessities of life state statute provides as follows a subject_to the additional requirements of subdivisions b c and d if a_trust b notwithstanding the use of terms like absolute sole or uncontrolled by a instrument confers absolute sole or uncontrolled discretion on a trustee the trustee shall act in accordance with fiduciary principles and shall not act in bad faith or in disregard of the purposes of the trust express reference to this subdivision a person who is a beneficiary of a_trust that permits the person as trustee or cotrustee to make discretionary distributions of income or principal to or for the benefit of himself or herself may exercise that power in his or her favor only for his or her health education support or maintenance within the meaning of settlor or a testator a person who is a beneficiary of a_trust that permits the person either individually or as trustee or cotrustee to make discretionary distributions of income or principal to or for the benefit of himself or herself pursuant to a standard shall exercise that power reasonably and in accordance with the standard c unless a settlor or a testator clearly indicates that a broader power is intended by ‘page sec_2041 and sec_2514 of the internal_revenue_code in the present case the interest of the primary beneficiary in his or her trust share will terminate on the beneficiary’s death accordingly the primary beneficiary will not possess an interest in the trust corpus that would cause the trust to be includible in the primary beneficiary’s gross_estate under sec_2033 further the trustee of each trust share can invade the trust corpus for the benefit of the primary beneficiary however if a primary beneficiary becomes the trustee of his or her trust share that beneficiary acting as trustee would not possess a general_power_of_appointment with respect to his or her trust share see sec_20_2041-1 see also state statute further the testamentary_power_of_appointment each primary beneficiary possesses with respect to his or her trust share is a limited_power_of_appointment that is the power can not be exercised in favor of the beneficiary’s estate creditors or creditors of the beneficiary’s estate accordingly possession of that power will not cause the trust share corpus to be included in the primary beneficiary’s gross_estate under sec_2041 we conclude therefore that upon the death of the primary beneficiary of a_trust share the trust share will not be includible in the primary beneficiary’s gross_estate thus with respect to your first ruling_request we conclude as follows i ii will be distributed to such employee not later than the required_beginning_date or with respect to your second through sixth ruling requests code sec_401 that upon the death of the primary beneficiary of each separate trust trust d through trust m the trust assets will not be included in such beneficiary’ s estate provides in general that a_trust will not be considered qualified unless the plan provides that the entire_interest of each employee- will be distributed beginning not later than the required_beginning_date over the life of such employee or over the lives of such employee and a designated_beneficiary or over a period not extending beyond the life expectancy of such employee or the life expectancy of such employee and a designated_beneficiary similar to the rules of sec_401 and the incidental death_benefit requirements of sec_401 shall apply to the distribution of the entire_interest of an individual for whose benefit the trust is maintained before the distribution of his interest has begun in accordance with subparagraph a ii prior to code sec_408 provides that under regulations prescribed by the secretary rules code sec_401 provides in general that if a plan participant ira holder dies page his required_beginning_date then his entire_interest must be distributed within years of his death code sec_401 provides in general that if any portion of the interest of a deceased plan participant ira holder is payable to or for the benefit of a designated_beneficiary such portion will be distributed beginning not later than year after the date of the deceased’s death or a later date as prescribed by the secretary under regulations in accordance with regulations over the life of the designated_beneficiary or a period not extending beyond the life expectancy of the beneficiary code sec_401 provides in relevant part that for purposes of this paragraph the term required_beginning_date means april of the calendar_year following the calendar_year in which the employee attains age code sec_401 defines designated_beneficiary as any individual designated as a beneficiary by the employee ira holder with further respect to your second through sixth ruling requests final income_tax regulations under code sec_401 and sec_408 were published in the federal_register pincite federal_register date and in the internal_revenue_bulletin pincite ilr b date the preamble to the final regulations in relevant part provide that the regulations apply for determining required minimum distributions for calendar years beginning after date in addition the final regulations have been modified in part see lr b date the modification to the final regulations may also be relied upon with respect to required distributions for the and subsequent calendar years sec_1_401_a_9_-3 of the final regulations q a-3 a provides in general that with respect to the life expectancy exception to the 5-year rule described in code sec_401 and in a-1 distributions are required to begin to a non-spouse beneficiary on or before the end of the calendar_year immediately following the calendar_year in which the employee died this rule also applies if another individual is a designated_beneficiary in addition to the employee’s ira holder’s surviving_spouse sec_1_401_a_9_-3 of the final regulations q a-4 a provides in relevant part that in the absence of a plan provision to the contrary with respect to an individual who dies prior to reaching his required_beginning_date if said individual has desi gnated a beneficiary distributions from his plan or ira are to be made in accordance with the life_expectancy_rule of code sec_401 and iv page sec_1_401_a_9_-5 of the final regulations q a-5 b provides in general that if an employee dies before his required_beginning_date in order to satisfy the requirements of code sec_401 or iv and the life_expectancy_rule described in a-1 of sec_1_401_a_9_-3 the applicable distribution period for distribution calendar years after the distribution calendar_year containing the employee’s date of death is determined in accordance with paragraph c of this a-5 sec_1_401_a_9_-5 of the final regulations q a-5 c provides in general that with respect to a non-spouse beneficiary the applicable distribution period measured by the beneficiary’s remaining life expectancy is determined using the beneficiary’s age as of the beneficiary’s birthday in the calendar_year immediately following the calendar_year of the employee’s death one for each calendar_year that has elapsed after the calendar_year immediately following the calendar_year of the employee’s death in subsequent calendar years the applicable distribution period is reduced by sec_1_401_a_9_-4 of the final regulations q a-1 provides in relevant part that a designated_beneficiary is an individual who is designated as a beneficiary under a plan either by the terms of the plan or by an affirmative election by the employee q a-1 further provides that a person who takes under a will or otherwise under applicable state law will not be a designated_beneficiary unless that individual also takes under a plan sec_1_401_a_9_-5 of the final regulations q a-7 a provides in summary that except as otherwise provided in paragraph c of this a-7 not pertinent to this ruling_request if more than one individual is designated as a beneficiary with respect to an employee as of the applicable_date for determining the designated_beneficiary the named beneficiary with the shortest life expectancy will be the designated_beneficiary for purposes of determining the applicable distribution period sec_1_401_a_9_-4 of the final regulations q a-4 provides in relevant part that in order to be a designated_beneficiary an individual must be a beneficiary as of the date of the employee’s death generally an employee’s designated_beneficiary will be determined based on the beneficiaries designated as of the date of death who remain beneficiaries as of september of the calendar_year following the calendar_year of death q a-4 further provides that consequently any person who was a beneficiary as of the date of the employee’s ira holder’s death but is not a beneficiary as of that september eg because the person receives the entire benefit to which he is entitled before that september is not taken into account in determining the distribution period for required minimum distributions after the employee’s death accordingly if a person disclaims entitlement to the employee’s benefit pursuant to a disclaimer that satisfies sec_2518 by that september thereby allowing other beneficiaries to receive the benefit in lieu of that person the disclaiming person is not taken into account in determining the person’s designated_beneficiary page sec_1_401_a_9_-8 of the final regulations qs as-2 and provide the rules that apply if the ira of a deceased ira holder is divided into separate_accounts for purposes of code sec_401 sec_1_401_a_9_-8 of the final regulations q a-2 a provides that if an employee’s ira holder’s benefit in a defined_contribution_plan is divided into separate_accounts and the beneficiaries with respect to one separate_account differ from the beneficiaries with respect to the other separate_accounts of the employee under the plan for years subsequent to the calendar_year containing the date as of which the separate_accounts were established or date of death if later such separate_account under the plan is not aggregated with the other separate_accounts under the plan in order to determine whether the distributions from such separate_account under the plan satisfy sec_401 however the applicable distribution period for each such separate_account is determined disregarding the other beneficiaries only if the separate_account is established on a date no later than the last day of the year following the calendar_year of the employee’s ira holder’s death sec_1_401_a_9_-8 of the final regulations q a-3 defines separate_accounts for purposes of code sec_401 as separate portions of an employee’s benefit reflecting the separate interests of the employee’s beneficiaries under the plan as of the date of the employee’s death for which separate_accounting is maintained the separate_accounting must allocate all post-death investments gains and losses contributions and forfeitures for the period prior to the establishment of the separate_accounts on a pro_rata basis in a reasonable and consistent manner among the separate_accounts sec_1_401_a_9_-4 of the final regulations q a-3 provides that only individuals may be designated beneficiaries for purposes of sec_401 a person who is not an individual such as the employee's estate may not be a desi gnated beneficiary however q a- of sec_1_401_a_9_-4 provides that beneficiaries of a_trust with respect to the trust's interest in an employee's benefit may be treated as designated beneficiaries if the following requirements are met the trust is valid under state law or would be but for the fact that there is no corpus the trust is irrevocable or the trust contains language to the effect it becomes irrevocable upon the death of the employee the beneficiaries of the trust who are beneficiaries with respect to the trust's interest in the employee's benefit are identifiable within the meaning of a-1 of this section from the trust instrument page the documentation described in a-6 of this section has been provided to the plan_administrator sec_1_401_a_9_-4 of the final regulations q a-6 b provides generally with respect to required minimum distributions after the death of the employee that documentation described therein must be provided by the trustee of the trust_beneficiary to the plan_administrator by october of the calendar_year following the calendar_year in which the employee died sec_1_401_a_9_-4 of the final regulations q a-5 c provides in relevant part that the separate_account rules under a-2 of sec_1_401_a_9_-8 are not available to beneficiaries of a_trust with respect to the trust’s interest in the employee’s benefit sec_1_401_a_9_-9 of the final regulations q a-1 sets forth the single life table used to compute the life expectancy of an individual as previously noted taxpayers must compute minimum required distributions for calendar years beginning with calendar_year in accordance with the final regulations referenced above with further respect to your second through sixth ruling requests decedent maintained ira w at his calendar_year death subsequent to decedent’s death ira w was subdivided by means of a series of trustee-to-trustee transfers into nine iras maintained in the name of decedent to benefit the nine named beneficiaries of ira w such subdivision was intended to comply with the requirements of relevant provisions of trust t found above the provisions of trust t as modified and as complied with operationally require that a separate trust be set up to hold the appropriate portion of ira w allocated to each trust under decedent’s ira w beneficiary designation and under provisions of trust t pursuant to relevant provisions of trust t the assets held in each trust except trust j are to be distributed to the primary beneficiary of said trust as soon as they are received by the trustee of the trust upon distribution to trust j assets therein are to be accumulated and added to the principal thereof to benefit potential remaindermen none of which can be older than j in this case the service notes that the separate trusts created under the provisions of trust t were the beneficiaries of decedent’s interest in his ira w and that trust t was not the named beneficiary of ira w the service also notes that prior to december ira w was divided by means of a series of trustee-to-trustee transfers into a number of sub-iras each of which was set up and maintained in the name of decedent and each of which was set up to benefit a specific beneficiary of trust t through the trusts created under the provisions of trust page t thus distributions from ira w will now be made by the sub-iras to the trusts created under provisions of trust t distributions will not be made to trust t an issue to be resolved in this case is whether to apply the limitations found in sec_1_401_a_9_-4 of the final regulations q a-5 c to the fact pattern presented herein the facts in this case indicate that decedent intended that the trust t trustee divide trust t into separate trusts at his decedent’s death and directed that the trustee do so the trust t trustee had no discretion in the matter furthermore the decedent specifically named the trusts created under the provisions of trust t and not trust t as the beneficiaries of his ira w thus the decedent through the provisions of his trust t and through his date beneficiary designation took action to insure that his ira w did not pass through trust t and that the trustee of trust t had no part in dividing ira w among the beneficiaries thereof thus for purposes of code sec_401 the service will not apply the rule found in sec_1_401_a_9_-4 of the final regulations q a-5 c to the fact pattern presented herein therefore the beneficiaries of one of the trusts created under the provisions of trust t need not be considered in determining who if anyone is the code sec_401 designated_beneficiary of another such trust a second issue to be resolved in this case is whether the date action of the trust_protector noted above has negative implications for code sec_401 purposes-ie does it negate decedent’s date beneficiary designation to the extent said designation affects j and the sub-trust and sub-ira set up to benefit him in this regard we note that the trust protector’s actions were in conformity with relevant provisions of trust t which was drafted for decedent and executed by decedent additionally we note that pursuant to the terms of trust t said actions are effective ab initio or in other words relate back to the date that decedent executed trust t thus said date writing may be treated as a part of trust t furthermore we also note that said actions were taken within nine months of the date of decedent’s death and are treated as a disclaimer under the laws of state as to which beneficiaries were to receive his ira w and will not be treated as a post-death action taken by an individual or entity which negates modifies or changes decedent’s date beneficiary designation thus with respect to the trust created under the provisions of trust t to benefit j for purposes of code sec_401 none of the remaindermen of said trust can be older than j thus said trust_protector action may be treated as effectuating decedent’s written intent page therefore with respect to your second through sixth ruling requests we determine as follows that the provision in each trust trust d through trust m except for trust j mandating that all withdrawals from retirement assets be distributed to the trust_beneficiary as soon as possible after trust expenses are deducted will not cause the trust to be treated as if there is an accumulation of distributions from retirement accounts see sec_1_401_a_9_-5 of the final income_tax regulations question and answer-7 consistent with example that each trust trust d through trust m created under the provisions of trust t qualifies as a see-through trust as that term is used in sec_1_401_a_9_-5 of the final income_tax regulations question and answer-5 that for purposes of calculating required minimum distributions within the meaning of code sec_401 made applicable to iras pursuant to code sec_408 with respect to trust d through trust m other than trust j the appropriate measuring life will be the life of the primary beneficiary thereof that for purposes of calculating required minimum distributions within the meaning of code sec_401 made applicable to iras pursuant to code sec_408 with respect to trust j the appropriate measuring life will be the life of j the primary beneficiary thereof and for purposes of calculating minimum required distributions within the meaning of code sec_401 made applicable to iras pursuant to code sec_408 with respect to each trust trust d through trust m the life expectancy or expectancies of the beneficiary or beneficiaries thereof may be considered without regard to the life expectancy ies of the beneficiary ies of the other trusts the ruling contained in this letter is based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by the appropriate party the letter_ruling specifically assumes that ira w and all of the other iras referenced therein either have met are meeting or will meet the requirements of code sec_408 at all times relevant thereto furthermore it assumes that trust t and all of the other page trusts referenced therein are valid under the laws of state please note that while this office has not verified any part of the material submitted in support of the request for rulings it is subject_to verification and examination except as specifically ruled above no opinion is expressed as to the federal tax consequences of the facts described above under the cited provisions or any other provisions of the code or regulations this ruling is directed only to the taxpayer requesting it sec_61 k provides that it may not be used or cited as precedent pursuant to a power_of_attorney on file with the service the original of this ruling letter is being sent to your authorized representative if you have any questions concerning this letter_ruling please contact esquire id who may be reached pincite- not a toll-free number or fax sincerely yours frater vy loe frances v sloan manager employee_plans technical group enclosures deleted copy of this letter notice of intention to disclose


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 washington d c date cc psi b05 genin-142689-10 o f f i c e o f c h i e f c o u n se l number release date uil -------------------------------- -------------------------------------- ------------------------------- ------------- ----------------------------------- dear --------------- this letter responds to your request for information dated date regarding the disabled_access_credit under sec_44 of the internal_revenue_code section dollar_figure of revproc_2010_1 2010_1_irb_1 provides that the internal_revenue_service may issue an information_letter the purpose of which is to call attention to a well-established interpretation or principle of tax law without applying it to a specific set of facts accordingly the following discussion is provided for general information purposes only and does not constitute a ruling sec_44 provides an income_tax_credit not to exceed dollar_figure to eligible small businesses for eligible_access_expenditures an eligible_small_business may claim the disabled_access_credit only for eligible_access_expenditures paid_or_incurred by the eligible_small_business for the purpose of enabling the eligible_small_business to comply with applicable_requirements under the americans with disabilities act of ada amounts paid_or_incurred that are not required to comply with the ada are not eligible for the disabled_access_credit this letter has called attention to certain general principles of tax law it is intended for informational purposes only and does not constitute a ruling if you have any additional questions please contact our office at -------------------- sincerely paul f handleman paul f handleman chief branch office of associate chief_counsel passthroughs special industries


internal_revenue_service number info release date uilc may cc psi 1-genin-122103-02 we are responding to correspondence submitted on your behalf by cpa requesting automatic late s_corporation relief for an effective date of date based on the information provided and data furnished by the internal_revenue_service you are eligible for relief under section dollar_figure of revproc_97_48 no further action is needed on your part you should receive a notice of s_corporation acceptance from the irs within days in addition the irs has developed two new cd-roms to help educate small_business owners on their tax responsibilities introduction to federal taxes for small_business self-employed and a virtual small_business workshop these two items are free and can be ordered by calling the irs also provides a website www irs gov smallbiz dedicated to small_business taxpayers please keep this letter with your tax records and feel free to provide a copy of it to your authorized representative we hope that the above information proves helpful sincerely yours s dianna k miosi dianna k miosi chief branch associate chief_counsel passthroughs and special industries


t c memo united_states tax_court james t and tiffany a manning petitioners v commissioner of internal revenue respondent docket no filed date farley p katz and charles j muller iii for petitioners daniel n price for respondent memorandum opinion kroupa judge this case is before the court on petitioners’ motion for litigation costs as supplemented petitioners seek attorney’s fees and costs under sec_7430 and rule as well as excessive costs and sanctions against respondent under sec_6673 1all section references are to the internal_revenue_code and all rule references are to the tax_court rules_of_practice and procedure unless otherwise indicated we must decide whether petitioners are entitled to recover more than dollar_figure of litigation costs under either sec_7430 or sec_6673 we hold that they are not background the underlying facts of this case are set out in detail in manning v commissioner tcmemo_2009_157 we summarize the factual and procedural background briefly to rule on the instant motion petitioners are husband and wife who resided in texas at the time they filed the petition james manning petitioner operated the austin texas office of assent llc assent through his wholly owned entity james t manning llc a disregarded_entity petitioners deducted large commission adjustments paid to the warrior fund warrior on their federal_income_tax return warrior was owned by petitioner’s brother and was operated out of the united_states virgin islands usvi the irs investigated warrior in connection with an alleged abusive_tax_shelter as a result of that investigation respondent examined petitioners’ tax_return and issued a deficiency_notice disallowing the commission- adjustment deductions respondent also determined among other things that petitioners were liable for an accuracy-related_penalty respondent disallowed deductions for the payments to warrior under several theories involving the relationship between petitioner and his brother respondent’s primary argument was that petitioner’s payments to warrior were not deductible under sec_162 because the payments were not ordinary and necessary business_expenses respondent also made two alternative arguments against deductibility respondent argued that the payments were nondeductible illegal payments under sec_162 respondent also argued that the payments were not deductible because the transactions lacked economic_substance petitioners conceded that they had mistakenly deducted dollar_figure of commission adjustments in after trial we held that petitioners were entitled to the other deductions at issue that they did not have dollar_figure in unreported income and that they were not liable for the accuracy-related_penalty petitioners then filed a motion for litigation costs as supplemented petitioners seek to recover more than dollar_figure in litigation costs from respondent including their attorney’s fees discussion we now address whether petitioners may recover any of their litigation costs the prevailing_party may be awarded reasonable_litigation_costs in any court_proceeding brought by or against the united_states involving the determination or collection of tax sec_7430 a prevailing_party must establish to obtain such an award that the party has exhausted the administrative remedies available the party has substantially prevailed in the controversy the party satisfies certain net_worth requirements the party has not unreasonably protracted the proceedings and the amount of costs is reasonable sec_7430 and c the failure to satisfy any one of the requirements precludes an award of costs see sec_7430 and c see also rule e swanagan v commissioner tcmemo_2000_294 respondent acknowledges that petitioners substantially prevailed with respect to the amount in controversy and the most significant issue or set of issues presented sec_7430 respondent argues nonetheless that petitioners should not be deemed the prevailing_party because respondent’s positions in the judicial proceedings were substantially justified and petitioners failed to establish that they met the net_worth limitations see sec_7430 b we agree the moving party will not be treated as having prevailed if the government establishes that its position was substantially justified sec_7430 the commissioner’s position is substantially justified if based on all the facts and circumstances and relevant legal precedents the commissioner acted reasonably see 487_us_552 89_tc_79 affd 861_f2d_131 5th cir the commissioner’s position may be incorrect yet substantially justified if the commissioner’s position had a reasonable basis in law and fact see pierce v underwood supra pincite n sec_301_7430-5 proced admin regs a position has a reasonable basis in fact if there is relevant evidence that a reasonable mind might accept as adequate to support a conclusion pierce v underwood supra pincite huffman v commissioner 978_f2d_1139 n 9th cir affg in part revg in part and remanding tcmemo_1991_144 all the facts and circumstances surrounding a dispute must be considered in analyzing whether the government’s position is substantially justified 55_f3d_189 5th cir affg tcmemo_1994_182 that respondent loses on an issue is not determinative of the reasonableness of respondent’s position see 86_tc_962 85_tc_927 it remains a factor however to be considered 931_f2d_1044 5th cir further relevant factors include whether an issue is novel or difficult nalle v commissioner supra pincite respondent’s position was that petitioners were not entitled to deduct the commission adjustments paid to warrior respondent first argued that the payments were not ordinary and necessary business_expenses under sec_162 respondent also argued 2the court looks to whether the commissioner’s position was reasonable given the available facts and circumstances at the time the commissioner took his position see 108_tc_430 85_tc_927 the commissioner’s position in a judicial proceeding is generally the position the commissioner took in the answer to the petition sec_7430 huffman v commissioner 978_f2d_1139 9th cir affg in part revg in part and remanding tcmemo_1991_144 that the expenses were nondeductible illegal payments under sec_162 finally respondent argued that the payments lacked economic_substance we found that petitioners were entitled to the deductions see manning v commissioner tcmemo_2009_157 we also find that respondent was substantially justified in arguing that they were not deductible the payments were between family members and family controlled businesses such transactions present greater possibilities for abuse and require closer scrutiny for purposes of determining whether they are ordinary and necessary business_expenses 513_f2d_800 5th cir these payments were also for large amounts in addition petitioner’s brother was being investigated for allegedly participating in an offshore tax_shelter we find that respondent’s position was substantially justified given the relationship between james manning and his brother we further conclude that respondent’s position regarding the accuracy-related_penalty was substantially justified for similar reasons see uddo v commissioner tcmemo_1998_276 accordingly we conclude that petitioners are not the prevailing_party for this purpose and may not recover any 3we also note that petitioners have failed to satisfy this court that they met the net_worth requirements of sec_7430 petitioners bear the burden_of_proof with respect to this requirement rule e 91_tc_963 jensen v commissioner tcmemo_2000_341 we find that petitioners failed to provide adequate supporting information to establish their net_worth or the net_worth of their unincorporated business at the time they filed the petition litigation costs see sec_7430 in light of this holding we need not decide whether petitioners exhausted their administrative remedies or whether the legal costs petitioners claim are reasonable petitioners also seek fees under sec_6673 which allows this court to award attorney’s fees and costs when a government attorney has multiplied the proceedings in any case unreasonably and vexatiously respondent’s counsel has not done so and petitioners are not entitled to fees pursuant to sec_6673 to reflect the foregoing an order will be issued denying petitioners’ motion for litigation costs as supplemented


internal_revenue_service p o box cincinnati oh release number release date date date name of private_foundation address address department of the treasury employer_identification_number contact person - id number contact telephone number legend uil c geographical region x lower grant threshold_amount y higher grant threshold_amount dear you asked for advance approval of your educational grant and loan procedures under internal_revenue_code sec_4945 and sec_4945 this approval is required because you are a private_foundation that is exempt from federal_income_tax our determination we approved your procedures for awarding educational grants and loans based on the information you submitted and assuming you will conduct your program as proposed we determined your procedures for awarding scholarships meet the requirements of code sec_4945 we also determined your procedures for awarding educational grants and loans meet the requirements of code sec_4945 as a result expenditures you make under these procedures won't be taxable also awards meeting the requirements of code sec_4945 which are made under these procedures are scholarship or fellowship grants and are not taxable to the recipients if they use them for qualified_tuition_and_related_expenses subject_to the limitations provided in code sec_117 description of your request your request indicates that you plan to award scholarships to individuals under sec_4945 to enable them to further their education at university by enrolling into programs leading to bachelor's master's or doctoral degrees you will also provide educational grants under sec_4945 to those who wish to improve their skills and abilities through non-degree courses executive education or similar learning opportunities you do not currently award educational loans but may in future offer soft low-interest loans under g to students which they would not need to repay until they have graduated and have been afforded an interest-free period of time to seek employment awards may range from under dollar_figurex for students needing help with only a portion of their tuition or for open courses and executive education to in rare instances over dollar_figurey representing full tuition at a top university for the length of years necessary to complete the degree for all awards the amount is determined by a consideration of the type of education program the applicant is applying to the socioeconomic status of the applicant past academic performance proven leadership ability the applicant's commitment to the c region and community and your available_resources the program will be publicized on your website amongst networks of universities and high schools and occasionally via media to be eligible potential applicants must have a strong tie or connection to the c region eg born there studied or lived there for a long period of time be of descent etc recipients will be chosen by a selection committee based on past academic performance leadership potential and economic need selection committee members a total of three will be chosen by your governing body and are expected to be persons with strong ties to either the academic or business world such as teachers academics or business executives the number of grants each year will be decided by your board based on financial projections and availability of funds disqualified persons are ineligible for any grants or loans relatives of selection committee members are also not eligible for the students you select you will pay grant funds directly to their academic institution to be applied to their tuition and other expenses in the case of large awards that cover the entire year or more than one year distributions to the institution would be made in accordance with the school's regular tuition payment schedule students must furnish grade transcripts to you upon request you have represented that you will arrange to receive and review such reports at least annually if you become aware that the terms of an award have been violated you will communicate the violation to the award recipient and try to have the violation corrected if correction is not possible you will withhold all further distributions to the recipient and in special cases may require the recipient to return some or all of the grant amount to you basis for our determination the law imposes certain excise_taxes on the taxable_expenditures of private_foundations code sec_4945 a taxable_expenditure is any amount a private_foundation pays as a grant to an individual for travel study or other similar purposes however a grant that meets all of the following requirements of code sec_4945 is not a taxable_expenditure the foundation awards the grant on an objective and nondiscriminatory basis e the irs approves in advance the procedure for awarding the grant the grant is - - - ascholarship or fellowship subject_to sec_117 and is to be used for study at an educational_organization described in sec_170 or a prize or award subject_to the provisions of sec_74 if the recipient of the prize or award is selected from the general_public or to achieve a specific objective produce a report or similar product or improve or enhance a literary artistic musical scientific teaching or other similar skill or talent of the recipient to receive approval of its educational grant procedures sec_53_4945-4 requires that a private_foundation show the grant procedure includes an objective and nondiscriminatory selection process the grant procedure results in the recipients performing the activities the grants were intended to finance the foundation plans to obtain reports to determine whether the recipients have performed the activities that the grants were intended to finance long-term low-interest loans that private_foundations make for educational_purposes can be considered grants under code sec_4945 and revrul_77_434 other conditions that apply to this determination e this determination covers only the grant and loan program described above this approval will apply to succeeding grant and loan programs only if their standards and procedures don't differ significantly from those described in your original request this determination applies only to you it may not be cited as precedent you cannot rely on the conclusions in this letter if the facts you provided have changed substantially you must report any significant changes in your program to the cincinnati office of exempt_organizations at internal_revenue_service exempt_organizations determinations p o box cincinnati oh you cannot make grants or loans to your creators officers directors trustees foundation managers or members of selection committees or their relatives e e all funds distributed to individuals must be made on a charitable basis and must further the purposes of your organization you cannot award grants for a purpose that is inconsistent with code sec_170 you should keep adequate_records and case histories so that you can substantiate your grant and loan distributions with the irs if necessary please keep a copy of this letter in your records if you have any questions please contact the person listed at the top of this letter sincerely jeffrey cooper director exempt_organizations rulings and agreements